Donor-Advised Funds: The Gift That Keeps on Giving

Donor-Advised Funds: The Gift That Keeps on Giving

Jacob Pruitt is the president of Fidelity Charitable, the nation’s largest donor-advised fund.

For someone who is new to donor-advised funds, what do they do and how do they work? They’re similar to an investment account. You put money or other assets into an account, and if you itemize, you can claim the tax deduction up front. You have the ability to invest your money in a variety of mutual funds, including funds that focus on environmental, social and governance (ESG) issues. Then you identify an IRS-approved 501(c)(3) nonprofit you want to support. Fidelity Charitable can accept a variety of assets, including publicly held stocks, bonds and mutual funds, shares in privately held companies and private-equity firms, and restricted stock. We’ll convert those assets to cash and put them in your charitable giving account. Even if you don’t itemize, giving an appreciated asset to a donor-advised fund provides a tax benefit because you may eliminate paying taxes on capital gains you’ve accumulated through the years.

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