Donor Advised Funds

The benefits and flexibility of a Donor Advised Fund might be an option right for you.

There is a growing interest in Donor Advised Funds, but there might still be some people who are concerned about creating one, or don’t know enough about them to make an informed decision. This month’s blog is designed to help you understand and evaluate this option.

A person creates a Donor Advised Fund (DAF) by making an irrevocable gift to a sponsoring organization like the WELS Foundation, Vanguard, Fidelity, or a community foundation. Since this is a chartable gift, the donor is eligible for a tax deduction. The entity will invest the money for potential growth, and then make charitable gifts to charities that are chosen by the donor.

The advantages of DAFs include:

• One large donation could mean the donor can itemize deductions in that year

• Investing the money could lead to financial growth and larger donations

• Donations from the DAF can be made over a period of years

• Donors can easily support many ministries through one DAF

The KML Foundation works very well with the WELS Foundation, and we typically recommended them for DAFs. You are not limited or required to use the WELS Foundation, but their management fees are lower than other entities and they are very familiar with local WELS ministries.

If you have plans to give generously to various ministries over the coming years, but your annual donations aren’t high enough to qualify for itemizing on your tax return, a DAF might be a good option. By bunching your donations into one gift, you get the best of both worlds through a DAF.

If you would like to learn more about Donor Advised Funds, check out the WELS Foundation at www.wels.net/foundation.