Great Opportunity to Use a DAF

What is a DAF you ask?

Donor Advised Funds, or DAFs, have been around for a while. The first ones were set up in the 1930s and Congress gave them formal standing in 1969. And they may be one of the most advantageous tax strategies you’ve never heard of.

The structure is pretty simple. You set up an account with a qualified record-keeper and you fund the account with cash or securities. Like regular donations to charity, you get to take a tax deduction for the amount contributed. Then, once the account is funded, you make disbursements over time out of the fund to federally recognized charities. You can research which charities spend their money wisely on Charity Navigator.

And it's that ability, the ability to disburse funds over time and spontaneously, that really differentiate DAFs from other forms of giving.

This has been a difficult hurricane season. Add in the recent earthquakes and other global calamities and there is a great need for donations both here in the U.S. and internationally. This is exactly the situation where DAFs can play a critical role in getting help to those who need it.

Imagine you got a big bonus two years ago and wanted to donate a large sum of money to those in need. You could have made one big gift to an organization like the Red Cross two years ago, but if you had a DAF you could make that one big gift into a DAF and then over time, give proportionally out of your fund as the need arises. You could have given a portion to an organization helping Harvey victims, then another portion to organization helping with the aftermath of hurricanes Irma, Marie and Jose and then another portion to the victims of the earthquake in Mexico, and then maybe some to your local church. You decide how and when to give.

Here's an simple example of how a DAF can work and be beneficial both from a tax and giving perspective:

Say you bought 400 shares of a tech stock for $10 a share and it ends up going way up in value to $50 a share and you determine that it’s time to sell. Guess who’s coming for capital gains taxes? You know who. So one option is to gift some or all of the appreciated shares directly into the DAF. When you do that, you completely avoid the capital gains tax and you now have the ability to invest the money in a diversified portfolio, allow it to grow and disburse it over time. In this case let’s say you sold ½ for $10,000 and gave the other $10,000 to the DAF. Great, now you’ve got your next several years of giving all lined up and you only paid $1,600 in capital gains taxes vs. $3,200.

Everyone has a unique financial and charitable giving strategy and these accounts aren’t for everyone. Furthermore, there are state tax laws and restrictions that may make them inappropriate for your situation, so best to discuss your specific tax situation with your tax advisor or accountant, but if you would like to learn more about DAF accounts or the investment aspects of the DAF account, we’d be happy to help. 603-438-1874 or Schedule a time to chat that's convenient.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

A Funny Thing Happened After We Crushed Our Fundraising Goal!

If there is one piece of universally accepted business advice, it may be to set goals. Not far behind would be to be sure that your goals are written, specific and measurable. And then we’d probably get to the advice about setting them high and building stretch goals -- goals that are achievable, but will be difficult to pull off.

Personally I’m a big believer in goals and stretch goals but as an investment manager and financial adviser, I am frequently talking about managing risk, setting realistic expectations and being a prudent investor. Don’t go for the home run. Take reasonable risks, earn an appropriate return for taking those risks and generally go for slow and steady returns in a diversified portfolio.

Perhaps true for investments, but perhaps not for charitable fundraising! Through the efforts of many great friends and our family members, we were able to raise over $7,300 for cancer research. For us and our event, it was a record haul. The annual fundraising event has grown from a few hundred dollars, to $1,000, to over $3,000 last year and then we more than doubled our donation from last year! It was a smashing success by every measure. Last week, we delivered our check, took our pictures, delivered all the thank yous and as we were talking about next year, I went into expectation setting mode and started to say things like it would still be great if we do the $3,000 again next year, just in case we can’t repeat the performance, yada, yada, yada.

Well, the good friend who runs the event would have none of it. “Absolutely not, we have to get bigger and raise more every year! Next year, WE WILL BE BIGGER". And you know what? A funny thing happened on the way to the parking lot. Instead of talking about how to repeat the $7,000 we immediately started talking about ways to grow the event even bigger and raise even more. Stretch goals are as much about attitude as they are about execution. We started to think about how to grow rather than just protect and repeat what we had done. After a bit, it almost resembled a plan! (We'll talk about planning and execution another day) But that is exactly what happens when you set any goal, you start trying to figure out how you are going to achieve that specific goal. As we brainstormed about it more, the ideas started flowing, the excitement grew and we now believe that next year will be bigger and better than ever. Attitude started it all.

Everyone should certainly have investing goals and a plan to achieve them, but if you haven't revisited your personal, professional, civic or charitable goals in a while, give it a try and don't be afraid to stretch, you might be surprised how achievable they really are.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Congrats to the NH Community Loan Fund on Another Successful Year!

Just a brief shout-out to the New Hampshire Community Loan Fund on another successful year!

They provide a really compelling combination of loans, capital infusions and ongoing technical assistance and support to help ensure the success of their projects and ultimately, their investments.

Not only do their investments have a tremendous impact and do tremendous good in our communities, they also offer investment opportunities that can provide a very competitive rate of interest to investors of every shape and size.

Building a long-term track record is difficult, but build a long term track record they have!

I'd encourage you to read about all of their success stories in their Annual Report. It has the details of who they help, and why, and the breadth of their impact. According to that very Annual Report, the New Hampshire Community Loan Fund has had 33 years without investor losses. That's impressive.

Congrats to everyone involved with such an impactful organization!!

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.