Consider a donor-advised fund during the pandemic


ROCHESTER, N.Y. (WROC) — A donor-advised fund is a great way to support non-profits during the COVID-19 pandemic and it might also help ease your tax burden.

CPA Jamie Block of the New York State Society of CPAs discussed the benefits of donor-advised funds Thursday during News 8 at Sunrise.

Block said the CARES Act allows people to deduct $300 of cash donations to charity while taking the standard deduction this year. Normally, you can only deduct charitable contributions if you itemize your tax return deductions.

Block noted that with the standard deduction being much larger now, it is wise to bunch multiple years of donations into one year. This can be done easily with the use of a donor-advised fund. “A donor-advised fund is an investment account that enables you to donate highly appreciated securities,” she said. “Donating appreciated securities is advantageous for two reasons. One, you get to deduct the fair market value of the security on the date donated – not what you paid for it. Two, you do not have to report any gain for the difference of what you paid for the security and the value on the donation date – the amount the security appreciated.”

Block added a donor-advised fund allows you to donate to various charities at any time – not all at once. Also, you can invest the money in the donor-advised fund and allow it to grow until you donate the money to charities.

Contact your custodian like Fidelity or Schwab or go through the United Way or Community Foundation to open up a donor-advised fund. Even some religious groups have donor-advised funds. Block said it’s best to shop around to find the one that provides the most flexible option and has the lowest fees.

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