Complex Assets in Donor Advised Funds

Why are donor-advised funds (DAFs) considered flexible for charitable giving?
- DAFs enable clients to make charitable contributions that align with their financial planning goals while allowing flexibility in deciding when to allocate gifts to causes.
What types of assets can be contributed to a DAF?
- While cash is the most common asset, clients can also contribute:
  - Appreciated publicly traded securities.
  - Complex assets such as private company stock, real estate, life insurance policies, alternative investments, farm machinery, and collections.
What are the benefits of donating complex assets to a DAF?
- Larger capacity for charitable giving by utilizing a client’s full net worth.
- Tax benefits, including relief from capital gains taxes when contributing certain assets before liquidation.
How is a complex asset donation typically initiated and processed?
- Step 1: Contact the DAF program to confirm if the asset can be accepted.
- Step 2: Submit due diligence documentation as requested.
- Step 3: Complete due diligence; if approved, sign a gift agreement.
- Step 4: Transfer the asset to the DAF.
- Step 5: Liquidate the asset within the DAF; reinvest proceeds and make them available for charitable grants.
What motivates clients to donate complex assets?
- Upcoming events, such as the sale of private company stock, present opportunities to maximize tax deductions and avoid capital gains taxes.
- Strategic reviews of a client’s portfolio to identify non-cash assets suitable for donation.
- A desire to move away from assets that are no longer appropriate or aligned with the client’s goals.