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Individuals and Families About AEF Donor Advised Funds: Strategies In the News
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Investment Management |
At AEF, donors can recommend their existing trusted investment advisor to tailor asset allocation in a Fund.
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Simple Way to Get Started | A Donor Advised Fund is simple way for your clients to get started. The minimum $10,000 contribution is significantly lower than what is required for a private foundation. Donors who are new to philanthropy can start small and build as appropriate. |
Concentrated Holdings | Concentrated or illiquid holdings may make it difficult to gift smaller amounts to a number of charities. Smaller charities are often not equipped to handle gifts of securities or illiquid assets. |
Year-end Timing Pressures | Donors
can avoid the year-end pressures associated with gifting to smaller
charities (an immediate and maximum tax benefit when contribution
is given to AEF). |
Accountability | A Fund can be used to distribute grants over time to ensure accountability from the recipient charity.
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Privacy and Anonymity | Privacy
is an important issue to donors. On many levels, being a donor-advisor
gives the donor a much greater degree of privacy than a private foundation.
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Maximize Tax Deduction and Valuation |
Provide immediate and maximum tax benefits of giving. See Tax Benefits
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Make a Private Foundation Work Better | Donor Advised Fund can compliment a private foundation and enhance
the plan.
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Terminate a Private Foundation into a Donor Advised Fund | Private foundations have a number of financial and administrative disadvantages when compared to a Donor Advised Fund. These drawbacks include greater investment restrictions, mandatory distribution and reporting responsibilities, fewer tax benefits and the sometimes-heavy burden of personally administering a private foundation. see Comparison AEF is a public charity into which a private foundation may distribute all of its assets. The first step in the termination process is the establishment of a Fund at AEF into which the private foundation's assets will be distributed. Second, AEF will work with you and your client to take the necessary steps to terminate the private foundation -- whether it is in trust or corporate form -- and arrange for the transfer of assets to the new Fund at AEF.
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Enhance a Charitable Remainder Trust | 1) Name AEF as the Charitable Remainderman that becomes the lasting legacy of giving for continued family involvement. 2) A Donor Advised Fund can ease the pressure of deciding the ultimate charitable recipients. 3) A Donor Advised Fund can be the overflow, when the client no longer needs the income. 4) A Donor may prefer to accelerate a CRT into a Donor Advised Fund and give sooner.
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Enhance a Charitable Lead Trust | Name AEF as the Charitable Beneficiary of a CLT. The Fund becomes the lasting legacy for continued family involvement.
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Life Insurance | By designating AEF as the beneficiary of a life insurance contract, donors can make a significantly larger charitable gift than may be possible out of their current assets. If a donor makes AEF the owner of the contract, he/she can deduct the premiums as they are paid. Or, if the donor would rather retain the right to change beneficiaries on the contract and doesn't care about deducting the premium, donor's can simply name AEF as partial, sole or contingent beneficiary.
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401K & 403B | Retirement plan assets when left to children, are subject to both estate tax and income tax (called Income in Respect to Decedent tax) Without proper planning, up to 76% of your clients retirement assets can be lost to taxes. Gifts of these assets will not be taxed if they are paid directly to AEF as beneficiary. Donors can designate all or a certain percentage of their retirement assets to go to AEF. Under current law, if your client wants to make a gift of retirement assets to charity, he or she must first withdraw the assets, recognize the distribution for income tax purposes, contribute the funds to charity, and then claim an income tax charitable deduction to mitigate the income tax liability. Note: there may be penalties for early withdrawal of any retirement assets.
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