Donor Advised Funds

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The following is paid programming.

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Welcome to Something More with Chris Boyd.

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Chris Boyd is a Certified Financial Planner Practitioner

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and Senior Vice President and Financial Advisor at

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Wealth Enhancement Group, one of the nation's largest

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registered investment advisors.

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We call it Something More because we'd like

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to talk not only about those important dollar

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and cents issues, but also the quality of

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life issues that make the money matters matter.

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Welcome everybody, thanks for being with us for

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another segment of Something More with Chris Boyd.

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I'm here with Jeff Perry and Russ Ball.

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We are all of the AMR team at

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Wealth Enhancement Group and glad to have you

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with us for another segment.

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Today, we're talking about donor advised funds.

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This is one of the, I think it's

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starting to get more traction, but this is

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a well-kept secret.

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I love donor advised funds as a resource,

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as a tool, we're going to talk about

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some of the details about how they work,

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some of the pros and cons, and some

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of the things to think about if you

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were to consider using a donor advised fund.

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Why would someone consider a donor advised fund?

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There's probably a lot of reasons.

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I'm going to start with, one of them

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has to do with current tax law and

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that current, you want to hit on that

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Jeff?

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Well, I didn't mean to steal your thunder.

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No, go right ahead.

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Go ahead.

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Well, since the Tax Cut and Jobs Act

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and the reductions in taxes and all those

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changes that were made, charitable deductions, if you

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take the standard deduction, which most people do,

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you don't get to deduct individual contributions to

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charities.

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Right.

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It's tough to get up to these levels

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of deductions to make it worth your while

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not to take the standard deduction.

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Right.

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So a reason, not to go on a

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tangent, a reason to use a donor advised

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fund is you can contribute all at once.

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You can like- You can bundle as

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they say, right?

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Yeah.

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Multiple years.

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If you give $5,000 a year to

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charities and you have the available cash, you

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can like say, okay, I'm going to $50

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,000 for the next 10 years and you

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can put it in a donor advised fund.

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Doesn't mean you're going to give it all

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away, but you've donated it to the fund.

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Therefore you qualify to deduct that $50,000

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as a charitable contribution and the decisions where

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it goes can be made later.

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Yeah, essentially that's it.

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So we should talk about what a donor

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advised fund is in just a second.

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We'll backtrack a little bit.

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But this is one of the motivators.

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I can make a single charitable donation to

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this donor advised fund that essentially I can

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have control, and I'm putting air quotes around

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that, in the sense that I can later

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on identify, advise where I want that money

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to go.

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That's the A in donor advised fund.

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I can say, I want to, let's say

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for example, I have a charity that I

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like to give to, the XYZ charity, the

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church of whatever, the hospital, the college, you

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can fill in the blank, right?

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If I, and maybe I do multiple charities,

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I don't just do a single charitable, I'd

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say I do all of those.

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But in a given year, I don't give

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so much that I would benefit from getting

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more than the standard deduction.

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Right.

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So I can give multiple years to this

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donor advised fund, get more than my standard

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deduction because of that circumstance, because of the

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charitable deduction that I might benefit from by

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contributing that to this donor advised fund, and

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then dole it out over years, two years,

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three years, five years, whatever it happens to

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be that I might have otherwise bundled in

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this situation.

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It allows me to get the benefit of

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the standard deduction and periodically the charitable giving

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deduction that I want to have enhanced tax

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benefit from, which ultimately people don't just give

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for a tax benefit, but if you can

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- It's free giving anyway.

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Right.

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Yeah.

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Right.

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Might as well.

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So, okay.

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What's a donor advised fund?

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Russ, you want to like start us off

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or you want me to do it?

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I'm putting you on the spot.

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Why don't you start it off?

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All right, start us off.

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So, the essence of a donor advised fund

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is a charitable entity, it's usually offered by

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a foundation, lots of brokerage platforms offer these,

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there are others.

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So we've had exposure with the American Endowment

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Foundation, there's charitable funds with Schwab and Fidelity

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and lots of others, like Local, Cape Cod

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Foundation we've had on many times as a

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guest on our show.

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All of these offer a donor advised fund.

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Okay.

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So essentially you could create your own fund

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like an endowment of sorts, but a lot

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less administrative headache.

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So- Virtually none, right?

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Well, it's minimal, right?

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And so essentially, yeah, virtually none.

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So I can, there's some costs associated with

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it, but ultimately it's modest.

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We'll talk about that in a minute or

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two.

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The essence is though, I can create this

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fund and in this fund, I get to

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put the funds I want into it.

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I can do stocks or securities of different

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kinds, or I could put in, sometimes I

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could put in things like real estate or

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things that might be sometimes difficult to transact.

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It depends on where I'm doing it and

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what they- What their rules are, right?

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Yeah, but cash can be put into it

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as well, but we might be inclined to

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want to use highly appreciated assets as a

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preferred tool to put into it.

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I often think of someone creating the fund

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with a highly appreciated asset, like a stock

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they've had forever.

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That's right.

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That's a great example of like, why would

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you, now, why would you do that?

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Maybe to elaborate on that.

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Yeah.

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You don't sell it, technically.

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You are donating it, so you never have

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the capital gains that are embedded in that

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long-term held stock.

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In the process, you get the benefit of

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the full market value as what's considered the

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contribution, so you've avoided that big capital gain.

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The charitable fund, the donor advice fund, doesn't

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pay taxes on it either.

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They just get the stepped up basis.

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They get it because they're not taxed as

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a- Right.

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They never get it, right.

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They just get to turn around and trade

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the transacted stock to make it useful if

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we wanted to give cash or whatever.

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It's as good as cash.

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Or they could, then that's some choices we'll

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talk about in a minute, how the money's

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held once it's donated into the donor advice

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fund, but there's not a tax event for

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the charitable entity.

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Or for you.

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Or for you.

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So, that's appreciated to be able to use

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these highly appreciated assets as a way to

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do it.

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In any case, so the fund essentially says,

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okay, we'll accept these assets and then you

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can leave them in there for a while

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or you can turn around and donate them

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immediately.

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Or as we said, I want to dole

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it out over, I put five years worth

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of my charitable giving into a single occasion.

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Oh, great.

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You can dole out five years or whatever

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it might be if you wanted to.

