DONOR-ADVISED FUND A donor-advised fund usually receives contributions from many unrelated donors (though donors' accounts are kept separate), while a private foundation is typically funded by one source (an individual, family, or corporation). While donors to a donor-advised fund may only offer advice regarding grants and investments, private foundations offer the donor exclusive control and direction over grants and investments, an attractive feature to some philanthropists. SUMMARY: A donor-advised fund offers an easy way for a donor to make significant charitable gifts over a long period of time. A donor- advised fund is similar to a private foundation but requires less money, time, legal assistance, and administration to establish and maintain. A donor-advised fund also enjoys greater tax advantages than a private foundation, However, various legal restrictions imposed on private foundations are not imposed on donor- advised funds, and the federal income tax treatment of a donation to a private foundation is less favorable than that afforded to a donor-advised fund. Because contributions to a donor- WHAT IS A DONOR-ADVISED FUND? DOUGLAS STIRLING Strling Wealth Management Technically, a donor-advised fund is an agreement between a advised fund are considered gifts to a "public charity." they may allow a greater income tax deduction than contributions to a private foundation. Furthermore, private foundations are required to distribute a minimum of 5% of their assets each year. Donor-advised funds have no such minimum distribution requirement (though some funds follow the 5% rule voluntarily), and donors may be allowed to let their accounts build up tax free for many years and be distributed only upon a specified date or upon the occurrence of a specified event. donor and a host organization (the fund) that gives the donor the right to advise the fund on how the donor's contributions will be invested and how grants to charities (grantees) will be made. Contributions may be tax deductible in the year they are paid to the fund, subject to the usual limitations, if they are structured so they aren't considered earmarked for a particular grantee. Though they can bear the donor's name, donor-advised funds are not operated as separate entities like private foundations are, but are merely accounts held by the fund, The fund owns the contributions and has ultimate control over grants. Also, donor-advised funds do not need to fulfill many of the reporting and filing requirements that are imposed on private foundations. And because the fund handes any legal, administrative, and filing requirements (including tax returns), the donor is completely freed from these responsibilities. In addition, since separate accounts within a donor-advised fund are administered as part of the larger host organization, the administrative costs borne by the donor are generally lower than those incurred by a private foundation. The community foundation was the first type of host organization to offer donor-advised funds but, today, many financial institutions offer them, and many public charities have funds or will create a fund upon request HOW DOES A DONOR-ADVISED FUND WORK? It's easy to set up a fund account. The donor first signs a letter of understanding with the fund, establishes an account, names the account, and recommends an investment strategy. Then, the donor makes required minimum contributions of assets, which may include cash, marketable securities, and other types of assets, depending on the fund. The required minimum contributions vary from fund to fund, but are usually less than those required by private foundations. ENDOWED FUNDS vS. NON-ENDOWED FUNDS Endowed funds only distribute income, not principal. These funds invest a donor's assets in perpetuity for potential growth over time. Because they are permanent, endowed funds provide a lasting memory of the donor's philanthropic nature. Non-endowed funds permit a donor to make ongoing recommendations for grants up to the entire fund balance (principal and income). Such funds remain non-endowed, unless the donor specifies otherwise, until such time as the donor or the donor's designees are no longer providing advice to the fund. During life, the donor (or the donor's designee) can make ongoing, non-binding recommendations to the fund as to how much, when, and to which charities grants from the fund should be made. Additionally. the donor can offer advice to the fund regarding how contributions should be invested. The donor may suggest that, upon death, grants be made to charities named in his or her will or other legal instrument such as a revocable living trust. Or the donor may designate a surviving family memberts) to recommend grants. However, the fund is not obligated to follow any of the donor's suggestions - hence the name "donor- advised fund." As a practical matter, though, the fund will generally follow a donor's wishes. Distributions to grantees are typically identified as being made from a specific donor's account, but they can be made anonymously at the donor's request. GIFT AND ESTATE TAXES There are no federal gift tax consequences because of the charitable gift tax deduction, and federal estate tax liability is minimized with every contribution since donated funds are removed from the donor's taxable estate. If you would like to be added to our email list, please send an email to: TheStirlingGroupaJanney.com. DONOR-ADVISED FUNDS VS. PRIVATE FOUNDATIONS Both private foundations and donor-advised funds allow a person to take tax deductions now and decide later to whom to give. Both donor-advised funds and private foundations can be named to honor the donor, a family member, or other person. Head of the Strling Wealth Management at Janney. Douglas String is Executive Vice PresidentWealth Management and Chartered Advisor in Philanthropy in Janney's Sewickley office. Recognized by Forbes Magazine as a Best-h-State Advisor, Doug's experience and expertise, as well as the dedication of his team, has guided investors through some of ife's most challenging financial situations. STIRLING WEALTH MANAGEMENT at Janney Montgomry Scott LLC Stirling Wealth Management was founded on a simple belief that everyone's economic and life situation is unique. We keep that simple principle at the forefront when creating tailored financial plans for our clients. As veteran Financial Advisors, we have vast experience researching the marketplace and advising our clients on the products and services that best meet their needs. We are dedicated to learning about your personal goals, and together we will use that information to build a solid financial Janney STIRLING WEALTH MANAGEMENT AT JANNEY MONTGOMERY SCOTT LLC 2200 Georgetowne Drive, Suite 400, Sewickley, PA 15143 www.stirlingweathmanagement.com 1 724.934.2953 I in CANNIY MONTGOMERY ScoT LLC - MEMBER NYSE. FINRA SPC www.JANNIY COM plan focused on your specific