Selecting a charity that will use your money wisely and effectively isn’t easy, particularly during this hectic time of year. Donor-advised funds are one solution. These funds allow you to make a charitable contribution now and claim the tax deduction on your 2013 tax return, but distribute the money later. The funds are ideal for busy people who want to give but aren’t sure which charities to support, says Martin Shenkman, a New Jersey lawyer who specializes in tax and estate planning.
Interest in donor-advised funds typically swells in bull markets, and this year is no exception. At Fidelity, the number of new accounts in the first half of 2013 was up 43% over the first half of 2012. That’s because donor-advised funds are a tax-efficient way to donate taxable stock, mutual funds or other assets that have gained in value. You can claim a deduction for the entire market value of the securities. Your donor-advised fund will sell the securities and add the proceeds to your account.
The funds are a tax-break twofer. You avoid capital gains taxes, and the donor-advised fund doesn’t have to pay them, either, which means there’s more money available for charity, says Kim Laughton, president of Schwab Charitable. Some large donor-advised funds, such as Fidelity Charitable, also accept donations of illiquid assets, such as non-publicly traded securities and real estate.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
You don’t need to be Bill Gates to contribute to a donor-advised fund. The minimum required to open an account at Fidelity Charitable and Schwab Charitable is $5,000; at Vanguard Charitable, it’s $25,000. Some community foundations offer donor-advised funds with minimums as low as $1,000.
-
Elon Musk's $1 Trillion Pay Package Vote: What's at Stake for Tesla StockTesla shareholders are voting this week on a massive pay package for CEO Elon Musk. Here's what it means for the Mag 7 stock.
-
How to Read a Company's Balance Sheet Like a Stock ProKnowing how to read this financial statement can help you separate strong companies from struggling ones.
-
The Original Property Tax Hack: Avoiding The ‘Window Tax’Property Taxes Here’s how homeowners can challenge their home assessment and potentially reduce their property taxes — with a little lesson from history.
-
Three Critical Tax Changes Could Boost Your Paycheck in 2026Tax Tips The IRS predicts these tax breaks may change take-home pay in 2026. Will you get over $1,000 in tax savings?
-
What’s the New 2026 Estate Tax Exemption Amount?Estate Tax The IRS just increased the exemption as we enter into a promising tax year for estates and inheritances.
-
IRS Updates 2026 Tax Deduction for People Age 65 and OlderTax Changes Adjustments to the extra standard deduction can impact the tax bills of millions of older adults. Here are some new amounts to know for 2026.
-
IRS Reveals New 2026 Child Tax Credit and other Family Credit AmountsTax Credits Key family tax breaks are higher for 2026, including the Earned Income Tax Credit and the Adoption Credit. Here's what they're worth.
-
Standard Deduction 2026 Amounts Are HereTax Breaks What is the standard deduction for your filing status in 2026?
-
Claiming the Standard Deduction? Here Are Five Tax Breaks for Retirement in 2025Tax Tips If you’re retired and filing taxes, these five tax credits and deductions could provide thousands in relief (if you qualify).
-
New Tax Rules: Income the IRS Won’t Touch in 2025Income Taxes From financial gifts to Roth withdrawal rules, here’s what income stays tax-free under the new Trump 2025 tax bill, and some information on what’s changed.
