Year-End Giving Through a Donor-Advised Fund: Key Dates and Deadlines
As the year draws to a close, the desire to make a meaningful impact through charitable giving grows stronger. The season sparks a spirit of generosity in your clients while charitable organizations issue impassioned pleas for year-end donations. Moreover, the impending tax deadline motivates clients to finalize charitable gifts before the clock strikes midnight on December 31.
As you assist clients in executing their philanthropic plans and identifying assets within their portfolios suitable for donation, consider the flexibility of a donor-advised fund (DAF).
A DAF is a powerful tool for strategic giving, delivering immediate tax benefits. Donors can contribute a wide range of assets now and allocate grants over time, providing the space for your clients to develop a philanthropic strategy.
The good news is, it does not take long to establish a DAF, which means there’s still time to incorporate it into your clients’ 2023 plans if you act now.
Opening a DAF Account
The timeline for opening a DAF differs for account types. While pooled DAF accounts can be established in minutes, segregated DAF accounts involve additional steps, making prompt action essential. We recommend initiating this process in early December, and no later than December 15th.
Recognizing Contribution and Grant Deadlines
Forethought is needed to meet year-end giving deadlines, especially for non-cash gifts.
- Contributing Complex Assets: When it comes to contributing complex assets—such as special securities, private business interest, private/alternative investments, real estate and stock certificates—thorough due diligence is required. Typically, such assets require at least 6-8 weeks for the necessary approvals and transfer procedures.
- Initiating Transfers: While publicly traded stock, cryptocurrency and money wires offer straightforward transfers, they still require some lead time. To ensure your clients’ contributions are counted as 2023 gifts, aim for a mid-December initiation: December 20 for cryptocurrency; December 21 for stocks, bonds and ETFs; and December 22 for money wires. Keep in mind that the transfer of mutual funds takes longer, ranging from 4-6 weeks, depending on their holding location.
- Sending a Check: If your client is considering contributions via check through the U.S. Postal Service, they must be postmarked by December 30 to qualify as a 2023 gift. For checks dispatched via FedEx, UPS or other carriers, ensure they are received by 3 p.m. on December 29th.
- Giving by Credit Card: For last minute gifts, your client can use NPT GivingPoint to contribute online with a credit card up until 11:59 p.m. on 12/31.
- Submitting Grant Recommendations: For NPT to review, approve and send grant payments in 2023, we ask that your clients enter grant recommendations by 11:59 p.m. ET on Monday, December 18. Approved grants will be mailed on or before Friday, December 29.
For further insights and suggested deadlines for contributions involving several types of assets, refer to our comprehensive guide: 2023 Contribution Deadlines.
Get in Touch
As you assist your clients in fulfilling their charitable goals this season, remember that we are your dedicated partner in giving. We are here to help you assess potential donations, gauge feasibility and impact of contributions. Should you have any questions, our Advisor Services team is available to assist you at 888-675-8383 or email@example.com.
NPT does not provide legal or tax advice. This blog post is for informational purposes only and is not intended to be, and shall not be relied upon as, legal or tax advice. The applicability of information contained here may vary depending on individual circumstances.