Charitable Giving Is a Family Affair

A donor-advised fund is a tax-savvy way for families to pool their charitable dollars and create the next generation of philanthropists.

Question: I’d like to set up a donor-advised fund so my family can contribute to charities as a group. Does one person have to control the fund, or can several family members donate to it and get a tax break for the contributions? --E.G., Baltimore

Answer: The fund can be controlled by one or more people. Anyone named on the account can recommend grants, and anyone can make tax-deductible donations.

Setting up a donor-advised fund is a great way to get your family involved in philanthropy, teach your kids and grandkids about giving, and build a charitable fund that can last for generations. Some parents start by controlling the fund themselves but have their children research charities and present their ideas at a family meeting. Parents may add the children to the account as they get older so they can make grants.

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You can set up a donor-advised fund at many brokerage firms, banks and community foundations. Fidelity requires a $5,000 contribution to get started; Vanguard’s minimum is $25,000. You can donate cash, stock and other assets to get a current tax deduction, then take as much time as you want to choose the charities.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.