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In this episode, Doug is joined by Courtney Tsai, Senior Manager of Charitable Strategies Group at DAFgiving360TM. They delve into the benefits of donor-advised funds (DAFs) and how DAFgiving360 simplifies and enhances charitable giving.
Courtney explains the structure and tax advantages of DAFs, the importance of donating non-cash assets like private business interests and real estate, and how DAFgiving360 supports advisors and donors through complex giving strategies. Courtney highlights that non-cash asset donations can offer substantial tax benefits, and emphasizes the need for professional guidance in these transactions.
If you’d like to learn more about working with DAFgiving360 and the benefits to both you and your clients, review their online resources or request more information.
Related: Maximizing Your Clients’ Charitable Impact Through a Life Insurance Donation
A donor’s ability to claim itemized deductions is subject to a variety of limitations depending on the donor’s specific tax situation.
DAFgiving360TM does not provide legal or tax advice. Please consult a qualified legal or tax advisor where such advice is necessary or appropriate.
Contributions made to DAFgiving360 are considered an irrevocable gift and are not refundable. Once contributed, DAFgiving360 has exclusive legal control over the contributed assets.
Contributions of certain real estate, private equity, or other illiquid assets may be accepted via a charitable intermediary, with proceeds transferred to a donor-advised fund (DAF) account upon liquidation. Call DAFgiving360 for more information at 800-746-6216.
DAFgiving360 is the name used for the combined programs and services of Donor Advised Charitable Giving, Inc., an independent nonprofit organization which has entered into service agreements with certain subsidiaries of The Charles Schwab Corporation. DAFgiving360 is a tax-exempt public charity as described in Sections 501(c)(3), 509(a)(1), and 170(b)(1) (A)(vi) of the Internal Revenue Code.
©2025 Donor Advised Charitable Giving, Inc. All rights reserved. (0325-U11V)
Transcript:
[00:00:00] Doug Heikkinen: This is Advisorpedia's Power Your Advice podcast, and I'm Doug Heikkinen. Today, we have Courtney Tsai with us, who's a Senior Manager of Charitable Strategies Group at DAFgiving360. Courtney is diving into donor-advised funds and how DAFgiving360 makes charitable more easy and more effective.
Courtney, thanks for joining us.
[00:00:24] Courtney Tsai: Thank you, Doug. Great to be here. . .
[00:00:26] Doug Heikkinen: For those who aren't familiar, can you explain what a donor-advised fund account is?
[00:00:31] Courtney Tsai: Absolutely, Doug. So donor-advised funds, or DAFs, provide a simple, tax smart way to give to charity. They're like a charitable investment account, with the main purpose of helping donors to maximize their support of the charities and causes that are most important to them.
Donors can contribute cash, securities, or other non cash assets, and they're eligible for a charitable deduction in the year that they make the gift. After the gift is complete, the donor retains two main advisory privileges. First, the right to advise on investments in the donor advisement account.
That account can enjoy tax free growth over time. And second, the right to advise on grant making. Donors can recommend grants from their accounts to other eligible public charities of their choice at any time.
[00:01:23] Doug Heikkinen: Can you tell us a little bit about DAFgiving360?
[00:01:27] Courtney Tsai: Sure. DAFgiving360 is one of the largest national donor-advised funds.
As an independent 501c3 public charity, our mission is to increase charitable giving in the U. S. We do this by offering DAFs and related philanthropic resources that make charitable giving efficient and effective. In 2024, DAFgiving360 donors granted more than 7.7 billion dollars to charity, with more than 1.3 million grants to over 151,000 charities. That averages to more than 21 million dollars to charity each day. And since our inception 25 years ago, our donors have granted more than 40 billion to charity, supporting over 270,000 charities.
[00:02:18] Doug Heikkinen: Wow, 40 billion to charity since inception is an incredible milestone.
What's your role in supporting advisors and their clients?
[00:02:27] Courtney Tsai: I am part of the Charitable Strategies group as a subject matter expert on gifts of complex assets and other complex giving strategies. We are a team of professionals. We specialize in knowledge about non cash asset contributions to charities, and we aim to provide helpful information to advisors, their clients, and individual donors to make informed decisions about their charitable transactions.
Donating appreciated non cash assets that have been held for more than one year is a great strategy for advisors with charitably minded clients to be familiar with. It's popular among donors. In fiscal year 2024, about 64 percent of our donor contributions were non cash assets.
[00:03:11] Doug Heikkinen: Can you please explain to our listeners what non cash assets are?
[00:03:16] Courtney Tsai: Of course. A non cash asset is essentially any asset that isn't cash. A few common examples are publicly traded stock, private business interests, commercial or residential real estate, cryptocurrency, life insurance, and collectibles, such as fine art.
[00:03:34] Doug Heikkinen: What's the main reason you recommend that donors gift non cash assets instead of cash?
[00:03:40] Courtney Tsai: Great question. And here's the simple answer. When a taxpayer makes a gift of cash to charity, they're eligible for one tax benefit. That's the charitable deduction for the value of the cash, and that's available to them only if they itemize.
Meanwhile, gifts of non cash assets that, again, have been held for more than one year, provide the taxpayer with two potential tax benefits. One, the tax deduction for the fair market value of the asset, which must be substantiated by qualified appraisal. And two, donors could potentially eliminate the capital gains tax that would otherwise incur if they had sold the assets themselves and donated the proceeds.
