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Donor-advised funds, a charitable giving tool offered by community foundations, major financial institutions, and various mission-driven organizations, continue to rapidly grow. In fact, the largest charitable organization in America is a donor-advised fund: Fidelity Charitable.

DAF providers enable hundreds of thousands of donors a simpler way to deploy billions in charitable capital by offering "savings accounts" of sorts for charitable dollars. These types of funds receive a lot of attention at the end of the year. And, rightfully so. Many people focus on their charitable giving in the period between Thanksgiving and the end of the year.

The holiday season also happens to be an incredibly busy time for most people. One of the many benefits of a DAF is how it removes the time pressure to make strategic gifts during the busiest time of the year due to a donor’s tax-deductible gift coming as soon as he or she contributes to the fund.

The explosive growth of DAFs hasn’t gone unnoticed by critics who see them as an unnecessary intermediary between donor and charity. They argue that disconnecting the tax-benefit gift from the charity-benefiting gift hurts the nonprofits and their work.

However, these critics miss the point. Philanthropy isn’t simply about giving money away. It’s about doing so wisely and in a way that advances the donor’s vision of a better world.

As with any tool, a DAF’s power can either be squandered or be utilized to do more good with less work. Strategically leveraging a DAF account can allow a donor to give away more — and to do so more effectively — than they might have otherwise.

Consider the following three ways that a donor-advised fund can help donors — perhaps you — give more strategically and increase overall charitable impact.

The first way is simple. With a DAF, you buy yourself time to make decisions. The late date for Thanksgiving caught a lot of us off-guard, creating a mad rush into the holiday season and the year’s end. Thoughtful charitable decision-making shouldn’t be a casualty of the calendar. Open the fund now, and set your charitable money aside for when things are calmer.

Secondly, after seeing your tax situation this year, you might be considering a bunching strategy for your giving. Taxpayers on the cusp of itemizing or taking the new, higher standard deduction may see benefit in “bunching” charitable contributions for two or three years into a single year. In doing so, you might benefit your tax situation over multiple years. Gifting that money to a DAF allows you to level out your charitable giving over multiple years instead of leaving your favorite charities in a lurch.

Lastly, use a DAF to give away more than you otherwise might have. Unlike last December, the stock market is up at this year’s end. Take advantage by gifting your appreciate stock into a donor-advised fund. This way, you can give the capital gains to charity instead of the government, as well as give a little more because of the additional tax savings. Giving out of assets lets you give more.

Alternatively, perhaps it was a big cash year for you because of the sale of a business, an inheritance, or some other good fortune. A donor-advised fund offers an excellent way to both mitigate your tax responsibility and to buffer against years when your cash flow might be lower by building your charitable giving nest egg now.

The 1,000+ DAF providers in the U.S. are as diverse as the donors they help. Community foundations take a geographic focus. Your alma mater may even offer one. My fund is among those with a mission focus (for us, that’s preserving liberty).

Whatever your giving focus, find a way to increase your giving in 2020. Consider a donor-advised fund as a helpful tool for increasing your charitable impact in the new year.

Peter Lipsett is vice president of DonorsTrust, a mission-driven donor-advised fund in Alexandria, Virginia.

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