Better Business with Malvern: Donor Advised Funds – A Unique Way to Give

We’ve all been impacted by COVID.  If we have our health, we’re grateful, even as our hearts go out to those who’ve suffered.  In our communities and on the news, we’ve seen businesses close their doors and people lose their jobs.  With heavy hearts, we’ve paid close attention to the damage the disease has done.  But, as feverish as the news cycle has been with respect to the virus, there’s one especially hard-hit class of enterprise that has received, comparatively, less attention: charities, especially equestrian charities.

As we all know, COVID has kept us in isolation.  But what not everyone knows is that this inability to gather has been especially detrimental to charitable organizations, which rely on social events for a portion of their fundraising.  Did you know that 82% of non-profits use in-person events as key anchors of their fundraising and awareness-building?  Those parties and raffles and 5Ks are, of course, not just for fun; they are essential cashflow engines used to galvanize donors and contributors.  They help fund a tremendous amount of the good works that charities do.

But they haven’t been able to gather in person, for almost a year.  This inability to host events hits home in our equestrian community, profoundly.  And unlike Fortune 500s, nonprofits are usually not sitting on large cash reserves, which only serves to amplify the way in which COVID has negatively impacted them.  Our equestrian nonprofits cannot host those galas, polo exhibitions, or hold special events that are typically their fundraising linchpins.  But even with COVID restrictions, you don’t have to stay shut down going into 2021.  Like you, Malvern cares about giving.  Yes, we contribute funds to worthwhile causes through the Malvern Federal Charitable Foundation and various community efforts.  But we’ve also gone one step further and worked hard to innovate and engender instruments that facilitate your giving.  Malvern is innovating when it comes to finding dynamic, real-time solutions that allow charitable giving to continue uninterrupted, with maximum ease of use, optimized impact, and minimal effort.

We have discussed Malvern Bank’s Affinity Program, which allows account holders to choose a Malvern Bank client charity to receive account interest contributions made by Malvern.  (For more information on the Affinity Program, click HERE.)  Another one of the instruments that we are particularly excited about is the Donor Advised Fund.  It has a unique set of advantages.

  • First, you can contribute right away. You don’t have to wait.  You don’t even have to research charities, if you don’t have the time.  Bell Rock Capital can do that for you, selecting only worthy and fully-validated IRS-qualified charities.
  • Second, you can contribute in any number of ways.   Real estate. Financial instruments. Because our partners are specialists in converting even complex assets into contributions, Bell Rock takes the complexity out of the equation, so that you don’t have to worry about how, and whether, your life insurance policy or stocks will work as charitable contributions.  We do it for you.
  • Third, you can take the deduction immediately, and see the tax benefit without delay.
  • Fourth, if you do have a favorite charity in mind, there is the option to recommend IRS-qualified charities to be recipients of the fund.

We believe that COVID may keep us apart, but it can’t keep us down.  The philanthropic spirit is alive and well, especially in our equestrian community, and we at Malvern Bank are striving to do our part to contribute to it.  If you need assistance in identifying or selecting a charity, please read the following article written by author Laura Fredricks, titled How to Select the Best Charities that are Right for YOU in 2021.

Winning presentation from the 2020 Great Charity Challenge at the Winter Equestrian Festival

In order to present a bit more detail on Bell Rock’s Donor Advised Fund for those who are interested, we were lucky enough to speak with our affiliate partners at Bell Rock Capital, who answered some key questions.

What is a Donor Advised Fund? 


A Donor Advised Fund (DAF) is like a charitable investment account, for the sole purpose of supporting charitable organizations you care about. When you contribute cash, securities or other assets to a Donor-Advised Fund, you are generally eligible to take an immediate tax deduction. Then those funds can be invested for tax-free growth and you can recommend grants to virtually any IRS-qualified public charity.

When you give, you want your charitable donations to be as effective as possible. Donor-Advised Funds are the fastest-growing charitable giving vehicle in the United States because they are one of the easiest and most tax-advantageous ways to give to charity.

You can support virtually any IRS-qualified public charity with grant recommendations from the donor-advised fund—from your local homeless shelter to your alma mater or religious institution. The public charity sponsoring your account will conduct due diligence to ensure the funds granted go to an IRS-qualified public charity and will be used for charitable purposes.

Let’s take a more in-depth look at how a donor-advised fund works.  How does this benefit your charitable giving?

Opening a Donor Advised Fund, the Donor can get an immediate tax deduction, and receive the biggest deduction when selling assets. Flexibility in accepting a variety of simple or complex assets including cash, publicly traded securities, closely held stock, real estate, life insurance policies and more.

Donor-Advised Funds are typically established under the tax umbrella of a sponsoring public charity. Donors may qualify for immediate tax advantages, make grants on a flexible timetable over time, build a charitable legacy, and potentially increase their philanthropic funds for future grant making.

Donating long-term appreciated securities directly to charity—instead of liquidating the asset and donating the proceeds—can help maximize both your tax benefit and the overall amount you have to grant to charity. These donations provide two tax benefits:

  • Become eligible for an income tax deduction of the full fair-market value of the asset, up to 30 percent of your adjusted gross income.
  • Eliminate capital gains tax on long-term appreciated assets, as long as they’ve been held for more than a year.

If you donate cash, via check or wire transfer, you are generally eligible for an income tax deduction of up to 60 percent of your adjusted gross income.

How does it work?  

A client opens a Donor-Advised Fund with a selected DAF sponsor through Bell Rock Capital.  At that point, the client makes the decision when and how much to fund the account.  Once funded, Bell Rock will manage the assets so that the value of the fund keeps growing over time, similar to how an IRA account would work.

Can we put money in now and use for our 2020 taxes?

Unfortunately, taxpayers are not able to back date a DAF contribution.

Do you have to give all the money in a specific year?

No.  Giving timetable can be during lifetime or in perpetuity.  The donor has complete control of when they would like to donate to their donor-advised fund in any year, and at any time.

Can you take the money out?

A contribution to a donor-advised fund is an irrevocable commitment to charity; the funds cannot be returned to the donor or any other individual or used for any purpose other than grantmaking to charities.

How can would one get set up with this type of account?

Contact Sally Lawson SVP, Senior Investment Advisor 610-695-3651 to learn how to get your Donor-Advised Fund started. Establishing a Donor- Advised Fund can be simple and quick.

*Bell Rock Capital does not provide tax advice. We suggest that you consult with a tax-planning professional with about your personal circumstances.

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