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Sometimes people do these because they want the

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charitable deduction, but they really don't know exactly

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what they want to do for the charitable

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intention just yet.

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And we can talk about that in a

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moment as well.

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I think that's something that's worth talking about,

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the non-financial benefits of a donor advised

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fund values and benefits.

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So just going back to conceptually, the fund

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is created.

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You put the assets in, you get immediate

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benefit from a tax planning point of view,

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and then you can choose to dole it

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out quickly, gradually, leave it for a while

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and then donate it.

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You have all these options available to you.

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So ultimately it is intended, keep in mind,

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this is charitable giving.

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What you donate to a donor advised fund

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is not your money anymore.

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It is going to charitable intention, whether it

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does it immediately or indirectly through this donor

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advised fund, it gets there later.

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But it does have the opportunity to compound

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and grow.

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So you could, in some instances, you can

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invest that money and later on make that

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donation.

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Now one of the things I was starting

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to make mention of is the values component

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of this.

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This is part of the thing I like

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best about these donor advised funds.

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You like this too, Jeff?

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I see you like that.

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So the idea is like, okay, I want

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to instill values in my family, perhaps.

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I want to pass on not only wealth,

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but a value system of like one of

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the things that we do as a family,

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we want to say, imagine the person saying

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in their mind, I want to instill community

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values.

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I want to instill the notion that we

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do for others.

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So they might create this donor advised fund,

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not strictly as a tax benefit, though it

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has that.

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But also with the notion of saying, okay,

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as part of our planning, we're going to

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pass on values of, hey, this is important

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to us to make a priority of giving

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to our community or whatever it might be,

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certain causes or priorities.

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So family, let's together come up with a

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plan each year as to who we're going

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to prioritize for our charitable giving through our

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donor advised fund.

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And so there's an opportunity for parents and

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children that picture these as adult children, but

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could be young children to say, hey, let's

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do this collaboratively.

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And as I think about my family, I

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think, gosh, this could, if we do this,

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this could be challenging because we have some

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of my family, we have very different priorities

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in our charitable giving.

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Our political alignments are very different.

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Our priorities as far as like who should

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we be donating to could be very different.

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So on the one hand, that could be

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a great exchange of ideas.

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On the other hand, it could be challenging.

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But I think that that's probably a value

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to the idea of saying, okay, how do

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we deal with things when we don't agree?

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Yeah, you know, like that context.

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Right.

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00:11:20,600 --> 00:11:20,900
Yeah.

274
00:11:20,900 --> 00:11:21,200
Right.

275
00:11:21,580 --> 00:11:22,960
So in any case, you know, I could

276
00:11:22,960 --> 00:11:26,820
see, you know, family saying, yeah, let's let's

277
00:11:26,820 --> 00:11:28,260
this be like really important to me.

278
00:11:28,440 --> 00:11:30,060
And then how do we respond to that?

279
00:11:30,160 --> 00:11:31,800
Okay, well, let's do what's important to you

280
00:11:31,800 --> 00:11:32,300
this year.

281
00:11:32,480 --> 00:11:33,100
Like a mini board.

282
00:11:33,200 --> 00:11:34,600
It's important to you next year.

283
00:11:34,860 --> 00:11:36,540
Let's do what's important to you another year.

284
00:11:36,560 --> 00:11:38,500
You know, we could go through the family.

285
00:11:39,160 --> 00:11:39,800
You know what I mean?

286
00:11:39,980 --> 00:11:40,520
I love it.

287
00:11:40,880 --> 00:11:41,120
Yeah.

288
00:11:42,160 --> 00:11:45,720
And similarly, you could otherwise say, no, no,

289
00:11:45,760 --> 00:11:46,880
we want consensus.

290
00:11:46,960 --> 00:11:48,120
What can we all agree on?

291
00:11:48,120 --> 00:11:49,300
You know, that's another.

292
00:11:49,660 --> 00:11:51,080
But these are the kind of things you'd

293
00:11:51,080 --> 00:11:56,120
have that opportunity to deliberate about and periodically

294
00:11:56,120 --> 00:11:57,940
make decisions around.

295
00:11:58,700 --> 00:12:01,440
The big picture, though, is that notion of

296
00:12:01,440 --> 00:12:04,300
what are you saying to your family by

297
00:12:04,300 --> 00:12:08,460
saying I've dedicated assets, I've allocated money to

298
00:12:08,460 --> 00:12:11,660
this priority, which I think I want to

299
00:12:11,660 --> 00:12:14,200
say, I hope you will have as a

300
00:12:14,200 --> 00:12:17,400
priority to that we care about community and

301
00:12:17,400 --> 00:12:19,260
we want to be able to give back

302
00:12:19,260 --> 00:12:20,700
in various ways.

303
00:12:21,260 --> 00:12:22,460
You know, I love that.

304
00:12:23,660 --> 00:12:25,620
The other thing I like about the donor

305
00:12:25,620 --> 00:12:28,020
advised funds is that it doesn't lock you

306
00:12:28,020 --> 00:12:29,400
into a specific charity.

307
00:12:29,600 --> 00:12:31,180
You know, let's let's say I'm imagining this

308
00:12:31,180 --> 00:12:33,240
scenario and your kids are growing up and

309
00:12:33,240 --> 00:12:35,400
they have maybe let's say you say, all

310
00:12:35,400 --> 00:12:37,120
right, each kid is going to get X

311
00:12:37,120 --> 00:12:39,020
amount of dollars from this donor advised fund

312
00:12:39,020 --> 00:12:39,920
to this charity.

313
00:12:39,920 --> 00:12:41,920
So you can divvy it up rather than

314
00:12:41,920 --> 00:12:43,720
doing everything into one charity in one year.

315
00:12:43,980 --> 00:12:44,240
That's right.

316
00:12:44,500 --> 00:12:45,920
So you have a lot of flexibility once

317
00:12:45,920 --> 00:12:47,500
the money is in the donor advised fund.

318
00:12:47,740 --> 00:12:49,880
And then as your kids, for example, grow

319
00:12:49,880 --> 00:12:51,600
up, their priorities might change.

320
00:12:51,700 --> 00:12:53,900
They might have different charitable leanings that that

321
00:12:53,900 --> 00:12:55,780
they like, a different organization or they want

322
00:12:55,780 --> 00:12:56,960
to contribute to something else.

