Save $$$ using Donor-Advised Funds

Donor-Advised Funds are a great way to do good and save $$$ at the same time

Hey everyone, gooood morning and happy Thursday! Since we’re approaching the end of the tax year, we’re upping our cadence to make sure you get all the insights you need to lower your tax bill!

In the last newsletter, we gave you a 101 on capital gains taxes. Today, we’re going to give a quick primer on Donor-Advised Funds (DAF): what they are and how they’re uniquely positioned to save you money on taxes while allowing you to donate to your favorite charity 😀


What is a Donor-Advised Fund (DAF)?

A donor-advised fund allows you to make a charitable contribution and receive an immediate tax deduction. While your money is in a specific DAF account, your investment grows tax-free until you’re ready to donate to any IRS-qualified public charity.

What assets can I donate to a DAF?

Generally accepted assets include:

  • Cash equivalents, such as checks or cash positions from a brokerage account

  • Publicly traded stocks or mutual fund shares

  • Bitcoin and other cryptocurrencies

Why should I donate my money to a DAF?

Because you’re eligible for an immediate tax deduction as soon as you make a donation. If you donate cash or long-term, appreciated assets, then you're generally eligible for an income tax deduction of up to 60% and 30% of your adjusted gross income (AGI), respectively. For gifts that exceed the AGI limits, you have a 5 year carry-forward deduction to maximize the full value of your donation.

In addition, you can now donate a significant amount to your favorite charity without making a large cash outflow. Since your money grows tax-free within the DAF, you can theoretically have a $1,000 investment appreciate to $10,000 - all of which will be donated to the charity of your choosing.

How do I donate to a DAF?

Most traditional brokerages, like Schwab and Fidelity, have a dedicated DAF account that’s accessible via your account. You can also check out Daffy, a new startup that makes it easy to donate to DAFs!


Hope you enjoyed this read! If you have any questions on DAFs or anything else related to your capital gains taxes, just reply to this email.

P.S. we are releasing a new version of Reconcile in just a few weeks. If you haven’t signed up for early access, go ahead and do so at getreconcile.com.

Loading more posts…