It is easy to get started with a fund at the Hudson Community Foundation. No cost to set-up.
A simple fund agreement and an initial tax-deductible gift are all you need to create your charitable giving account.
Did you know that DAFs are the fastest growing form of planned giving in America, outnumbering private foundations nearly three to one?
What is a Donor-Advised Fund (DAF)?
A DONOR-ADVISED FUND, or DAF, is a charitable investment account established at a public charity. It allows donors to make a charitable contribution, receive an immediate tax deduction and then recommend grants from the fund over time. Donors can contribute to the fund as frequently as they like, and then recommend grants to their favorite charitable organizations whenever it makes sense for them.
HCF is your partner in charitable giving!
We strive to help donors achieve their philanthropic goals, and work with your professional advisors. We provide a wide variety of giving options, types of funds and complete support services to allow donors to turn their charitable dreams into reality today, and as their permanent legacy.
HCF is a public charity, but does not promote any one charitable cause. Rather, HCF is committed to expanding the capacity of family philanthropy - no matter where you live. You do not need to live in Hudson as we do not restrict grants to a geographical area. You can give to the non profit organizations that matter most to you anywhere in the country. With us, your trusted professional advisor can manage the charitable investments of your fund, regardless of the account size. The fund can be as large as you choose, with a minimum of $5,000.
Who is a Donor Advised Fund (DAF) right for?
A DAF can be a solution for a person(s) who…
- is experiencing an extraordinarily high income year.
- will be selling a highly appreciated asset in the near future (closely held stock, real estate, a business, or something else).
- wants to support several charities through one substantial gift. - no longer writing multiple checks from your checkbook - one tax receipt
- wants maximum flexibility to change the charitable beneficiaries over time.
- wants to involve a spouse, children or grandchildren in their charitable giving.
- currently makes cash gifts to numerous charities, but would benefit by giving appreciated assets instead.
- experiences fluctuating income, but who wants to maintain a steady level of charitable giving.
- is concerned about the complexity or lack of privacy of a private foundation.
- wants to support a charity but is not confident with the organization’s investment management capability.
- wants to keep his or her charitable giving confidential.
- wishes to support a charity but wants to ensure that the gift is used as he or she intended.
Advantages of DAFs
As you explore whether a donor advised fund might be appropriate, consider both the advantages and disadvantages.
Let’s begin with the advantages:
- Easy set up. There are no complicated legal documents. A four page fill-in-the-blank form is typically all that is necessary for you to create a fund.
- Cost efficiency. Administrative Fees vary by sponsor. HCF offers a tiered administration fee based on the fund size. Typically 1% charged to the fund on a quarterly basis. Investment management fees vary based on the investment program of your financial advisor.
- Simplicity. Choose assets to create your fund, one tax receipt, decide later when to grant (allocate) to any U.S. charity throughout the country.
- Tax benefits:
– An immediate and maximum income tax deduction subject to annual AGI limits on the type of assets contributed with five-year carryover.
– No capital gains tax on appreciated long-term assets contributed.
– No estate tax on DAF funds.
– Assets in the DAF grow tax-free.
– If you are subject to AMT, contributions to the DAF will reduce AMT liability.
– No excise taxes on investment income.
– Favorable tax strategies on contributions of S corporation securities.
– HCFoffers alternative gifting strategies to reduce taxes on IRA Required Minimum Distributions (RMD).
- Flexibility. With a DAF, your tax deduction decision is separate from your grantmaking decision. There is no minimum annual grant distribution requirement as is true for private foundations. You can make grants on your own convenient timetable.
- Grantmaking support. Our professional staff can assist with charities you choose for grants.
- Donor recognition. We provide your personal charitable fund letterhead stationery.
- Visibility choice. You can choose to give anonymously or with full recognition.
- Legacy of family philanthropy. A fund that is set up and managed as an endowment will continue grantmaking in perpetuity.
- Educational benefits. Funds that involve both parents and children in grantmaking can be a rich training ground to pass on family values and establish a tradition of family philanthropy.
- An easy decision-making structure. The donor is involved in all decision making, unlike a private foundation whose board must be consulted, which can be a time-consuming process.
- An alternative to a bequest. A straight bequest to your favorite charity is always an option, but a fund with HCF offers you and your family the flexibility of an ongoing legacy.
- The ability to receive donations from private foundations. Private foundations must distribute five percent of assets yearly and, if they have not decided on a specific charity, they could give the five percent to a DAF for later decision making.
Types of Funds:
Hudson Community Foundation offers different types of funds to assist you in designing a charitable giving plan that is exactly suited to your needs and interests.
Donor Advised Funds
Hudson Community Foundation's most flexible fund, under the Donor Advised fund option, you create a fund in your name without naming any specific charitable institutions. Instead, you retain the right to advise HCF on your charitable desires, including who will manage the investments, who will receive grants from your fund, and finally whether you would like to name a successor when you die or make other arrangements.
In the Designated Fund, you name a particular charity or charities to benefit from the fund. Each year, Hudson Community Foundation distributes grants to those charities according to your specifications. You have the assurance of knowing that, if the organization you selected ceases to exist or the purpose of the grant cannot be met, Hudson Community Foundation’s Board will preserve your original intent by redirecting the fund toward the closest similar use. A scholarship is an example of a Designated Fund.
Field of Interest Fund*
Field of Interest Funds allow you to address a cause of particular importance to you without being locked into naming specific charities. Hudson Community Foundation identifies important needs in the community which may be targets of your philanthropy including Youth Education and Recreation; Arts and Culture; Hudson Social Services; Historical and Environmental Preservation. In addition you can specify your own field of interest. You name the purpose of the fund; Hudson Community Foundation’s Board identifies the charitable projects that can most effectively accomplish your goals at any given time.
An Unrestricted Fund is your broadest option. With an Unrestricted Fund in your name, you can reach out to all of the charitable organizations serving the Hudson Community with a focus on: Youth Education and Recreation, Arts and Culture, Hudson Social Services, Historical and Environmental Preservation. Hudson Community Foundation makes grants to those charities and causes that best meet the community’s most pressing needs and promising opportunities. By making a gift or bequest to create an unrestricted fund, you can create a living legacy in your name that will grow and change as the community does.
*Contributions can be made directly from your IRA and avoid taxation
Below are documents to Start Your Own Fund:
- What is a Donor Advised Fund (DAF)
- DAF Program Description
- Gift Acceptance Policy
- DAF Application
- Administrative Fees
- Grant Recommendation Form
Other types of Funds available for you to choose:
- Designated Funds
- Field of Interest Funds
- Scholarship Funds
- Memorial Funds
- Agency Funds
- Special Pass Through Funds For Groups/Organizations