323
00:12:57,260 --> 00:12:57,420
Yeah.

324
00:12:57,740 --> 00:13:00,340
Charitable organizations change, too, right?

325
00:13:00,440 --> 00:13:02,060
You know, maybe I don't necessarily want to

326
00:13:02,060 --> 00:13:04,120
give to that because that that's that's evolved

327
00:13:04,120 --> 00:13:06,180
or that's changed or maybe it's focused, has

328
00:13:06,180 --> 00:13:07,220
moved on or something.

329
00:13:07,380 --> 00:13:08,440
That certainly happens.

330
00:13:08,440 --> 00:13:12,420
Or that charity isn't as efficient with the

331
00:13:12,420 --> 00:13:13,500
dollars they spend.

332
00:13:13,620 --> 00:13:16,440
We want to look at who's who's having

333
00:13:16,440 --> 00:13:18,060
the most impact, you know, right.

334
00:13:18,140 --> 00:13:20,260
I think that notion of impact investing or

335
00:13:20,260 --> 00:13:22,300
something new comes to light, you know, some

336
00:13:22,300 --> 00:13:25,040
new cause or something, you know, in the

337
00:13:25,040 --> 00:13:27,760
family, you know, something you're affected by, something

338
00:13:27,760 --> 00:13:29,880
that's happened to the family, thinking of an

339
00:13:29,880 --> 00:13:30,560
illness, maybe.

340
00:13:30,780 --> 00:13:30,880
Right.

341
00:13:30,880 --> 00:13:31,240
Okay.

342
00:13:31,320 --> 00:13:34,740
Now we want to prioritize donating to a

343
00:13:34,740 --> 00:13:37,720
cause that affects research for cancer or, you

344
00:13:37,720 --> 00:13:38,920
know, fill in the blank.

345
00:13:39,040 --> 00:13:39,180
Right.

346
00:13:39,800 --> 00:13:39,960
Right.

347
00:13:40,540 --> 00:13:41,160
Yeah, exactly.

348
00:13:41,280 --> 00:13:43,120
So these are all kinds of reasons that

349
00:13:43,120 --> 00:13:45,000
people create donor advised funds on a personal

350
00:13:45,000 --> 00:13:45,260
level.

351
00:13:45,320 --> 00:13:48,180
I'll share when my sister passed away.

352
00:13:48,800 --> 00:13:50,760
One of the things we did was we

353
00:13:50,760 --> 00:13:54,980
we contacted the local foundation, Cape Cod Foundation,

354
00:13:54,980 --> 00:13:57,840
and created a donor advised fund.

355
00:13:57,920 --> 00:14:00,980
They collected all these little donations from all

356
00:14:00,980 --> 00:14:04,120
these people who gave checks for twenty five

357
00:14:04,120 --> 00:14:05,600
dollars or whatever it was.

358
00:14:05,600 --> 00:14:05,860
Right.

359
00:14:06,360 --> 00:14:08,840
And then, you know, others that were more

360
00:14:08,840 --> 00:14:11,220
substantial from family and so forth.

361
00:14:11,320 --> 00:14:14,780
And each year, Kristen and I and other

362
00:14:14,780 --> 00:14:19,820
members of our family donate to the donor

363
00:14:19,820 --> 00:14:23,520
advised fund and have have that continue to

364
00:14:23,520 --> 00:14:23,720
grow.

365
00:14:23,940 --> 00:14:25,700
For many years, we did that as a

366
00:14:25,700 --> 00:14:30,980
scholarship for local families because, you know, Bonnie

367
00:14:30,980 --> 00:14:32,880
was lived in Mashpee.

368
00:14:32,880 --> 00:14:35,420
And so we did something through the Mashpee

369
00:14:35,420 --> 00:14:39,100
High School now that, you know, everyone's out

370
00:14:39,100 --> 00:14:40,480
of that age range.

371
00:14:40,500 --> 00:14:43,060
We've kind of moved to change the focus

372
00:14:43,060 --> 00:14:44,280
to things around.

373
00:14:45,720 --> 00:14:47,420
Sometimes she died of melanoma.

374
00:14:47,580 --> 00:14:49,420
So, you know, it's melanoma research.

375
00:14:49,500 --> 00:14:51,600
Someone in the family has MS. We've done

376
00:14:51,600 --> 00:14:54,300
stuff around MS, you know, and so forth.

377
00:14:54,320 --> 00:14:56,120
You know, you can kind of prioritize.

378
00:14:56,460 --> 00:14:57,280
So what do we want to do?

379
00:14:57,280 --> 00:15:01,540
There was my my sister was athletic or

380
00:15:01,540 --> 00:15:05,080
the kids were now adults, but or athletic.

381
00:15:05,380 --> 00:15:06,940
So there was something they were doing.

382
00:15:07,420 --> 00:15:11,620
The Cape Cod Foundation suggested there's a fundraising

383
00:15:11,620 --> 00:15:14,420
campaign for a YMCA further down the Cape.

384
00:15:14,780 --> 00:15:16,060
Maybe that would be something we wanted.

385
00:15:16,220 --> 00:15:17,720
So, OK, that's a good suggestion.

386
00:15:17,880 --> 00:15:20,120
So there's all kinds of things that you

387
00:15:20,120 --> 00:15:20,700
can kind of say.

388
00:15:20,780 --> 00:15:21,560
What's our theme?

389
00:15:21,640 --> 00:15:22,440
What's our priority?

390
00:15:22,920 --> 00:15:26,200
And sometimes evaluate, well, what we want to

391
00:15:26,200 --> 00:15:26,420
do.

392
00:15:26,900 --> 00:15:30,520
We've had clients where we've been involved, not

393
00:15:30,520 --> 00:15:34,480
with a scholarship intention, but with charitable giving

394
00:15:34,480 --> 00:15:38,280
and so forth, where we've been investing their

395
00:15:38,280 --> 00:15:41,540
funds for them when it's not being donated.

396
00:15:41,900 --> 00:15:45,860
So through this donor advised fund, we continue

397
00:15:45,860 --> 00:15:48,880
to be involved, trying to grow that wealth

398
00:15:48,880 --> 00:15:52,140
that's ultimately going to go toward charitable intention.

399
00:15:55,040 --> 00:15:58,440
And I think that's been kind of a

400
00:15:58,440 --> 00:15:58,880
plus.

