Charitable Planning
Building wealth carries a responsibility to give back
The question isn’t whether to give. It’s whether you’re giving in a way that works.
Most families give the same way: a check in December, a few more scattered across the year, a shoebox of receipts, and no real sense of whether any of it was structured well.
That’s not a generosity problem. It’s a planning problem — and it’s usually the last part of a financial plan anyone gets around to fixing.
A charitable account you name, fund, and advise
A donor advised fund is an account you establish for charitable giving. You contribute to it, take your deduction in the year you contribute, and then recommend grants to the charities you choose — on your own timeline rather than the calendar’s.
The contribution is irrevocable. Once the money goes in, it goes to charity. What you keep is the timing, and the choice of where it lands.
Two situations make it especially worth a conversation.
Use Case One
You’re giving cash while holding appreciated stock
This is the most common and most expensive charitable habit we see. A family writes a $10,000 check from their checking account while a position they bought years ago sits in their brokerage account at four times what they paid for it.
Contributing that stock directly to a donor advised fund instead generally accomplishes two things at once. You may avoid recognizing the capital gain you would have triggered by selling it, and the full fair-market value is generally available to grant — subject to IRS limitations and your individual circumstances.
The charity receives the same support. The difference shows up on your tax return, and in the low-basis position you no longer have to figure out how to unwind.
This is also why a donor advised fund pairs well with a concentrated position you’ve been reluctant to sell for tax reasons. Charitable intent and portfolio concentration are two problems that can sometimes be solved with the same transaction.
Use Case Two
You want to pull several years of giving into one
Say you give $10,000 a year to an organization you care about. You’ve done it for years and you plan to keep doing it.
Spread across five separate years, that giving may produce no tax benefit at all — if $10,000 in charitable deductions isn’t enough to push you past the standard deduction, you take the standard deduction anyway and the gift changes nothing on your return.
Concentrating those same gifts into a single contribution changes the math. Contribute $50,000 to a donor advised fund in one year — five years of giving, funded at once — and you may be able to itemize in that year. Then you recommend $10,000 in grants annually for the next five years, exactly as before.
From the charity’s side, nothing changed. They receive $10,000 a year, same as always.
This approach tends to be most useful in a year when income is unusually high — a business sale, a large bonus, an exercised option, a Roth conversion. The deduction is worth more in a high-income year, and that’s often the year you’re least likely to be thinking about charitable giving.
A note on growth: assets in a donor advised fund are invested, and any growth within the fund is not subject to capital gains tax. If the fund grows over the years you’re granting from it, more money may ultimately reach the organizations you support than you originally contributed. The reverse is also true — investments can lose value, and a decline would reduce the amount available to grant. Investing involves risk, including possible loss of principal.
Two smaller problems worth mentioning
The paperwork
Twelve organizations means twelve acknowledgment letters and twelve chances to lose one before April. One contribution to a donor advised fund means one acknowledgment, one account, one record.
The next generation
Successor advisors let you name children or grandchildren to advise the fund after you. That turns an annual giving decision into something the family does together, while you’re still here to guide how it’s made.
Worth a conversation if you’re…
- Facing an unusually high-income year — a business sale, a large bonus, an equity event
- Holding a concentrated, low-basis position you’ve been reluctant to sell
- Giving consistently to several organizations and tracking it all by hand
- Near the line where itemizing stops making sense
- Building a legacy plan and want charitable intent written into it rather than assumed
- Running a business and thinking about what your giving looks like after you exit
It’s a poorer fit if your giving is modest and occasional, or if you want the flexibility to redirect a gift back to yourself or your family. Contributions are irrevocable.
How it works
Contribute
Make an irrevocable, tax-deductible contribution of cash, publicly traded securities, or other eligible appreciated assets to a fund established in your name. Contributions cannot be returned.
Invest
The assets are invested according to a strategy you select with your advisor. Any growth within the fund is not subject to capital gains tax. Investing involves risk, including possible loss of principal.
Recommend grants
Recommend grants to IRS-qualified 501(c)(3) organizations on your own timeline. There’s no requirement to grant the full balance in the year you contribute. The sponsoring organization retains final authority over all grants.
We use one ourselves
Vintage runs its own donor advised fund — the Vintage Community Impact Fund — funded entirely by the firm’s profits and granted to organizations in the Mid-Atlantic communities where our people live and work. Every employee here can recommend a grant from it.
We didn’t set it up as a marketing exercise. We set it up because our giving had the same problem most families have.
Learn how we’re making an impact in the communities where we live and serve
Start with a conversation, not a form
Whether a donor advised fund fits depends on your income picture, what you’re holding, and what you’re actually trying to accomplish. That’s a thirty-minute conversation, and we’ll tell you if the answer is no.
Vintage Financial Partners and LPL Financial do not provide tax or legal advice. Please consult your tax and legal professionals regarding your individual situation. The examples shown are hypothetical and for illustrative purposes only. They do not represent any specific individual or situation and are not a projection of results. Contributions to a donor advised fund are irrevocable and cannot be returned. Deductibility of charitable contributions is subject to IRS limitations, including limits based on adjusted gross income, and depends on individual circumstances. Investing involves risk including possible loss of principal. No strategy assures success or protects against loss. Grant recommendations are advisory; the sponsoring organization retains final authority over all grants.