Donor-Advised Funds and the Uncertainties of the Fiscal Cliff

Author National Philanthropic Trust

December 27, 2012

We are four days away from tipping over the “fiscal cliff” and Washington does not yet appear any closer to a solution. A number of proposals will reduce or eliminate the charitable tax deduction. In my last blog post, I wrote about the dramatic impact that augmenting the deduction could have on giving in the U.S.—reducing giving by $10 billion or more, according to some estimates.

The uncertainty around the charitable tax deduction has fueled giving, particularly to donor-advised funds. We have seen an enormous increase in contributions to NPT donor-advised funds over this same time last year. While overall growth in donor-advised funds has been multi-year trend, we attribute a large part of this recent, year-end boom to the economic uncertainties the fiscal cliff represents. But it is also due, in part, to the appealing tax benefits and giving flexibility that donor-advised funds can offer.

Philanthropists can contribute to a donor-advised fund before December 31st and receive the current charitable tax benefits, while making grants to charities in future years when the deduction may be less beneficial or nonexistent.

For more information about deadlines and contributions instructions, view our form.