401
00:15:59,000 --> 00:16:00,220
Someone says, all right, I know I want

402
00:16:00,220 --> 00:16:02,080
to put some money aside.

403
00:16:02,260 --> 00:16:05,900
I have these highly appreciated shares or I've

404
00:16:05,900 --> 00:16:07,960
got too much in my company stock or,

405
00:16:08,580 --> 00:16:09,940
you know, whatever it might be.

406
00:16:10,000 --> 00:16:11,180
There can be different reasons.

407
00:16:12,040 --> 00:16:14,520
Let's oh, there's a potential change in the

408
00:16:14,520 --> 00:16:15,140
tax law.

409
00:16:15,640 --> 00:16:17,820
Let's take some money and put it into

410
00:16:17,820 --> 00:16:19,300
the donor advised fund.

411
00:16:20,240 --> 00:16:22,900
It's good for our charitable deduction that we

412
00:16:22,900 --> 00:16:23,740
want this year.

413
00:16:24,160 --> 00:16:24,540
Great.

414
00:16:24,860 --> 00:16:25,100
Boom.

415
00:16:25,380 --> 00:16:28,060
You know, in there now we can change

416
00:16:28,060 --> 00:16:30,440
how it's invested, invested however we want.

417
00:16:30,980 --> 00:16:33,220
And off it goes.

418
00:16:33,440 --> 00:16:37,460
Years later, they can be making donations to,

419
00:16:37,560 --> 00:16:43,580
you know, charity of choice, college, hospital, any

420
00:16:43,580 --> 00:16:44,480
kind of nonprofit.

421
00:16:44,700 --> 00:16:47,420
Now that raises a question of this is

422
00:16:47,420 --> 00:16:48,540
donor advised.

423
00:16:49,820 --> 00:16:52,340
Just because you want something to go to

424
00:16:52,340 --> 00:16:56,160
a particular cause doesn't mean it can necessarily

425
00:16:56,160 --> 00:16:57,100
go to that cause.

426
00:16:57,380 --> 00:16:57,480
Right.

427
00:16:58,080 --> 00:17:02,400
Most foundations will look at this and say,

428
00:17:02,540 --> 00:17:05,440
well, is it an actual nonprofit?

429
00:17:05,819 --> 00:17:07,579
You know, or a three B, et cetera,

430
00:17:07,579 --> 00:17:08,900
type of filing.

431
00:17:09,339 --> 00:17:09,859
Yeah.

432
00:17:10,500 --> 00:17:12,000
No, that's not the right.

433
00:17:12,460 --> 00:17:12,859
Yeah.

434
00:17:13,060 --> 00:17:13,640
That's what it is.

435
00:17:13,660 --> 00:17:13,800
Right.

436
00:17:13,859 --> 00:17:14,240
For three.

437
00:17:15,920 --> 00:17:16,540
A nonprofit.

438
00:17:17,000 --> 00:17:17,220
Right.

439
00:17:18,099 --> 00:17:18,980
501 C3.

440
00:17:19,119 --> 00:17:19,839
501 C3.

441
00:17:19,940 --> 00:17:21,000
Sorry, I get my numbers.

442
00:17:21,339 --> 00:17:21,660
Thank you.

443
00:17:21,740 --> 00:17:22,520
501 C3.

444
00:17:24,020 --> 00:17:26,160
403 B is the retirement account for nonprofits.

445
00:17:26,520 --> 00:17:27,060
Thank you.

446
00:17:27,220 --> 00:17:30,820
501 C3 type charitable entity or similar.

447
00:17:31,120 --> 00:17:31,220
Right.

448
00:17:31,720 --> 00:17:35,440
And so they'll look for that kind of

449
00:17:35,440 --> 00:17:35,800
status.

450
00:17:36,040 --> 00:17:38,380
But there are, you know, churches, hospitals.

451
00:17:38,940 --> 00:17:39,660
It's really broad.

452
00:17:40,020 --> 00:17:42,740
Charities of, you know, but legitimate charities.

453
00:17:43,320 --> 00:17:43,600
OK.

454
00:17:43,800 --> 00:17:46,040
It does not necessarily get to go directly

455
00:17:46,040 --> 00:17:46,620
to.

456
00:17:46,620 --> 00:17:47,340
All right.

457
00:17:47,420 --> 00:17:49,680
There's this poor person, this homeless person on

458
00:17:49,680 --> 00:17:50,000
the street.

459
00:17:50,080 --> 00:17:51,180
I really want to help them out.

460
00:17:51,380 --> 00:17:51,540
Right.

461
00:17:51,700 --> 00:17:53,540
We can't do that through a donor advised

462
00:17:53,540 --> 00:17:55,160
on a foundation might be able to do

463
00:17:55,160 --> 00:17:55,400
that.

464
00:17:55,520 --> 00:17:59,100
But a donor advised fund that goes to

465
00:17:59,100 --> 00:18:02,460
charitable organizations that they might deal with that

466
00:18:02,460 --> 00:18:03,440
person on the street.

467
00:18:03,900 --> 00:18:08,420
But indirectly, I think most families understand that

468
00:18:08,420 --> 00:18:09,780
you can't give it to a person, but

469
00:18:09,780 --> 00:18:10,360
it comes up.

470
00:18:10,520 --> 00:18:12,860
There is a difference between a nonprofit entity

471
00:18:12,860 --> 00:18:16,420
and a charitable entity as determined by the

472
00:18:16,420 --> 00:18:16,720
IRS.

473
00:18:17,020 --> 00:18:19,200
So sometimes someone may see a nonprofit and

474
00:18:19,200 --> 00:18:21,960
think that they can receive charitable donations that

475
00:18:21,960 --> 00:18:24,100
are deductible or qualifying.

476
00:18:24,620 --> 00:18:25,820
And sometimes they're not.

477
00:18:26,220 --> 00:18:27,660
Well, you mentioned 501.

478
00:18:28,100 --> 00:18:31,960
There's lots of different 501 type classifications and

479
00:18:31,960 --> 00:18:33,980
some may be eligible and some may not

480
00:18:33,980 --> 00:18:34,560
be eligible.

481
00:18:34,580 --> 00:18:37,980
Some are related to education, you know, for

482
00:18:37,980 --> 00:18:39,140
and so forth.

