Why donor-advised funds are the right choice for philanthropic endeavors

The Schaefer Present Corte Investment Group, from left, Robert Present, Richard Schaefer and Gustavo Corte

Many well-known and wealthy families have funded their most cherished causes by establishing private family foundations. Now a growing number of high-net-worth families are turning to donor-advised funds (DAFs) to maintain their family tradition of philanthropy.

“DAFs are a hot topic among the families we work with,” says Gustavo Corte, a financial advisor in Tucson, Arizona, with the Schaefer Present Corte Investment Group at RBC Wealth Management–U.S. “They are emerging as a more affordable and easier-to-establish option for families that want to give back over time.”

To create a DAF, an individual must work with a parent organization such as a community foundation or another qualified 501(c) (3) non-profit that acts as the administrator of the fund over its lifetime. Financial advisors provide clients with valuable advice when it comes to goals, and tax advantageous strategies for their giving.

“We help people articulate their charitable goals, and then realize those goals by supporting organizations that align with their core values,” says Richard Schaefer, with the Schaefer Present Corte Investment Group.

There are typically no start-up costs associated with a DAF, beyond the individual’s initial contribution. The parent organization charges administrative and investment fees, usually based on a percentage of assets held.

Then there is the question of what assets an individual or family should contribute to the DAF. Many high-net-worth individuals make contributions of cash—perhaps proceeds from the sale of a business or another large asset sale. Contributions of appreciated securities and real estate are also tax-advantageous ways people choose to contribute to their funds.

“Donor-advised funds are a great part of a strategic plan to determine how families can leave a philanthropic legacy,” says Robert Present with the Schaefer Present Corte Investment Group. “They are a nice intergenerational charitable wealth transfer vehicle. The key is to have your financial advisor and their team take part in the discussion.”

RBC Wealth Management, a division of RBC Capital Markets, LLC, registered investment adviser and Member NYSE/FINRA/SIPC.

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