The capital gains tax rate is either 15 or 20 percent. And this is why we promote gifting non cash assets, because it increases the amount available for charity by up to 20 percent.
[00:04:31] Doug Heikkinen: Those two tax benefits alone seem like simple, compelling reasons to gift non cash assets. I'd like to dig into a little more specific strategies.
What is one non cash asset that donors often express interest in?
[00:04:44] Courtney Tsai: Well, the first that comes to mind is donating private business interests, such as private C Corps, private S Corps, private LLCs, and limited partnership interests. One significant consideration for this strategy is that business gifts require due diligence by the charity.
For example, the company's governing documents, such as shareholder agreements and bylaws, must be reviewed to understand whether there are any transfer restrictions or embedded liabilities. It takes time for the charity to do its due diligence review, get acceptance of the gift, and complete the paperwork for a valid charitable transfer.
Now, there can be complexities on the donor side as well, such as indebted interests that could trigger negative tax consequences for the donor and the receiving charity. It is very important that the donor have independent tax counsel, as the charity should not be providing tax or legal advice to the donor.
[00:05:38] Doug Heikkinen: Courtney, what other guidance should donors and their advisors seek when considering this strategy?
[00:05:44] Courtney Tsai: Advisors should encourage their donor clients to work with a CPA to fully understand their tax situation when considering gifting complex assets. It's important to consider these donations on a case by case basis and to understand when they're right for your client.
Donating a privately held business interest might not make sense for one client while being an extremely effective strategy for another. At DAFgiving360, we help walk advisors and donors through the process, and we alleviate the complexity for both advisors and their clients by leveraging our expertise from start to finish.
[00:06:22] Doug Heikkinen: Another non cash asset you mentioned earlier was real estate. What kind of real estate can be donated and which donors are good candidates for this strategy?
[00:06:31] Courtney Tsai: Whether it's a family home, income producing property, undeveloped land, or commercial property, donating real estate directly to charity is another great way for advisors to help their clients maximize their donations.
The best candidates for this strategy will be donors who have held property for more than one year and have seen the property appreciate significantly.
[00:06:54] Doug Heikkinen: Do you have any tips for those who are interested in donating real estate?
[00:06:58] Courtney Tsai: We recommend the strategy for debt free property. If there is a mortgage on gifted property, it can be subject to IRS bargain sale rules, which can generate capital gains tax and lower the value of the deduction.
The debt could also be taxable to the charity when the property is sold. I think it goes without saying, but problematic properties generally do not make great gifts. If the client is having a hard time selling that property, they should refrain from gifting unmarketable property to an unsuspecting charity.
That includes timeshares. These are just a few considerations, and we're happy to talk through specific cases with advisors so that they may play a key role in guiding clients on effective options for gifting their property.
[00:07:41] Doug Heikkinen: Are there any other non cash assets that you see often among DAFgiving360 clients?
[00:07:48] Courtney Tsai: Yes. Restricted stock. We see lots of gifts of restricted stock, which are stock that cannot be transferred or sold to the public, including by charities until certain legal and/or regulatory conditions have been met.
And like the others we discuss, this comes with its own considerations. We have a team of experts here at DAFgiving360 who work with many company executives and advisors on such gifts of restricted stock.
[00:08:13] Doug Heikkinen: We discussed why non cash assets can be great for clients to donate from a tax perspective.
But how do the charities handle the assets? Can all charities accept non cash assets, such as restricted stock.
[00:08:28] Courtney Tsai: That's a great question, Doug. And the short answer is no, not every charity is equipped with the infrastructure to accept non cash assets. That's where DAFs come in as a great option for clients looking to donate non cash assets because charities like DAFgiving360 have the resources and expertise to evaluate, receive, process, and liquidate the assets.
And by contributing to a DAF, clients can still donate to the charities of their choice through their DAF account, even if that particular end charity can't accept non cash assets directly.
[00:09:01] Doug Heikkinen: DAFgiving360 has many resources available to help donors and their advisors leverage tax smart strategies to maximize their charitable giving.
Where is the best place to start?
[00:09:13] Courtney Tsai: For advisors with clients considering donating non cash assets, the DAFgiving360 Charitable Strategies Group has specialized knowledge about non cash asset contributions to charities. Our team stands ready to support you from the initial consultation through asset evaluation, Receipt processing and sale.
We strive to provide unbiased guidance while providing communication every step of the way to help you and your clients make informed decisions. We also have a wealth of online resources, including articles that outline considerations for various non cash assets.
[00:09:51] Doug Heikkinen: Courtney, what else? Is there anything else you'd like to share?
[00:09:55] Courtney Tsai: So I want to reemphasize how non cash assets can be an extremely effective and tax smart way to give to charity. Given the complexity and the various consideration for these assets, advisors play an important role in guiding clients on options that are best suited for each unique situation. I also want to emphasize the time that these gifts can take, and we would encourage you to come to DAFgiving360 early on in these gifting conversations so that we can talk through the process up ahead. We are here to help.
[00:10:27] Doug Heikkinen: Great information, Courtney. Thank you so much for joining us.
[00:10:31] Courtney Tsai: Thank you, Doug.
[00:10:32] Doug Heikkinen: To learn more about DAFgiving360, please visit DAFgiving360.org. Please follow us for timely updates on LinkedIn and Facebook at Advisorpedia. For everybody at Advisorpedia, our producer, Julia Smollen, our engineer, Tory Miller, and the Power Your Advice podcast team.
This is Doug Heikkinen.