483
00:18:39,140 --> 00:18:42,820
So it's go go in with your eyes

484
00:18:42,820 --> 00:18:46,000
wide open that perhaps you could run into

485
00:18:46,000 --> 00:18:47,520
a charity or if there is a specific

486
00:18:47,520 --> 00:18:50,140
charity that you intend on using, bet that

487
00:18:50,140 --> 00:18:51,480
out before you enter.

488
00:18:51,800 --> 00:18:52,920
Yeah, advice fund.

489
00:18:53,060 --> 00:18:54,560
And keep in mind, there's a couple of

490
00:18:54,560 --> 00:18:55,800
things that we might want to think about

491
00:18:55,800 --> 00:18:57,460
when selecting a donor advised fund.

492
00:18:57,600 --> 00:19:00,360
One is, does the donor advised fund have

493
00:19:00,360 --> 00:19:03,380
some of these rules about donation?

494
00:19:03,380 --> 00:19:03,880
Right.

495
00:19:06,000 --> 00:19:08,380
We came across one recently that was going

496
00:19:08,380 --> 00:19:11,600
to require that if you didn't make a

497
00:19:11,600 --> 00:19:13,220
donation within three years, they were going to

498
00:19:13,220 --> 00:19:14,800
start making donations for you.

499
00:19:16,480 --> 00:19:19,040
If and if if you had made a

500
00:19:19,040 --> 00:19:21,360
donation, they'd use whoever you had most recently

501
00:19:21,360 --> 00:19:22,120
donated to.

502
00:19:22,240 --> 00:19:25,340
If not, they would make their own assessment,

503
00:19:25,520 --> 00:19:25,980
you know.

504
00:19:26,320 --> 00:19:28,080
So there's rules in some of them.

505
00:19:28,240 --> 00:19:28,420
Yeah.

506
00:19:28,460 --> 00:19:29,620
So that's one kind of thing.

507
00:19:29,660 --> 00:19:31,220
Oh, is there a requirement around that?

508
00:19:31,220 --> 00:19:35,900
Two is maybe when it comes to these

509
00:19:35,900 --> 00:19:38,900
donations, you know.

510
00:19:40,160 --> 00:19:42,820
It's advised, you're saying I'd like to go

511
00:19:42,820 --> 00:19:45,720
to this and it is at the discretion

512
00:19:45,720 --> 00:19:48,700
of the trustees, essentially of the of the

513
00:19:48,700 --> 00:19:52,740
foundation to decide is that something they're going

514
00:19:52,740 --> 00:19:54,700
to they're willing and able to do.

515
00:19:55,980 --> 00:19:57,800
So, you know, keep that in mind.

516
00:19:57,880 --> 00:20:00,160
Another thing to be tuned into is can

517
00:20:00,160 --> 00:20:00,960
I move the fund?

518
00:20:01,220 --> 00:20:05,500
If I'm not happy with this fund, this

519
00:20:05,500 --> 00:20:08,300
foundation, can I move it to that fund

520
00:20:08,300 --> 00:20:08,840
foundation?

521
00:20:09,080 --> 00:20:10,600
You know, so there are times you can

522
00:20:10,600 --> 00:20:11,060
do that.

523
00:20:11,140 --> 00:20:13,660
And it's essentially just another charitable gift in

524
00:20:13,660 --> 00:20:15,100
effect from A to B.

525
00:20:15,220 --> 00:20:16,580
So like a transfer.

526
00:20:18,120 --> 00:20:20,600
So these are things to be tuned into.

527
00:20:21,220 --> 00:20:25,580
Russ, maybe you did a little just preliminary

528
00:20:25,580 --> 00:20:28,940
review of some of the differences and cost

529
00:20:28,940 --> 00:20:29,620
and so forth.

530
00:20:29,620 --> 00:20:31,480
What are some of the other variables that

531
00:20:31,480 --> 00:20:33,300
might come to your mind?

532
00:20:34,260 --> 00:20:36,240
Well, I think, you know, when people are

533
00:20:36,240 --> 00:20:39,000
talking about these donor advised funds, they may

534
00:20:39,000 --> 00:20:42,140
sound, you know, fancy and, you know, the

535
00:20:42,140 --> 00:20:43,500
high minimums and that kind of thing.

536
00:20:43,760 --> 00:20:43,900
Yeah.

537
00:20:44,000 --> 00:20:45,960
For a lot of the donor advised funds,

538
00:20:46,220 --> 00:20:48,560
like through Schwab has a donor advised fund,

539
00:20:48,660 --> 00:20:50,700
Fidelity you mentioned, I think Vanguard has one.

540
00:20:51,400 --> 00:20:54,140
And these are the minimums to start a

541
00:20:54,140 --> 00:20:55,800
donor advised fund are really quite low for

542
00:20:55,800 --> 00:20:56,360
the most part.

543
00:20:57,180 --> 00:21:00,580
To have professional management within the fund, it's

544
00:21:00,580 --> 00:21:01,160
a little bit higher.

545
00:21:02,180 --> 00:21:04,300
It can be a little bit higher, but

546
00:21:04,300 --> 00:21:07,500
just it's pretty accessible to most to most

547
00:21:07,500 --> 00:21:08,640
investors out there.

548
00:21:09,060 --> 00:21:11,660
And just the idea to have even people

549
00:21:11,660 --> 00:21:13,620
who are donating on a monthly basis, I

550
00:21:13,620 --> 00:21:15,480
know a lot of people who do, they

551
00:21:15,480 --> 00:21:17,440
have like a basically part of their budget

552
00:21:17,440 --> 00:21:19,320
is their donation month to month.

553
00:21:19,600 --> 00:21:19,720
Yeah.

554
00:21:19,900 --> 00:21:22,020
And they can, you know, front load a

555
00:21:22,020 --> 00:21:23,340
donor advised fund at the beginning of the

556
00:21:23,340 --> 00:21:25,660
year, have that money grow tax free in

557
00:21:25,660 --> 00:21:28,760
a relatively safe invested vehicle if they choose

558
00:21:28,760 --> 00:21:31,620
to do so and choose which charities they

559
00:21:31,620 --> 00:21:33,520
want to distribute to throughout the year.

560
00:21:33,620 --> 00:21:35,120
I think that's a really great option for

561
00:21:35,120 --> 00:21:37,640
those people who have charitable inclinations and want

562
00:21:37,640 --> 00:21:38,740
to do that throughout the year.

