Simplify charitable giving paperwork for tax season

Lee's Summit JournalMarch 28, 2014 

There are just a few more weeks until April 15 arrives and tax season is officially over. For people who support a number of charities one typical tax time task is tracking down all your tax receipt letters required for any contribution of $250 or more. If you are in this boat right now you might want to consider creating a donor advised fund to help simplify and organize your charitable giving.

A Donor Advised Fund is a cost efficient alternative to a private family foundation and can help you simplify and organize your giving to charitable organizations that you care about. A number of entities provide donor advised funds including The Truman Heartland Community Foundation. When working with us, this is how a Donor Advised Fund works.

You make a gift to the Truman Heartland Community Foundation – cash, appreciated stocks, real estate or other assets. We set up a special fund in your name, family name or other name of your choice. You receive the tax deduction when this gift is made and a tax receipt letter from me. Your gift is invested and grows tax free. You can immediately start making grants by making recommendations to us to support organizations that you care about. We verify they are a 501-c-3 nonprofit and handle all the administrative work of sending a check with a letter indicating the source of the gift, or it can also be anonymous if you wish. It’s that simple.

Come tax time, you don’t have to worry about tracking down receipt letters for all those grants you made throughout the year from your fund. The only tax receipt letter you need is the one you received from me when you made your gift to your Donor Advised Fund. You can make additional gifts to your fund at any time and will receive quarterly statements showing your fund’s investments earnings and grants made.

Setting up a private family foundation is much more complex and requires the expertise of an attorney. It also requires filing a tax return and paying an excise tax of 1-2 percent. Tax deduction contribution amounts are also more limited for a private foundation. There are many advantages of a Donor Advised Fund versus a private foundation.

A Donor Advised Fund is a great tool to help you simplify and organize your charitable giving and can be established with a gift of $5,000 or more with the Truman Heartland Community Foundation. We have many people in the community take advantage of this charitable giving tool and would be pleased to share more with anyone interested.

 

Phil Hanson has been the president of the Truman Heartland Community foundation since January 2010. Raised in the Raytown area he went to Rockhurst University for his undergraduate and UMKC for his MPA.

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