In 2021, the Greater Kansas City Community Foundation helped Kansas Citians and other philanthropists across the country give out $694 million in grants to their favorite charities—the largest amount in the nonprofit’s history dating back to 1978.
Most of that giving came from donor-advised funds.
What’s a Donor-Advised Fund and Who Can Open One?
Most of us have different accounts to keep our financial assets separate for various purposes. You likely have a bank account for everyday expenses, you might have a few different savings accounts—maybe one to save for a down payment on a home or a college fund—meanwhile, many of us have a 401Ks or Roth IRAs to save for retirement too.
So why wouldn’t you have a separate account for charitable giving? That’s exactly what a donor-advised fund is—it organizes and maximizes your giving. With the Greater Kansas City Community Foundation, opening such a fund is quick, easy, and customizable for your needs as an individual, family, or business.
“We work with donors of all levels,” says Leanne Breiby, the vice president of communications for the Community Foundation. “We believe that organized philanthropy should be available to anyone, and our donors can give to any charity across the country.”
You might be wondering why you wouldn’t just open a separate savings account and earmark that account for annual giving or why you might choose a donor-advised fund over starting a private foundation.
With a donor-advised fund, you can give cash, stock, or other assets—including complex assets such as real estate and business interests—and contributions are tax-deductible. Your funds will then be invested, and your charitable dollars will grow tax-free. Plus, donor-advised funds are less expensive to set up (fees start at just $21 per month), and you won’t have to hire staff to manage the account—the Community Foundation will do that part for you.
“Once you’ve contributed to your donor-advised fund, the assets are then invested in the market—you can invest with your financial advisor or we have low-cost, passively-managed investment pools you can choose from—and you can choose your risk tolerance,” says Breiby. “The idea is that the money grows while it’s in the fund, so donors are able to give more with a donor-advised fund.”
Making the Most Out of Your Donor-Advised Fund
Did you know you can make your donor-advised fund a family affair? Many donors open accounts with the intention of leaving behind a legacy of charitable giving so younger generations of the family can continue gifting. Plus, you can use the fund to bring the family together in philanthropic efforts.
“We see families come together over donor-advised funds. It might prompt in-depth discussions about their values, motivations, and family history,” Breiby says. “And if they need help navigating challenging conversations with multiple generations, our philanthropic advisors can help.”
With a donor-advised fund, you won’t be required to donate a specific amount. This means you can use your donor-advised fund to set aside assets throughout your career, invest those assets, and have a larger fund to gift from after retirement.
“Some donors use their donor-advised funds to set aside assets for charitable giving while they’re in their income years. And then, when they retire, they can focus on granting it out,” Breiby says. “We encourage donors to use their funds for grants as soon as they set up the fund, but some donors carefully plan for a major gift they want to make that they might not have been possible without a donor-advised fund.”
Another benefit of donor-advised funds is that during times of unexpected community need, your fund will be there at the ready to use for emergency gifting.
“Because you’ve already set aside assets for charity, you have an account you can easily tap into,” Breiby adds. “At the beginning of the pandemic, for example, we saw a huge jump in grants. When we compared 2020 to 2019, donors were giving more and more often, and we really haven’t seen that drop off. When donors saw there was a need, they responded and they continue to give to causes that make our community a better place for all.”
To learn more about opening a donor-advised fund with the Greater Kansas City Community Foundation visit www.growyourgiving.org. There’s still time to open a new fund before the end of the year—get a jumpstart on your holiday giving!