563
00:21:40,600 --> 00:21:42,820
But yeah, as to, you know, some of

564
00:21:42,820 --> 00:21:44,840
the fees, I don't know if we want

565
00:21:44,840 --> 00:21:45,060
to.

566
00:21:45,340 --> 00:21:46,040
Yeah, why not?

567
00:21:46,240 --> 00:21:48,240
I mean, just this is preliminary research.

568
00:21:48,320 --> 00:21:49,400
These things can change.

569
00:21:49,980 --> 00:21:52,340
We just were looking at it recently, a

570
00:21:52,340 --> 00:21:53,620
few few different firms.

571
00:21:54,360 --> 00:21:58,560
And keep in mind, there's there's countless community

572
00:21:58,560 --> 00:22:01,580
foundations and other options.

573
00:22:01,840 --> 00:22:03,080
We're just talking about some of the ones

574
00:22:03,080 --> 00:22:04,900
that are in our orbit that we've looked

575
00:22:04,900 --> 00:22:09,100
at recently that relate more to the kind

576
00:22:09,100 --> 00:22:11,160
of circumstances we are involved with, where we

577
00:22:11,160 --> 00:22:14,020
stay involved in the management of the investments

578
00:22:14,020 --> 00:22:14,640
as well.

579
00:22:14,920 --> 00:22:16,540
But yeah, what were you going to say?

580
00:22:17,020 --> 00:22:21,520
So it looks like the typical expense rate

581
00:22:21,520 --> 00:22:24,580
is about 60 basis points on the first

582
00:22:24,580 --> 00:22:26,200
500 thousand or so.

583
00:22:26,360 --> 00:22:28,560
So that's a reasonable pretty big range.

584
00:22:28,840 --> 00:22:30,180
Yeah, you will see it will be 0

585
00:22:30,180 --> 00:22:33,720
.6 percent, 60 basis points, 0.6 percent

586
00:22:33,720 --> 00:22:35,020
rate of charge.

587
00:22:35,520 --> 00:22:37,140
And then if you have an investment manager

588
00:22:37,140 --> 00:22:39,220
involved, they choose to probably charge something on

589
00:22:39,220 --> 00:22:39,720
top of that.

590
00:22:40,040 --> 00:22:40,500
Right, right.

591
00:22:40,520 --> 00:22:42,740
So that's just the administrative fee for the

592
00:22:42,740 --> 00:22:47,380
donor advised fund that's handling the contributions.

593
00:22:48,000 --> 00:22:49,000
Yeah, yeah.

594
00:22:49,320 --> 00:22:51,680
So it scales down from there quite considerably.

595
00:22:51,900 --> 00:22:53,620
But I mean, from what I was seeing,

596
00:22:53,660 --> 00:22:54,640
I thought it was pretty competitive.

597
00:22:55,460 --> 00:22:59,780
You know, 6.6 is quite reasonable compared

598
00:22:59,780 --> 00:23:01,160
to even some mutual funds that are out

599
00:23:01,160 --> 00:23:01,320
there.

600
00:23:01,560 --> 00:23:03,240
So yeah, there's some administrative costs.

601
00:23:03,400 --> 00:23:06,460
And I think, you know, again, how where

602
00:23:06,460 --> 00:23:10,000
you do this can vary and the scale

603
00:23:10,000 --> 00:23:12,660
of the amount you're involved with can vary

604
00:23:12,660 --> 00:23:15,000
the some of these costs as well.

605
00:23:17,080 --> 00:23:21,340
And, you know, I mentioned like some will

606
00:23:21,340 --> 00:23:24,300
allow you to the community foundation will allow

607
00:23:24,300 --> 00:23:26,500
you to have a scholarship.

608
00:23:26,880 --> 00:23:29,260
Well, most of the ones that a charitable

609
00:23:29,260 --> 00:23:32,100
fund that is through a brokerage platform, they're

610
00:23:32,100 --> 00:23:32,800
not going to do that.

611
00:23:33,080 --> 00:23:33,200
Right.

612
00:23:33,400 --> 00:23:34,880
It's a different kind of scenario.

613
00:23:35,140 --> 00:23:37,100
So, you know, you have to identify what

614
00:23:37,100 --> 00:23:38,100
are you trying to accomplish?

615
00:23:38,100 --> 00:23:41,060
We will help define where it might make

616
00:23:41,060 --> 00:23:41,900
sense to work.

617
00:23:42,480 --> 00:23:44,280
One other detail I want to mention.

618
00:23:44,460 --> 00:23:47,420
So you're mentioning that the contribution is deductible.

619
00:23:48,040 --> 00:23:50,980
And so it's deductible in the year that

620
00:23:50,980 --> 00:23:52,520
you make the donation to the donor advised

621
00:23:52,520 --> 00:23:52,820
fund.

622
00:23:53,040 --> 00:23:56,780
So let's say as an example, let's say

623
00:23:56,780 --> 00:23:59,100
you make $100,000 every year.

624
00:23:59,780 --> 00:24:01,960
So if you do a cash donation to

625
00:24:01,960 --> 00:24:05,500
the donor advised fund, 60 percent of your

626
00:24:05,500 --> 00:24:08,620
adjusted gross income is is deductible.

627
00:24:09,300 --> 00:24:11,260
So you can donate if you're making $100

628
00:24:11,260 --> 00:24:12,980
,000, let's say that's your adjusted gross income.

629
00:24:13,540 --> 00:24:15,560
You can make a donation of $60,000

630
00:24:15,560 --> 00:24:17,220
when you're in that could all be deducted

631
00:24:17,220 --> 00:24:18,560
off your gross income.

632
00:24:19,760 --> 00:24:22,400
So I count as a charitable contribution that

633
00:24:22,400 --> 00:24:24,080
you get to take a deduction for.

634
00:24:24,440 --> 00:24:24,600
Right.

635
00:24:24,760 --> 00:24:27,480
And if you're doing the same with appreciated

636
00:24:27,480 --> 00:24:29,780
stock, it's 30 percent.

637
00:24:30,460 --> 00:24:32,740
So and that's the market value, the present

638
00:24:32,740 --> 00:24:35,100
market value of the contribution.

