Investing with Faith / Kimberly Pohovey

Donor-advised funds allow you to put your faith into action

Charitable giving is a powerful tool that enables individuals to make a positive impact on the causes they care about.

For many, this generosity is rooted in faith and the belief that giving is an expression of compassion, love and service to others. Managing donations efficiently and strategically, however, can often be challenging.

Donor-advised funds (DAFs) provide an innovative and flexible solution to this dilemma, allowing individuals and families to combine the benefits of giving with enhanced control and tax advantages, all while staying true to their values and faith.

One of the unique benefits of a donor-advised fund is that it allows you to be your own grantmaker. This means you can directly influence which causes receive funding, how often and for what purposes. You can recommend grants to the organizations you care about, providing you with complete control over your charitable giving.

A DAF is a philanthropic vehicle that allows individuals or organizations to contribute assets to a charitable fund, which is then managed by a public charity or a financial institution that offers DAF services, such as the archdiocesan Catholic Community Foundation. The key feature of a DAF is the ability to advise or recommend how and when the funds should be distributed to qualified charitable organizations.

Once you contribute to a DAF, the fund is technically owned and operated by the sponsoring organization, but as the donor, you retain the privilege of advising the fund on the distribution of grants to charitable organizations. This provides donors with a streamlined and flexible way to manage their charitable giving, enjoy tax benefits and support causes they care about through time.

DAFs are a powerful tool for families who want to give together in a way that reflects their shared values and beliefs. For families who seek to weave their faith into their giving, a DAF can be a unifying force that enables them to engage in meaningful acts of charity while preserving a sense of shared purpose.

Key benefits of donor-advised funds

DAFs offer a range of benefits that appeal to individuals and families who want to maximize the impact of their giving while minimizing administrative burdens. Some of the key advantages include:

—Immediate tax deductions: Donors receive an immediate charitable tax deduction when contributing to a DAF. This allows donors to reduce their taxable income in the year of the donation, freeing up more resources for further giving.

—Flexibility in timing: Donors have the ability to contribute assets to the fund at any time, but they are not required to distribute funds to charities immediately. This provides the flexibility to plan donations over several years while still receiving the tax deduction upfront.

—Investment growth: Assets in a DAF can grow tax-free. Donors can choose from a range of investment options, allowing their contributions to potentially increase in value before being distributed to charitable causes.

—Ease of administration: DAFs simplify the process of managing charitable donations. The sponsoring organization handles all of the administrative tasks, such as issuing donation acknowledgements and ensuring compliance with IRS regulations. This reduces the workload for donors who want to focus on their philanthropy.

—Privacy: Donors can choose to remain anonymous when making charitable donations through a DAF. If desired, donors can have their names appear publicly, but many prefer the ability to remain private about their charitable giving.

—Low minimum contribution: Many DAFs have relatively low minimum contribution requirements, making them accessible to a wider range of individuals, not just those with large estates or substantial incomes.

—A family-oriented approach to giving: A donor-advised fund offers families the opportunity to unite around shared values and faith-based giving. Whether it’s supporting your parish, school or archdiocesan ministries, a DAF allows families to decide together where their charitable resources go, creating a lasting legacy of generosity and service. It’s a beautiful way to teach younger generations the importance of giving and engage them in meaningful, faith-driven philanthropy.

DAFs established with the Catholic Community Foundation at the Archdiocese of Indianapolis are invested following the socially responsible investing guidelines set by the U.S. Conference of Catholic Bishops, ensuring your investment is in accordance with the teaching of the Church.

With the ability to be your own grantmaker, you have the power to shape the future of your giving, while deeply integrating your faith and values into each decision. Whether you are looking to make a personal impact or teach future generations about the importance of giving, a donor-advised fund is an ideal way to put your faith into action and make a meaningful, lasting difference in the world.
 

(Kimberly Pohovey is the director of major and planned gifts for the archdiocese. Tax or legal information provided herein is not intended as tax or legal advice. Always consult with your legal, tax or financial advisors before implementing any gift plan. For more information on the Catholic Community Foundation, visit www.archindy.org/CCF, e-mail ccf@archindy.org, or call 317-236-1482.) †