Good News about Donor Advised Funds

Understandably, nonprofits often worry that donor advised funds may delay or diminish their donors’ contributions. In reality, though, donor advised funds can be very helpful to boost financial support for your mission. Three fundamental concepts are important to gaining a better understanding of how donor advised funds work at the East Tennessee Foundation (ETF).

Many Options Are Available at the East Tennessee Foundation

It is important to note that a donor advised fund is just one of many types of funds that an individual, family, or business can establish with ETF. You are more likely to be aware of donor advised funds than other types of funds, because they are frequently covered in financial media, and also because your organization might have received grants from specific donors through their donor advised funds. Dollars in donor advised funds are already set aside for charitable giving, and it is very convenient for donors to use their funds to support favorite organizations.

The East Tennessee Foundation Encourages Donors to Give Directly

Rest assured that the team at ETF encourages donors to give directly to their favorite charities when that is the best strategy to achieve the donor’s estate planning, tax, and charitable goals. When that is not a viable option, though, both the donor and the charity benefit from the donor using a donor advised or other type of fund at ETF. Examples include cases where the donor wants to give a complex asset, such as real estate or closely-held stock, or needs to plan out several years of giving to address fluctuating income levels and tax liability. Some donors also prefer to give anonymously, and a donor-advised fund can help with that.

Donor Advised Funds Are Becoming Increasingly Popular

Donor advised funds are attractive vehicles to help donors organize their giving. In turn, donor advised fund sponsors—including community foundations like ETF—continue to channel billions of dollars in contributions annually to thousands of charities through these vehicles. When donors begin giving through a donor advised fund, their annual support for organizations often increases significantly, underscoring donor advised funds’ potential to deepen long-term donor engagement.

The East Tennessee Foundation is always happy to provide an overview of how these vehicles work and how they can benefit both your donors and your organization. Please reach out anytime.

This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.