As the tax year draws to a close, taxpayers begin exploring ways to reduce their tax liability. If you plan to donate to charity over the next few years, establishing a donor-advised fund ("DAF") is an effective tax planning opportunity you can start today.
A DAF is a charitable giving vehicle that lets you make an upfront contribution to a fund and advise the sponsoring organization on how you want the money distributed to your favorite charities. The tax benefit is an immediate deduction for the amount you contributed to the fund.
This can be especially valuable if you are in a lower income tax bracket in future years. Taking the deduction now in a higher tax bracket allows you to maximize the tax benefit received from those charitable contributions.
Ask your accountant or investment advisor if a donor-advised fund would be right for you–it could give you the tax savings you were looking for.