FedEx Professionals: The Benefits of Giving

In recent times, donor-advised funds (DAFs) have emerged as a significant philanthropic tool that FedEx employees and retirees can take advantage of. They combine the ease of management with potential tax benefits, making them a popular choice for charitable giving. The National Philanthropic Trust’s 2023 Donor-Advised Fund report revealed a substantial growth in the use of DAFs. Notably, there was a 9% increase in grants from DAFs in 2022, amounting to $52.16 billion, alongside a similar growth in contributions.

DAFs present several advantages. They provide immediate tax deductions and simplify the process of charitable giving, while also allowing for the potential growth of assets. Furthermore, they facilitate the establishment of a philanthropic family legacy, enabling families to involve their children in philanthropic activities and instill a sense of community engagement.

Tax implications are a crucial aspect of DAFs. According to Richard Pon, an advisor and CPA, there are maximum limits on charitable contributions based on adjusted gross income. For cash donations, the limit is 60% of the adjusted gross income, while for non-cash donations, like securities, it is 30%. Carlos Lowenberg, founder and CEO of The Lowenberg Group, highlights that DAFs are particularly beneficial for wealthy investors and business owners, especially those preparing to sell their businesses. Contributing public or privately held stock to a DAF can significantly impact net after-tax proceeds from business sales. Notably, donations of privately held stock qualify for deductions without incurring capital gains taxes.

However, DAFs are not without controversy. Cinira Baldi, Chief Development and Communications Officer at Project Hope, points out that there are no mandated timelines for disbursing funds from DAFs. This lack of regulation can lead to funds sitting idle for years, posing challenges for charities dependent on these donations. The substantial amounts held in DAFs remain untapped for urgent charitable needs.

It is essential for FedEx workers and retirees to consider the permanence of their contributions to DAFs. Kyle Christopherson, Senior Vice President of Client Success at REN, reminds donors that once a donation is made to a DAF, it cannot be retrieved. Donors must ensure that their charitable giving does not compromise their immediate financial needs. Christopherson also advises clients to review their top charity choices annually and make timely donations from their DAFs to ensure that the funds effectively support their intended causes.

In summary, DAFs offer a streamlined and tax-efficient method for charitable giving, allowing FedEx professionals to make a lasting impact while potentially benefiting from financial advantages. However, donors must navigate the complexities of tax implications and ethical considerations surrounding the timely distribution of funds. As DAFs continue to grow in popularity, it is imperative for donors to use these tools responsibly, balancing their philanthropic goals with their financial realities.

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Consider a donor-advised fund (DAF) as a well-tended orchard. Just as an orchard offers a bountiful harvest year after year, a DAF provides a continuous stream of charitable contributions. Planting an orchard requires an initial investment, much like setting up a DAF. Once established, both the orchard and the DAF require some oversight, but they primarily grow and yield benefits with time. For those nearing retirement or already retired, the orchard symbolizes a legacy of nurturing and growth, just as a DAF represents a lasting philanthropic impact. The fruits of the orchard can be shared with many, paralleling how a DAF allows for sustained and meaningful charitable giving. This analogy reflects the enduring value and satisfaction that comes from both cultivating an orchard and contributing to a DAF.