Hills Bank Trust Officer
For many individuals and families, charitable giving is more than a financial decision — it’s a reflection of personal values and a desire to make a lasting impact. But as giving becomes more intentional, so does the need for tools that offer flexibility, privacy, and tax efficiency. One option that’s gaining popularity among donors is the non-endowed donor advised fund — a charitable investment account that allows you to contribute assets, receive an immediate tax deduction, and recommend grants to nonprofits over time.
WHY CONSIDER A DONOR ADVISED FUND?
Whether you give regularly or are planning a larger gift, a donor advised fund (DAF) offers several benefits that make charitable giving more strategic and manageable.
- Immediate Tax Deduction, Flexible Giving Timeline
With a DAF, you can make a contribution and claim a tax deduction in the same year, even if you plan to distribute the funds to charities gradually. This is especially useful for donors who want to “bunch” their giving to maximize itemized deductions.
- Support Causes Over Time
There’s no pressure to decide where every dollar goes right away. You can take your time identifying the organizations you want to support and make grants when it feels right.
- Donate Appreciated Assets or Commodities
Many DAFs accept in-kind contributions such as stocks, mutual funds, or even farm commodities like grain or soybeans. These gifts can offer additional tax advantages, such as avoiding capital gains tax or reducing reportable income.
- Maintain Privacy
For donors who prefer to give quietly, a DAF allows for anonymous grant recommendations. The receiving charity knows the gift came from the fund, but the donor’s identity can remain private.
LOCAL VS. NATIONAL PROVIDERS
While large national firms offer donor advised funds, many community-based financial institutions and community foundations also provide this service — often with a more personalized, team-based approach. Working with a local provider can offer the added
benefit of direct support and deeper community ties.
IS IT RIGHT FOR YOU?
Donor advised funds are typically a good fit for individuals or households who:
- Give at least $10,000 annually to charity
- Want to simplify and organize their giving
- Are looking for tax-efficient ways to donate
- Prefer a more private or long-term approach to philanthropy
Whether you’re supporting local nonprofits, funding scholarships, or planning a legacy of giving, a donor advised fund can help you do more — with less complexity.
Trust Officer Jeff Ritchie, JD, leads Hills Bank’s Trust and Estate team and oversees the Hills Bank Donor Advised Gift Fund with a focus on building lasting relationships and guiding clients through life’s most important financial decisions.
This article is for general informational purposes only and does not constitute tax advice. Please consult a tax attorney for your specific situation.
