Privacy Please: Look Into Donor Advised Funds

In the August 2009 “Give & Take” newsletter, Robert F. Sharpe, Jr., a nationally recognized adviser to non-profit organizations, identified reasons donors choose to make anonymous or private gifts. Reasons ranged from religious traditions and shyness to protecting against unwanted contacts from gift-seekers. Due to identity theft concerns, some seek to minimize publicity that could jeopardize family safety or financial security. In the Christian community, my experience has been that a very humble spirit is the frequent nature of faithful stewards. Decisions to share publicly about giving are prayerfully made in light of what will model stewardship in a way that encourages fellow believers and strengthens the work of the church.

A popular tool that accommodates various levels of privacy in giving is the Donor Advised Fund (DAF). These are available through community foundations, some financial service providers, and, in Missouri Baptist life, the Missouri Baptist Foundation. Planning and making gifts through a DAF at a “third-party” entity that is a qualified charitable organization also captures tax benefits to which the giver may be entitled. In addition, the use of a DAF can allow:

• The DAF manager to make distributions to ministries while keeping the donor’s identity anonymous. Expressions of appreciation from the benefiting ministry may be provided through the DAF manager to the anonymous giver.

• One large gift transaction to be divided among multiple causes (church, ministries, charities, etc.). Following the donor’s instruction to the DAF manager, notification of the donor’s identity may be withheld or released on a charity by charity basis.

• A gift to be completed in one year for tax purposes but distributed over several years.

• For gifting appreciated assets such as stocks or a mutual fund in ways that avoid capital gain taxes. The DAF manager converts the asset to cash for distribution to churches and ministries that may not be organized to properly receive and acknowledge non-cash gifts.

Concerns over privacy need not restrict the generosity God places in your heart. Using a Donor Advised Fund may even increase the economic stewardship of giving if you have a DAF with an organization that assists you in tax-wise planning of your gifts.