Anthony Amaradio – Explains the Principles of Donor Advised Funds
ALISO VIEJO, CA – Donor advised funds offer a remarkably simple way to give. They take the hassle out of making charitable donations and even offer cost and tax advantages to donors. Despite the clear benefits of DAFs for donors and nonprofits alike, many are still unaware of the basic principles of donor advised funds. Philanthropy guru, Anthony Amaradio, has provided his insight on this increasingly popular vehicle for giving. Coauthor of Faithful with Much: Breaking Down the Barriers to Generous Giving, esteemed speaker on strategic philanthropy, chief strategist of two innovative financial companies, and an active donor himself, Amaradio has an in-depth knowledge of this unique financial tool.
“Donor advised funds are not charities themselves, but accounts held within charitable organizations,” explains Amaradio. The first fund of this kind was opened in 1931 by The New York Community Trust and over the years, more than two hundred thousand funds have been established by educational institutions, community foundations, individual charities, and other associations. Anthony Amaradio states in his book, “A DAF refers to an account that is held within a charitable organization. The charitable organization is a separate legal entity, but the donor’s account is not – it is merely a component of the charitable organization that holds the account.”
The way these funds work is simple, although it can appear confusing at first. A donor moves assets to a public charity, which then moves the assets into a separate account for the donor. The donor can then recommend grants or disbursements in set increments. This allows the donor a great amount of flexibility and ease – cash, stocks, mutual fund shares, or other assets are set in a fund, someone else manages the assets for the donor, while the donor is allowed to suggest which public charities the assets will go to. Once assets are placed in an account, Anthony Amaradio says that it is important to understand that they are no longer under legal control of the donor. “The charitable organization becomes the legal owner of the assets and has ultimate control over it. The donor can advise – not direct.”
What are the advantages? Donor-advised funds offer a low-cost, straightforward tool for making tax-deductible contributions, which is much more cost-effective than setting up a personal foundation to distribute funds and adds great tax advantages for individuals, particularly for setting up IRA assets as planned gifts. DAFs have the framework in place to accept different types of assets and to make the process of receiving tax advantages seamless, something many nonprofits are unable to do. They also make it easy to give consistently, a factor that Anthony Amaradio points out as an important life value for many individuals.
Anthony Amaradio is an active philanthropist and the founder of Select Portfolio Management, Inc. and Select Money Management, Inc., two innovative wealth management companies staffed by handpicked, seasoned professionals who share Amaradio’s commitment to financial stewardship. Aside from helping clients with asset management, he also is frequently invited to speak on behalf of nonprofits and as a strategic philanthropist, educating audiences around the country on his asset protection plans and the importance of stewardship.