639
00:24:35,100 --> 00:24:37,900
So so there are differences and this changes

640
00:24:37,900 --> 00:24:39,940
from there have been times this was different

641
00:24:39,940 --> 00:24:41,140
amounts of different years.

642
00:24:41,280 --> 00:24:43,440
I remember just a few years ago, there

643
00:24:43,440 --> 00:24:45,280
were some differences in these numbers.

644
00:24:46,140 --> 00:24:48,300
I think it was at the start of

645
00:24:48,300 --> 00:24:50,080
the Secure Act or something along those lines.

646
00:24:50,160 --> 00:24:53,220
I forget which which which law came into

647
00:24:53,220 --> 00:24:54,420
effect that caused that.

648
00:24:54,520 --> 00:24:56,640
But keep that in mind, you know, that

649
00:24:56,640 --> 00:24:58,360
what it has been and what it will

650
00:24:58,360 --> 00:25:01,080
what it what it is currently may not

651
00:25:01,080 --> 00:25:02,000
always be the same.

652
00:25:02,640 --> 00:25:03,860
But it's a good point.

653
00:25:03,860 --> 00:25:06,760
So, you know, that there's some incentive to

654
00:25:06,760 --> 00:25:08,240
use cash in that scenario.

655
00:25:08,620 --> 00:25:12,980
On the other hand, there are some virtue

656
00:25:12,980 --> 00:25:15,360
to using stock and that we get to

657
00:25:15,360 --> 00:25:17,260
avoid the capital gain.

658
00:25:17,620 --> 00:25:20,180
It doesn't have to be all or one.

659
00:25:20,360 --> 00:25:20,920
Can I.

660
00:25:21,260 --> 00:25:23,100
And I think, you know, there's other types

661
00:25:23,100 --> 00:25:23,620
of assets.

662
00:25:23,740 --> 00:25:25,200
Sometimes people have real estate.

663
00:25:25,320 --> 00:25:26,460
Sometimes people have art.

664
00:25:26,600 --> 00:25:28,100
People are going to be all kinds of

665
00:25:28,100 --> 00:25:30,700
interesting things that might cause people to consider

666
00:25:30,700 --> 00:25:32,840
use of a donor advised fund.

667
00:25:33,520 --> 00:25:34,040
All right.

668
00:25:34,120 --> 00:25:38,980
So some costs ongoing, but, you know, the

669
00:25:38,980 --> 00:25:40,700
other thing is, like, is it is a

670
00:25:40,700 --> 00:25:43,640
perpetual or can someone doesn't want someone use

671
00:25:43,640 --> 00:25:44,820
this for a period of time and then

672
00:25:44,820 --> 00:25:45,560
be done with it?

673
00:25:46,540 --> 00:25:47,380
Well, it could be either.

674
00:25:47,780 --> 00:25:47,880
Right.

675
00:25:48,340 --> 00:25:51,260
Yeah, it could be something that's circumstantial and

676
00:25:51,260 --> 00:25:52,700
then you're done or it could be something

677
00:25:52,700 --> 00:25:54,440
that you're saying, hey, I want to have

678
00:25:54,440 --> 00:25:58,300
this live on for many years for legacy

679
00:25:58,300 --> 00:25:58,740
purposes.

680
00:25:58,740 --> 00:25:59,160
Right.

681
00:25:59,760 --> 00:26:02,160
There's one other reason that some families decide

682
00:26:02,160 --> 00:26:03,660
to do it or individuals.

683
00:26:04,240 --> 00:26:08,660
This can be done confidentiality confidentially, meaning, you

684
00:26:08,660 --> 00:26:11,120
know, sometimes people want to be philanthropic, but

685
00:26:11,120 --> 00:26:13,200
they don't really want for whatever reason.

686
00:26:13,400 --> 00:26:15,340
They don't want their name associated with the

687
00:26:15,340 --> 00:26:17,140
contribution that they give.

688
00:26:17,380 --> 00:26:17,920
Yeah.

689
00:26:18,220 --> 00:26:19,620
Either they don't want a bunch of people

690
00:26:19,620 --> 00:26:23,040
asking for more or or they they don't

691
00:26:23,040 --> 00:26:24,640
necessarily want the recognition.

692
00:26:24,640 --> 00:26:25,000
Yeah.

693
00:26:25,200 --> 00:26:27,500
Well, there's there's an endless list of reasons

694
00:26:27,500 --> 00:26:28,980
why people want to keep things private.

695
00:26:29,200 --> 00:26:31,340
And you can do that through a donor

696
00:26:31,340 --> 00:26:31,960
advised fund.

697
00:26:31,980 --> 00:26:33,760
You can make the donation to the charity

698
00:26:33,760 --> 00:26:36,360
without disclosing your name.

699
00:26:36,540 --> 00:26:39,240
Some and there's different rules for foundations, so

700
00:26:39,240 --> 00:26:42,340
they have obligations that they have to disclose

701
00:26:42,340 --> 00:26:44,400
certain amounts of donations.

702
00:26:44,400 --> 00:26:47,060
So if you wanted to be strictly confidential

703
00:26:47,060 --> 00:26:49,560
and private, a donor advised fund might be

704
00:26:49,560 --> 00:26:50,120
a good choice.

705
00:26:52,000 --> 00:26:55,560
So, you know, let's just mention a couple

706
00:26:55,560 --> 00:26:56,800
of things as we wind down.

707
00:26:57,040 --> 00:26:58,100
You know, you're not going to be an

708
00:26:58,100 --> 00:27:02,400
expert from a quick podcast, but definitely keep

709
00:27:02,400 --> 00:27:03,900
this on your radar, something you might want

710
00:27:03,900 --> 00:27:05,980
to learn more about, maybe take take advantage

711
00:27:05,980 --> 00:27:09,220
of, make use of doesn't require you don't

712
00:27:09,220 --> 00:27:11,040
have to be a millionaire, you know, kind

713
00:27:11,040 --> 00:27:14,240
of big numbers to think about something along

714
00:27:14,240 --> 00:27:14,880
these lines.

715
00:27:15,300 --> 00:27:17,360
But it's you know, it is something you

716
00:27:17,360 --> 00:27:20,580
you probably want to have certainly discretionary money

717
00:27:20,580 --> 00:27:22,900
you're willing to donate to charitable intentions.

