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The end of 2016 was unprecedented in the world of charitable giving. It's always the busiest time of year for charitable contributions, but the election and anticipation of future tax policy changes-along with a significant increase in the value of various assets-resulted in many advisors strongly encouraging clients to create donor-advised funds (DAFs) and to accelerate some of their anticipated future donations into these and already-existing accounts. This trend has continued in the new year.
Schwab Charitable just reported that the amounts their donors granted in the fourth quarter of 2016 increased by 75 percent over Q4 a year earlier. The number of DAF accounts created at American Endowment Foundation (AEF) increased by nearly 25 percent in 2016 with one firm opening 40 at AEF during one week in December.
Nearly all donors who create DAFs have charitable intent. However, some individuals who created DAFs near the end of the year did so at that time because their advisors told them of the likelihood of receiving greater tax benefits by creating an account sooner rather than later.
As a result, some clients now have an account but don't necessarily have a giving strategy or know where to start. I've contacted some of the leading philanthropic advisory firms in the country to get their sound advice on getting started. Here's what they told me:.
10 Tips
Why and how. Clients should "begin by discovering WHY they give, reflective of their own unique life journeys, values, and motivations for giving," and "to determine HOW to best identify giving opportunities and desired impact," says Colleen D. Mitchell of VENTURE3Philanthropy LLC.
Personal values. "What often begins as a tax-driven decision can...