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Strong Year-End Giving in a Bear Market: Donor Advised Funds Come in Handy

Giving appreciated stock to charitable organizations is certainly a highly-effective tax strategy. During years when highly appreciated stock is in short supply, however, implementing this strategy could be difficult. 

This is when Donor Advised Funds are especially handy. Now is the time to discuss charitable giving with those clients who regularly added to their Donor Advised Funds throughout the market’s long bull run. If these clients intend to ride out today’s market conditions in their personal portfolios, this year’s bear market doesn’t mean the clients’ year-end charitable giving has to take a hit. These clients can use their Donor Advised Funds to support their favorite organizations, sometimes even at levels consistent with prior years. 

Now is also a good time for clients to evaluate the asset allocation in their Donor Advised Funds. The Community Foundation is happy to assist your clients with assessing cash positions in their Donor Advised Funds as a potential source of year-end giving. 

Similarly, for some clients, this may be a year to consider contributing cash to a Donor Advised Fund instead of donating highly appreciated stock (which has been the go-to gift for so many of the last several years). Gifts of cash could reduce the burden on a client’s personal stock positions that may have fallen in value dramatically, giving these positions more time to recover value and, at some point in the future, be contributed to a Donor Advised Fund at a higher value (thereby resulting in a higher tax deduction for the client). 

Finally, consider encouraging your clients who’ve not yet established Donor Advised Funds at the Community Foundation to consider doing so now. Not only does a Donor Advised Fund help to organize charitable giving, but over the long term it can also protect a client’s ability to support favorite charitable organizations even when market conditions are rough.

The team at CFAAC is always happy to help your clients maximize both the philanthropic and financial elements of their charitable giving strategies. We look forward to hearing from you.


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