Donor Advised Fund Succession Planning: What Happens Next? (2024)

FAQs

Donor Advised Fund Succession Planning: What Happens Next? ›

Once the account owner has passed away and can no longer “advise” how and to what amount their donor advised fund supports charities, the DAF could become an “orphaned donor advised fund.” Essentially, orphaned donor advised funds are unrestricted assets of the sponsoring charity.

A donor-advised fund succession plan is an important part of your overall estate plan and charitable legacy. It involves directing your DAF sponsor on how to handle or distribute assets remaining in your charitable giving fund after your lifetime.

What is a Successor on a Donor Advised Fund? Successors are individuals and/or charities named by JCF Fundholders to succeed them on their fund. JCF has created three basic options for your Succession Plan: Option 1: Designate Individuals as Successors.

Cash contributions can be deducted up to 60% of AGI, while contributions of securities can be deducted up to 30% of AGI. You can claim the deduction in the year you make the contribution; contributions in excess of these percentage limitations may be carried forward for five (5) years.

What happens to a donor advised fund at death? After death, your DAF can continue carrying on your charitable giving legacy. As stated before, your DAF can be passed on to family or a close friend for them to advise, or even divided to make multiple DAF accounts for each successor.

Once the account owner has passed away and can no longer “advise” how and to what amount their donor advised fund supports charities, the DAF could become an “orphaned donor advised fund.” Essentially, orphaned donor advised funds are unrestricted assets of the sponsoring charity.

A common criticism of donor-advised funds is that donations can sit in the fund indefinitely. There is no deadline for when the assets must be disbursed to charities.

Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it. However, the donor, or the donor's representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account.

DAFs held nearly US$230 billion in assets by the end of 2022 and distributed some $52 billion to charities that year. Those are significant sums as giving of all kinds totaled about $500 billion that year. As of 2023 there were about 2 million donor-advised funds, according to the National Philanthropic Trust.

What is the rule 144 for donor-advised fund? ›

SEC Rule 144 provides an exemption to the SEC registration requirements and permits the public resale of restricted (legend) and control stock if a number of conditions are met, including how long the stock is held, the way in which it is sold, and the amount that can be sold in a certain time period.

The 2024 National Study on Donor Advised Funds includes information about DAFs from 2014 to 2022, covering aspects such as account size, age, type, succession plan, donor demographics, contributions, grants, payout rates, and grantmaking speed. The report represents the most extensive independent study on DAFs to date.

The contributions from the donor advised fund to individual charities never appear on your tax return. The contributions to the charities are made by the donor advised fund, not by you.

DAF providers regularly make grants to each other for a whole variety or reasons. It's quite likely your provider has made a gift to DonorsTrust before. The amount is up to you. You can open a new fund with the minimum of $10,000 or you can roll over the full balance of your existing fund if you're ready.

Donors receive an immediate tax benefit by contributing assets and/or cash to the DAF. If donating appreciated assets (held for more than one year), the donor gets to deduct the fair market value of the assets, subject to certain limitations,² and avoids the capital gains tax on appreciated assets.

Private non-operating foundations are not eligible for DAF grants. Please read our Giving Vehicle Comparison for more on the differences between DAFs and private foundations.

A donor-advised fund, or DAF, is like a charitable investment account for the sole purpose of supporting charitable organizations you care about.

When you establish a trust, you retain the authority to dictate the terms and conditions under which your beneficiaries will receive their inheritance. This control ensures that your assets are distributed per your wishes, safeguarding them from potential mismanagement or misuse.

Trustee succession is the process by which a new trustee takes over the role of managing a trust. Trustee succession may occur when a trustee passes away, becomes incapacitated, resigns, declines, or is removed from the position.