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Is a Donor Advised Fund right for me?

The Tax Cuts and Jobs Act of 2017 increased the standard deduction on our tax forms. The higher standard deduction is wonderful for many people, but it has an impact on charitably-minded donors who don’t meet that new level for itemizing their deductions. For some who fit that category, a Donor Advised Fund (DAF) might be a solution.

A DAF allows a person to “bundle” a larger donation at one time, invest it with the WELS Foundation or other financial institution, and exceed the standard deduction. In the following years, the donor can direct money to their church or other charity in amounts that match, or exceed, their initial plan.

Here is an example: Joe donates $8,000 a year to his church and other charities. That amount no longer exceeds the standard deduction. If Joe “bundled” his donations for the next three years ($24,000) and created a DAF, he would exceed the standard deduction in the year of his gift. The money would be invested for potential growth, and Joe will make his annual charitable gifts of $8,000 over the coming years. In fact, if his invested money grows, he could give even more than his initial plan.

A DAF is a good option for those who have the money to make the initial gift, have a desire to exceed the standard deduction on their tax return, and like the idea of giving more to their favorite charities than they initially thought was possible.

If this seems like a good option to consider, contact either your financial planner or me ( or 262-677-4051x1116) to discuss the benefits.

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