Maximize Year-End Giving: The Benefits of Opening a Donor Advised Fund with One Valley Community Foundation
As the end of the year approaches, many families and individuals are exploring how to make the biggest impact with their charitable giving. The pressure of numerous causes and year-end tax considerations can make giving decisions feel overwhelming. One Valley Community Foundation makes year-end giving simple, strategic, and highly impactful with our Donor Advised Funds (DAFs), which are designed to align with your long-term philanthropic goals.
What is a Donor Advised Fund?
A Donor Advised Fund, or DAF, is like a personal giving account for charitable donations. You put money or assets, like cash or stocks, into the fund and get an immediate tax deduction. From there, you can take your time to decide which charities you want to support. Think of it as a flexible charitable savings account: you add money when you’re ready, get tax benefits right away, and then use the funds to support nonprofits over time. It’s a great way to organize and plan your giving, all while making it easier to support the causes that matter to you.
Immediate Tax Benefits with a DAF
Opening a DAF with One Valley before December 31 provides an immediate tax deduction for 2024. With a minimum contribution of $5,000, you’ll receive a deduction right away, allowing you to decide where to donate over time. For those looking to maximize their tax benefits without feeling rushed into last-minute donation decisions, a DAF is an ideal solution.
Bunching Donations to Maximize Deductions
The "bunching" strategy is a tax-saving approach where you bundle several years of charitable contributions into a single year, exceeding the standard deduction and maximizing your tax benefits. A DAF is perfect for bundling: make a large, tax-deductible contribution to your DAF at year-end to secure a tax benefit now, then support nonprofits over future years at your own pace.
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Let’s say Sarah typically donates $5,000 each year to various nonprofits. In a regular year, her total deductions—including charitable gifts, mortgage interest, and other deductions—fall just below the standard deduction, so she ends up taking the standard deduction and doesn’t fully benefit from her charitable giving on her taxes.
To make the most of her donations, Sarah decides to “bundle” her giving through a Donor Advised Fund (DAF). Instead of giving $5,000 each year, she contributes $15,000 (three years’ worth) to her DAF in one year. This large donation allows her to surpass the standard deduction, enabling her to itemize deductions that year and secure a larger tax benefit.
With her DAF funded, Sarah now has $15,000 available to grant to her favorite charities at her own pace. Over the next three years, she can recommend grants from her DAF as she originally intended—around $5,000 per year. Her contributions are safely reserved in the DAF, potentially growing if invested, and ready to be distributed to the nonprofits she values. This way, Sarah maximizes her tax savings in the year of her bundled donation while maintaining flexibility to support her favorite causes consistently over time.
Simple and Flexible Setup
Starting a DAF with One Valley is simple—just complete a simple form, review an agreement, and transfer assets. Once set up, your DAF acts like a “charitable checking account,” allowing you to support nonprofits as you wish without feeling pressured to decide immediately. You’ll have the freedom to support causes that resonate with you and the flexibility to adjust giving as your priorities evolve.
Personalized Philanthropic Support
With One Valley, you’ll have access to personalized philanthropic consulting. Our team can help you clarify your values, explore your long-term giving goals, and connect with vetted nonprofits that align with your mission. This support ensures your giving is impactful and deeply meaningful.
Making a Local Impact with Your Values at Heart
DAFs at One Valley empower donors to make a real difference in Gallatin County and beyond. Today, One Valley manages 54 distinct funds on behalf of 42 donors, with over $22 million in total assets. In 2023 alone, those funds helped to provide $2.6 million in transformative and essential support to 301 nonprofits, with 86% of those funds distributed in Gallatin County.
Flexible Asset Transfers
One Valley makes funding a DAF simple and flexible with options to contribute cash, stocks, real estate, and other assets. Transferring appreciated assets directly to a DAF can help you avoid capital gains taxes and maximize your impact, enhancing both your tax savings and your charitable reach.
Make an Impact with Confidence
Opening a Donor Advised Fund with One Valley Community Foundation is a smart, impactful way to optimize tax benefits while building a legacy of giving. To learn more, contact President & CEO Bridget Wilkinson at bridget@onevalley.org or 406.587.6262 x50. Whether you’re looking to simplify your philanthropy, maximize tax benefits, or make a lasting difference, One Valley is here to support your journey every step of the way.