One thing to do in 2017 to lower your tax bill: start a donor-advised fund

Author National Philanthropic Trust

December 28, 2017

Wondering how the new tax laws may impact you? A donor-advised fund is one solution to help you reduce your tax bill in 2018 and beyond.

President Trump signed the Tax Cut and Jobs Act of 2017 on December 22nd. While the charitable deduction remains unchanged, the standard deduction is nearly doubling, which means fewer people will itemize their charitable deductions. Experts are recommending that Americans give more to charity in 2017 in order to reduce income this year when tax rates are higher and the tax benefit is available to more people.

A donor-advised fund is one way to accomplish this. You get a charitable tax deduction in 2017 for your contribution to a donor-advised fund, when it may be more valuable, and you can recommend grants to your favorite charities over time. The flexible timing of donor-advised funds also supports the suggestion from the New York Times and others that Americans “bunch” their charitable gifts.

“Bunching”—which is essentially pre-paying—means you make multiple years of charitable donations in a single year to maximize the tax benefit. There is concern that bunching will disrupt regular giving that charities rely on. Bunching your contribution to a donor-advised fund would allow you to maximize the tax benefit in a single year, but grant to your favorite charities as you normally do so the causes you love can count on your annual support.

There are only TWO days left to open and fund a donor-advised fund in 2017. Learn more about how to open one and the deadlines for giving here