Bringing Your Family Together

For generations, Donor Advised Funds (DAFs) have served as an effective and efficient tool for philanthropic grant making with tax advantages. And for generations the Jewish Federation of Cleveland has been helping donors put the tool to work for them — in fact, we help manage nearly 800 DAFs each and every day.

Over the years, we’ve seen a trend in how families are using DAFs as a first step — or the next step — in engaging family members in the philanthropic process. If you are interested in having intergenerational conversations about values and philanthropic priorities between family members, here’s what you should know about DAFs.

Some donors allow their children to recommend grants of a certain amount each year, and others gather at the dinner table to make philanthropic choices together. Either way, the fund acts as a catalyst for family philanthropy.

As years pass, and family members age, a DAF can also be a valuable tool in creating a philanthropic estate plan. Donors may recommend grants during their lifetime through their DAF. They may also recommend grants to be made upon their deaths – either liquidating the fund entirely or creating an endowment fund in their names.

Donors may designate successor advisors, often family members, giving their heirs the privilege to make grant recommendations of their own choice. The next generation then carries on the family’s value of philanthropy.

Let’s talk taxes.

When you open a Donor Advised Fund (known as a DAF) an immediate tax deduction is available for the amount of the initial gift that establishes the fund. Then, income is earned on all donations to the fund and all income generated by the fund is tax-free. Plus, the fund may be used to create endowments in perpetuity.

How to Get Started

1. A donor advised fund may be funded with gifts of cash, securities, or other property.
2. The donor recommends grants from the fund to qualified public charities.
3. The Federation verifies the tax status of the grantee organization.
4. The Federation invests and administers the fund’s assets, processes recommendations, mails checks to the recipient organizations and reports to the donor advisor.
5. Online tools make accounts accessible at all times, providing record of current and past philanthropic giving.

Meet Alan Gross

For assistance in setting up a DAF, contact Alan Gross at 216-593-2818 or agross@jcfcleve.org.