In the realm of trusts-and-estates attorney Paul Gordon Hoffman, planned charitable giving is every bit as personal as it is professional. A founding member of the nationally recognized Los Angeles law firm Hoffman, Sabban & Watenmaker, APC, Paul routinely advises clients on matters related to charitable planning and how it fits into the scheme of their larger estate plans.
Away from the office, the attorney practices what he counsels clients. For Paul and his wife, Sue, giving back plays a prominent role in their lives, and their donor-advised fund (DAF) at the Jewish Community Foundation of Los Angeles (The Foundation) provides the ideal charitable vehicle for doing so.
While the Hoffmans sustain a range of causes of shared importance to them through the DAF they established in 2012, the charitable fund also enables them to respond generously and nimbly in times of crisis, including support in the aftermath of catastrophes such as the Santa Barbara wildfires and Louisiana hurricanes. Most notably, though, it is their giving during the current global pandemic that has taken on personal importance, with the couple stepping up their giving for COVID-19-related response and relief efforts.
“What is our DAF for if not to be used in a once-in-a-lifetime event like the current pandemic?” Paul commented, adding that The Foundation’s online COVID-19 Response Hub provided a source to help them identify vetted causes and programs worthy of support.
He continued: “Our DAF enables us to support a wide range of causes more efficiently and strategically, provides us with a lot of flexibility, and affords us access to The Foundation’s helpful guidance with our giving when we need it, as it has done during the pandemic.”
Why did the Hoffmans, as well as hundreds of others, select Foundation DAFs as the best vehicle to conduct their philanthropy?
Streamline Your Giving
DAFs offer many of the advantages of a private foundation without the costs and administrative complexities of a private foundation.
One of the smartest ways to enhance your philanthropy is by establishing a DAF—essentially a charitable-giving account—at The Foundation. It provides convenience and flexibility for your donations, allowing you to give more strategically. You can fund a DAF with a variety of assets and can recommend grants to your favorite charities, Jewish or secular, on your own schedule. You may select investment options to potentially grow your fund as The Foundation streamlines the entire process by handling all the administrative responsibilities, freeing you to focus on the joy of giving.
The benefits of a donor advised fund at The Foundation include:
- With an initial contribution of at least $5,000 in cash, you can create your own donor-advised fund, receive an immediate fair-market-value charitable tax deduction, and have your charitable dollars in one convenient account where you can maintain total privacy about your giving.
- By using appreciated assets such as marketable stocks and bonds, real estate, or interests in a limited liability company to fund your DAF, in addition to the fair-market-value tax deduction, you will avoid all capital gains tax on your gift. And, through thoughtful pre-planning, a DAF can even help maximize tax benefits in the event of the sale of a business.
- You can recommend grants of $100 or more to a nearly limitless range of nonprofit organizations, Jewish or secular, locally, nationally, or in Israel via 24/7 online access to your fund. Plus, you can review your fund’s balance and giving history and add to your fund anytime with a credit card or online check.
- If your fund’s balance is $50,000 or more, you can access several types of investment options providing diversity and potential tax-free growth of your fund’s assets.
- Additionally, our Center for Designed Philanthropy offers complimentary philanthropic consultations and educational programs on giving more strategically. For example, we can help you determine which causes to support based upon your own passions and fields of interest.
- Finally, DAFs afford the ability to name your children as successor donor advisors, effectively creating the closest equivalent to a private family foundation without the cost and administrative hassles of establishing and maintaining one.
Studies indicate that children whose parents actively discuss giving are significantly more likely to become charitable adults themselves than those with parents who do not. This same research shows that charitable families volunteer more and consider themselves happier and closer-knit. That’s why we suggest engaging your family early on to communicate your charitable values and decision-making process.
To encourage their children’s philanthropic values, many Foundation donors have opened DAFs for their children and grandchildren as well, enabling them to experience firsthand the fulfilling power of giving at an early age. Upcoming articles in this four-part series include instilling meaningful giving in future generations of your family, as well as considering charitable legacies.
DAFs, the Tax-Reform Act and Estate Taxes
The income-tax reforms in 2018 changed the standard deduction and raised numerous questions about its impact on charitable giving. The need for well-planned strategies to maximize the tax benefits of your philanthropy is essential. DAFs offer an ideal vehicle for maximizing the deductibility of your donations, including approaches such as charitable-gift “bunching” or via contributions of appreciated assets.
With respect to estate planning, a DAF can be the recipient (upon death) of all or a portion of the donor advisor’s IRA or other retirement plan benefits. The family then controls 100% of those funds for charitable-giving purposes from the DAF. Comparatively, if the heirs take the retirement funds personally, they would be subject to tax in some degree irrespective of whether estate taxes are applicable.
For the Good of Community
The only cost associated with a DAF at The Foundation is a modest annual fee which covers several important administrative and portfolio management functions. A portion of that fee is reinvested in The Foundation’s own grantmaking to numerous causes throughout our community—creating, in effect, philanthropic sustainability.
To explore smart giving strategies—and the fulfillment that comes with it—at this time when it matters most, as well as ways to amplify the impact of your giving, please visit www.jewishfoundationla.org or contact us at (323) 761-8704, or firstname.lastname@example.org.
Steve Gamer is vice president of advancement for the Jewish Community Foundation of Los Angeles, which manages more than $1.3 billion in charitable assets and distributed $129 million in grants in 2019 to causes locally, nationally and around the world. He has 30 years of experience working with individuals, families, corporations and foundations to help them achieve their philanthropic vision.