Another potentially tax-advantaged technique for charitable giving is the use of a Donor-Advised Fund (DAF). A DAF can be established with most brokerage firms, as well as with some community foundations and charities. Once your DAF account is established, you transfer funds to the account and these funds are then invested and held for future donation to charities in accordance with your instructions. With a DAF, you receive your charitable donation tax deduction up front when you transfer money to the DAF account. So, the DAF can be a vehicle to “pre-fund” future years of charitable donations. For example, you can fund a DAF with an amount equal to your planned charitable donations for the next 5 years and claim an income tax deduction for the full amount in the year of funding. This “bunching” of charitable deductions into a single year can produce significant tax savings for individuals who generally claim the standard deduction on their personal tax return. By accelerating future deductions into the current year, you can inflate your total deductions to an amount in excess of the standard deduction for that year, thereby generating tax savings you would have lost if you were limited to the standard deduction every year.
Having funded the DAF, you would then make donations to charities from the DAF over the next 5 years (or any other period you choose). You would claim no tax deduction for the donations to charity as they are made from the DAF, because you would have already deducted the donation amount up front. But in the meantime, you would enjoy a further tax benefit: the funds invested in the DAF grow tax-free while they are held, because the DAF is exempt from income tax.
If your DAF is held with Fidelity Charitable, Schwab Charitable, or BNY Mellon Charitable Gift Fund, you can donate to GDFCF quickly and easily via DAF Direct. If you donor advised fund is not listed here, please direct your DAF sponsoring organization to make checks payable to Guanacaste Dry Forest Conservation Fund and mail to:
Guanacaste Dry Forest Conservation Fund
4780 Main Road
Huntington, VT 05462
GDFCF Tax ID is 94-3280315.
If you have any questions or would like more information, please reach out:
GDFCF Executive Director
GDFCF Development Advisor