As you advise clients on charitable giving, you’re likely aware of the growing popularity of Donor Advised Funds as a flexible, tax-efficient tool for philanthropy. Many families appreciate how DAFs can streamline giving, foster family engagement, and serve as a launchpad for deeper community impact.
Recently, we’ve engaged with many professional advisors who work with clients utilizing community foundations in a variety of ways, ranging from contributing to important initiatives, supporting the community foundation’s operating endowment, making qualified charitable distributions from IRAs, or participating in foundation-hosted events that address critical local priorities.
Interestingly, we have discovered that some advisors were not aware that their clients had established DAFs through national financial institutions. Although these clients are familiar with our Foundation, they simply did not know that we could help them in multiple ways, including establishing a DAF to support their favorite charitable causes.
It’s easier–and more beneficial–than you might think for your client to move a DAF to the Foundation! Here’s what you need to know:
Tax and administrative advantages are the same
The Foundation offers DAFs with the same tax and administrative advantages as national providers, including:
- Online access for clients to view fund balances, contributions, and grant history
- Simple grantmaking process to qualified nonprofits
- Consolidated tax reporting, often with a single year-end letter for all contributions and grants
- Comprehensive back-office support for administration, tax receipts, recordkeeping, and compliance with 501(c)(3) requirements
- Favorable tax deductibility for contributions, including gifts of cash, securities, and other assets
Added value at the Foundation
Unlike many national DAF sponsors, the Foundation offers a suite of high-touch, locally-informed services that can enhance your clients’ philanthropic strategies, such as:
- Personalized service from staff experienced in structuring complex gifts (e.g., appreciated stock, real estate, closely-held business interests, estate gifts)
- Local expertise on community needs, nonprofit effectiveness, and high-impact grantmaking
- Opportunities for collaboration with other donors and access to educational forums featuring local and national experts
- Deep engagement in specific issue areas, including educational opportunities and hands-on involvement for clients and their families
- Impact measurement support to help clients track and communicate the outcomes of their giving
- Family and corporate philanthropy services to foster long-term, multi-generational charitable engagement
- Administrative fees that are reinvested in the community, supporting local operations and amplifying the Foundation’s mission
- Direct access to local experts who can research and recommend causes aligned with your clients’ goals
- Staff with deep community roots who maintain close relationships with nonprofit leaders and stay attuned to emerging needs
What next?
The steps to transfer a DAF are surprisingly simple:
- Work with our Foundation team to establish a DAF. Our straightforward, easy-to-complete paperwork makes it seamless and fast. Your client can mirror the terms of their existing DAF, or adjust successor advisors and legacy provisions based on their charitable intentions. Our team will walk through the process with you and your client.
- Work with your client to request a grant from their national DAF provider. Depending on the provider, this can sometimes be completed all online. Designate the Sacramento Region Community Foundation (and reference the new DAF if possible) as the grant recipient.
- Your client may be able to grant the entire balance in one transaction. If not, most of the balance can be transferred to fund the new DAF, and you can work with your client to transfer the rest later.
- Before closing the DAF at the national provider, your client should download grant history and contribution information for future reference and tax documentation. Note that transfers between DAFs are tax-neutral; these transactions are not taxable events.
We look forward to working with you and your clients to make the most of their charitable giving, especially by establishing a DAF at the community Foundation to serve as the cornerstone of your client’s charitable giving plan. With a DAF as a baseline, your client can begin to tap into all of the many ways the Foundation serves as a home for charitable giving, from strategic grant making to legacy giving and everything in between.