DAFs are the gift that keeps on giving

investmentnews.com:

It’s the season when people keep on giving, and financial planning organizations are asking advisors to talk to their clients about contributing to donor-advised funds.

“One of the main reasons for the popularity of DAFs is just the simplicity in being able to create a donor-advised fund to have that look and feel of having your very own private family foundation without the headache and expense,” said Kyle Christopherson, senior vice president of client success at REN. “As far as charitable giving tools are concerned, this is definitely one of the most popular today and the fastest growing that we’re seeing.”

 The National Philanthropic Trust’s 2023 Donor-Advised Fund report showed a 9% increase in grants made from DAFs in 2022, to $52.16 billion, a new high for grant money. Contributions also grew 9%. While grants and contributions showed growth, charitable assets in DAFs declined, in part as a result of stock market losses.

There are increasing benefits to consider related to putting money in a DAF. The vehicles offer immediate tax deductions, simplified charitable giving, and the potential for asset growth. They also help create a philanthropic family legacy.

“It’s also a great way to get your children involved in in philanthropic giving in and let them see the benefits of engaging with their community through charitable giving,” Christopherson added.

Those who give to charity through a donor-advised fund can receive a few deductions and tax benefits. For charitable contributions, whether it’s to a donor-advised fund or charity directly, there’s a maximum limit individuals face, which is based on adjusted gross income, says Richard Pon, an advisor and CPA.

“If you’re doing cash, the total you can do for a year is