718
00:27:23,600 --> 00:27:26,480
But there's tax benefits, there's charity benefits, there's

719
00:27:26,480 --> 00:27:26,960
control.

720
00:27:27,520 --> 00:27:30,020
There's a whole bunch of considerations and legacies

721
00:27:30,020 --> 00:27:30,900
we're just talking about.

722
00:27:31,260 --> 00:27:32,860
If you want to learn more, there's a

723
00:27:32,860 --> 00:27:35,720
nice we've got a nice little brochure.

724
00:27:35,860 --> 00:27:36,860
We got it on the screen for those

725
00:27:36,860 --> 00:27:37,800
watching on video.

726
00:27:39,080 --> 00:27:41,180
And you can check this out if you'd

727
00:27:41,180 --> 00:27:42,760
like to get a copy of this.

728
00:27:42,940 --> 00:27:43,740
Reach out to us.

729
00:27:44,160 --> 00:27:45,960
We're giving it away.

730
00:27:45,960 --> 00:27:48,920
It's just a little bit of information about

731
00:27:48,920 --> 00:27:49,940
donor advised funds.

732
00:27:50,100 --> 00:27:52,820
Give you a little bit of the basics.

733
00:27:53,240 --> 00:27:55,240
But I think it's a good good thing

734
00:27:55,240 --> 00:27:55,780
to consider.

735
00:27:56,540 --> 00:27:57,500
Reach out to us.

736
00:27:57,880 --> 00:27:59,980
Probably easiest ways to connect with us through

737
00:27:59,980 --> 00:28:05,400
our email address.

738
00:28:06,100 --> 00:28:08,000
You can just connect to us with an

739
00:28:08,000 --> 00:28:12,400
email saying amr-info at wealthenhancement.com.

740
00:28:13,200 --> 00:28:14,100
Send us that.

741
00:28:14,180 --> 00:28:18,240
Give us a call 866-771-8901.

742
00:28:18,840 --> 00:28:20,460
Just let us know you're interested in the

743
00:28:20,460 --> 00:28:21,660
donor advised fund brochure.

744
00:28:21,760 --> 00:28:22,860
We'll send it to you by email.

745
00:28:22,860 --> 00:28:25,020
Or if you prefer, let us know if

746
00:28:25,020 --> 00:28:25,760
you want it in print.

747
00:28:25,860 --> 00:28:27,440
We'll we'll print it out for you and

748
00:28:27,440 --> 00:28:28,800
send it to you that way.

749
00:28:29,200 --> 00:28:31,560
But just let us know what you're interested

750
00:28:31,560 --> 00:28:34,060
in and think you'll benefit from it.

751
00:28:34,240 --> 00:28:36,500
Anything to add, guys, as we wrap up?

752
00:28:37,020 --> 00:28:37,460
No.

753
00:28:38,520 --> 00:28:39,200
All right.

754
00:28:39,700 --> 00:28:41,620
Well, that's donor advised funds.

755
00:28:41,620 --> 00:28:43,740
Hope you take advantage of it if you

756
00:28:43,740 --> 00:28:44,380
need help.

757
00:28:44,780 --> 00:28:47,000
Look, as I mentioned, we certainly offer these

758
00:28:47,000 --> 00:28:49,740
as something we help with our clients who

759
00:28:49,740 --> 00:28:52,780
do want to have, you know, a donor

760
00:28:52,780 --> 00:28:55,220
advised fund, but may want it to continue

761
00:28:55,220 --> 00:28:56,240
to grow over time.

762
00:28:56,380 --> 00:28:57,960
We can be a resource to you or

763
00:28:57,960 --> 00:28:59,840
certainly point you in the right direction if

764
00:28:59,840 --> 00:29:02,100
it's something you want a little guidance on.

765
00:29:02,760 --> 00:29:04,140
So thanks for listening.

766
00:29:04,320 --> 00:29:06,500
Until next time, keep striving for something more.

767
00:29:07,900 --> 00:29:09,780
Thank you for listening to something more with

768
00:29:09,780 --> 00:29:10,520
Chris Boyd.

769
00:29:10,520 --> 00:29:12,980
Call us for help, whether it's for financial

770
00:29:12,980 --> 00:29:16,880
planning or portfolio management, insurance concerns or those

771
00:29:16,880 --> 00:29:18,940
quality of life issues that make the money

772
00:29:18,940 --> 00:29:20,020
matters matter.

773
00:29:20,380 --> 00:29:21,400
Whatever's on your mind.

774
00:29:21,500 --> 00:29:23,640
Visit us at something more with Chris Boyd

775
00:29:23,640 --> 00:29:26,360
dot com or call us toll free at

776
00:29:26,360 --> 00:29:29,480
eight six six seven seven one eight nine

777
00:29:29,480 --> 00:29:30,480
zero one.

778
00:29:30,720 --> 00:29:33,060
Or send us your questions to A.M

779
00:29:33,060 --> 00:29:36,320
.R. dash info at Wealth Enhancement dot com.

780
00:29:36,760 --> 00:29:38,480
You're listening to something more with Chris Boyd.

781
00:29:38,480 --> 00:29:39,300
Financial talk show.

782
00:29:39,380 --> 00:29:41,900
Wealth Enhancement Advisory Services and Jay Christopher Boyd

783
00:29:41,900 --> 00:29:44,240
provide investment advice on an individual basis to

784
00:29:44,240 --> 00:29:44,780
clients only.

785
00:29:44,940 --> 00:29:46,920
Proper advice depends on a complete analysis of

786
00:29:46,920 --> 00:29:48,140
all facts and circumstances.

787
00:29:48,380 --> 00:29:50,200
The information given on this program is general

788
00:29:50,200 --> 00:29:52,240
financial comments and cannot be relied upon as

789
00:29:52,240 --> 00:29:53,820
pertaining to your specific situation.

790
00:29:54,040 --> 00:29:56,020
Wealth Enhancement Group cannot guarantee that using the

791
00:29:56,020 --> 00:29:58,000
information from this show will generate profits or

792
00:29:58,000 --> 00:29:59,100
ensure freedom from loss.

793
00:29:59,300 --> 00:30:01,480
Listeners should consult their own financial advisors or

794
00:30:01,480 --> 00:30:03,580
conduct their own due diligence before making any

795
00:30:03,580 --> 00:30:04,500
financial decisions.