Now that charitable deductions are being reduced for upper-income taxpayers by the new American Taxpayer Relief Act (ATRA), you may be pickier about giving to charity. There’s a way you can make your donations count while keeping the maximum tax benefits allowed under law.
Strategy: Set up a donor-advised fund. As the name implies, you—as the donor—do more than just put up the cash. You’re also able to dole out the money as you see fit.
According to the National Philanthropic Trust, donor advised funds are the fastest-growing charitable vehicle in the United States with an estimated $43 billion in assets at the end of 2012.
Here’s the whole story: With a donor-advised fund, you generally donate a lump sum to a branch of a financial institution, which manages the fund. In return, you can claim a current charitable deduction. Then you designate those charities you deem to be worthy of your generosity. Although the fund legall...(register to read more)