Have Flexibility in Your Giving
A donor advised fund is a special type of fund at the Baptist Foundation established to receive charitable gifts when no specific charities are named at the time of the gift.
At some point in the future, the donor writes the Foundation and requests that a distribution of a specific amount be paid to a named charity.
The Foundation reviews the request and once approved, a check is sent to the charity in the donor’s name. Contributions are fully tax deductible when made, and the donor advised fund may be added to at any time.
Questions and Answers on Donor Advised Funds
What kind of charities can a donor advised fund pay to?
Generally, any and all Baptist causes can be financially supported. A list of charitable needs (exhibit “A”) is provided with the sample agreement and information package. Upon review and approval, other qualified charities may be added to the list by the donor. In no case may more than a 49% portion go to non-Baptist causes. Finally, there cannot be any distributions made to release any legally enforceable pledge or obligation.
Will the payments to the selected charities come from the earnings or from the fund principal?
The donor may choose a fund agreement that makes payments from the accumulated income or choose one that makes the payments from accumulated income and principal.
What is the procedure for requesting that a distribution be made to specified charity?
1. A written request is made to the Baptist Foundation.
2. A staff review is made of the requested distribution. If the selected charity is not found on the charitable needs list (exhibit “A”), the donor will be required to provide written information including the federal tax identification number, general charitable purposes and contact information.
3. A written report is made to the Distribution Committee of the Foundation (currently the Denominational Relations Committee of the Board of Directors).
4. Once approval is made, a check is issued in the name of the fund (which will bear the donor’s name unless requested otherwise).
May additional contributions be made to a donor advised fund?
Yes, in any amount desired.
Must a donor advised fund be funded with cash or can stock and real estate be given?
This fund is completely charitable and thus, any type of gift that a church or other qualified charity can receive is acceptable.
What are the tax advantages for gifts made to a donor advised fund?
1. 100% income tax deduction is available
2. Capital gains taxes are bypassed on long-term appreciated assets
3. Assets given are removed from the estate for inheritance tax purposes
What happens to the donor advised fund at the death of the donor?
There are options that donors have:
1. A permanent endowment will begin with the earned income being distributed semiannually to the charity(ies) designated in writing.
2. The Donor Advised Fund will continue with the surviving spouse making distribution
3. The Donor Advised Fund will continue with the surviving children making distribution
Why would someone choose to set up a donor advised fund with the NC Baptist Foundation?
While each person’s situation is unique, the following will provide some of the most common reasons. All may not apply to any one donor.
1. You can pass the mantle of giving to family. By involving the spouse and children, the excitement of giving and doing for others in Christ’s name may be passed to the next generation.
2. Sometimes individuals need a large tax deduction now but are undecided about which Christian ministries to support.
3. Some individuals want to make one large gift now but have portions of the gift given to specific Christian ministries over a period of years.
4. Some individuals want to request specific amounts distributed as the needs of a chosen Christian ministry are more clearly known.
5. Some individuals like the flexibility of choosing charitable beneficiaries on an annual basis while living and then the satisfaction of knowing that a permanent endowment will support Christian ministries beyond their lifetime.