needs. DONOR-ADVISED FUND A donor-advised fund usually receives contributions from many unrelated donors (though donors' accounts are kept separate), while a private foundation is typically funded by one source (an individual, family, or corporation). While donors to a donor-advised fund may only offer advice regarding grants and investments, private foundations offer the donor exclusive control and direction over grants and investments, an attractive feature to some philanthropists. SUMMARY: A donor-advised fund offers an easy way for a donor to make significant charitable gifts over a long period of time. A donor- advised fund is similar to a private foundation but requires less money, time, legal assistance, and administration to establish and maintain. A donor-advised fund also enjoys greater tax advantages than a private foundation, However, various legal restrictions imposed on private foundations are not imposed on donor- advised funds, and the federal income tax treatment of a donation to a private foundation is less favorable than that afforded to a donor-advised fund. Because contributions to a donor- WHAT IS A DONOR-ADVISED FUND? DOUGLAS STIRLING Strling Wealth Management Technically, a donor-advised fund is an agreement between a advised fund are considered gifts to a "public charity." they may allow a greater income tax deduction than contributions to a private foundation. Furthermore, private foundations are required to distribute a minimum of 5% of their assets each year. Donor-advised funds have no such minimum distribution requirement (though some funds follow the 5% rule voluntarily), and donors may be allowed to let their accounts build up tax free for many years and be distributed only upon a specified date or upon the occurrence of a specified event. donor and a host organization (the fund) that gives the donor the right to advise the fund on how the donor's contributions will be invested and how grants to charities (grantees) will be made. Contributions may be tax deductible in the year they are paid to the fund, subject to the usual limitations, if they are structured so they aren't considered earmarked for a particular grantee. Though they can bear the donor's name, donor-advised funds are not operated as separate entities like private foundations are, but are merely accounts held by the fund, The fund owns the contributions and has ultimate control over grants. Also, donor-advised funds do not need to fulfill many of the reporting and filing requirements that are imposed on private foundations. And because the fund handes any legal, administrative, and filing requirements (including tax returns), the donor is completely freed from these responsibilities. In addition, since separate accounts within a donor-advised fund are administered as part of the larger host organization, the administrative costs borne by the donor are generally lower than those incurred by a private foundation. The community foundation was the first type of host organization to offer donor-advised funds but, today, many financial institutions offer them, and many public charities have funds or will create a fund upon request HOW DOES A DONOR-ADVISED FUND WORK? It's easy to set up a fund account. The donor first signs a letter of understanding with the fund, establishes an account, names the account, and recommends an investment strategy. Then, the donor makes required minimum contributions of assets, which may include cash, marketable securities, and other types of assets, depending on the fund. The required minimum contributions vary from fund to fund, but are usually less than those required by private foundations. ENDOWED FUNDS vS. NON-ENDOWED FUNDS Endowed funds only distribute income, not principal. These funds invest a donor's assets in perpetuity for potential growth over time. Because they are permanent, endowed funds provide a lasting memory of the donor's philanthropic nature. Non-endowed funds permit a donor to make ongoing recommendations for grants up to the entire fund balance (principal and income). Such funds remain non-endowed, unless the donor specifies otherwise, until such time as the donor or the donor's designees are no longer providing advice to the fund. During life, the donor (or the donor's designee) can make ongoing, non-binding recommendations to the fund as to how much, when, and to which charities grants from the fund should be made. Additionally. the donor can offer advice to the fund regarding how contributions should be invested. The donor may suggest that, upon death, grants be made to charities named in his or her will or other legal instrument such as a revocable living trust. Or the donor may designate a surviving family memberts) to recommend grants. However, the fund is not obligated to follow any of the donor's suggestions - hence the name "donor- advised fund." As a practical matter, though, the fund will generally follow a donor's wishes. Distributions to grantees are typically identified as being made from a specific donor's account, but they can be made anonymously at the donor's request. GIFT AND ESTATE TAXES There are no federal gift tax consequences because of the charitable gift tax deduction, and federal estate tax liability is minimized with every contribution since donated funds are removed from the donor's taxable estate. If you would like to be added to our email list, please send an email to: TheStirlingGroupaJanney.com. DONOR-ADVISED FUNDS VS. PRIVATE FOUNDATIONS Both private foundations and donor-advised funds allow a person to take tax deductions now and decide later to whom to give. Both donor-advised funds and private foundations can be named to honor the donor, a family member, or other person. Head of the Strling Wealth Management at Janney. Douglas String is Executive Vice PresidentWealth Management and Chartered Advisor in Philanthropy in Janney's Sewickley office. Recognized by Forbes Magazine as a Best-h-State Advisor, Doug's experience and expertise, as well as the dedication of his team, has guided investors through some of ife's most challenging financial situations. STIRLING WEALTH MANAGEMENT at Janney Montgomry Scott LLC Stirling Wealth Management was founded on a simple belief that everyone's economic and life situation is unique. We keep that simple principle at the forefront when creating tailored financial plans for our clients. As veteran Financial Advisors, we have vast experience researching the marketplace and advising our clients on the products and services that best meet their needs. We are dedicated to learning about your personal goals, and together we will use that information to build a solid financial Janney STIRLING WEALTH MANAGEMENT AT JANNEY MONTGOMERY SCOTT LLC 2200 Georgetowne Drive, Suite 400, Sewickley, PA 15143 www.stirlingweathmanagement.com 1 724.934.2953 I in CANNIY MONTGOMERY ScoT LLC - MEMBER NYSE. FINRA SPC www.JANNIY COM plan focused on your specific needs.