creative giving techniques

Do you want to leave a financial inheritance or a financial legacy? For what do you want to be remembered? For the temporal material possessions a financial inheritance could buy for your children? OR, the eternal value a financial legacy could provide for God’s Kingdom as well as to your children, grandchildren and great-grandchildren?

As we continue to go deeper this week into the many different ways to financially give, I will cover the use of a donor advised fund, which is a wonderful way to create a legacy of giving.

Scenario #1

An older couple came about wealth the old fashioned way – saving little by little working for the same company for over 30 years. Now retired, their portfolio is worth approximately two million dollars in savings, investments and retirement accounts. They are in their 70’s and have been married for nearly 50 years. They have 3 grown children, all married. Two are already financially successful. The third child is in full time ministry as a pastor of a church with 200 members. He struggles financially, as well as his church. This older couple want to set up part of their estate to fund ministries as well as leave a financial and spiritual inheritance for their children.

Scenario #2

A couple is in their early 60’s and own a farm and ranch property with mineral rights. Oil and gas has been recently discovered on their property and they have become wealthy overnight. They also have 3 grown children of which none are financially successful yet. They want to help their children with the new found sudden wealth from their oil and gas discovery, but they also have a heart for ministry and wish to see a third of it used to glorify God.

Scenario #3

An individual receiving a 6-7 figure sum from an inheritance, company buyout, or lump sum pension. They want to create legacy of giving with part of the sum.

A donor advised fund is a tool that can accomplish the goals for each of the above scenarios. A donor advised fund is just what the name implies. Your initial advice to the fund is given to via the application, which advises to whom, how much and when to give from the fund. You may revise your fund purpose by adding or deleting ministries or charities, saving you the time and expense of changing wills, trusts or other legal documents. It has all of the benefits of a private family foundation and more. It is a flexible gifting solution through which you may devote a portion of your wealth for the support of special ministries and nonprofits, receive an immediate tax deduction in the year the donation is made, and make grants at a later date.

To sum up a few of the characteristics of a donor advised fund:

  • It has a clear, specific purpose for giving
  • Many have low minimum initial deposits as low as $1,000 to get started
  • Grants may be recommended for 501(c)(3) organizations, scholarship programs, and Field of Interest Funds.
  • Grants may be recommended by application for non-qualified charitable, religious, educational, scientific, and health related activities.
  • The fund can be responsible for legal or other direct expenses incurred on behalf of the fund.
  • Fund assets may be invested in financial instruments
  • Cash balances can receive an indexed money market return.
  • A deferred fund may be established to receive estate distributions upon a donor’s death.

Next week, I’ll go over how donor advised funds can provide specific solutions using the three scenarios I shared this week. In the meantime, I am available to help you accomplish your specific financial and giving goals while minimizing the impact of taxes as much as legally possible. To learn more feel free to call my office at 830-609-6986 to set up a phone or in person appointment with me. All initial appointments are complimentary.