Tax Savings Today with Donor Advised Funds

What is the best Christmas gift you’ve ever received? Questions like that make our minds retreat to childhood, when we poked and rattled wrapped packages away from the watchful eyes of mom or dad. I think it’s interesting that I can remember many of those childhood gifts but not remember some of the gifts I’ve received as an adult. There's an aura of mystery around Christmas that embeds those memories upon our young minds.

I remember getting a hot wheels race track one year. With joy I snapped those yellow plastic sections of track together and clamped the end to the kitchen counter. With delight I raced those cars down the track into the family room, barely hearing my father’s admonition to keep the cars picked up so that no one would step on one and “break their neck.”Another year I got G.I. Joe’s. And yet another one of those electric football games complete with the plastic players that ran circles on thin sheet metal. I was able to enjoy those gifts for several years, and those memories are ever present in my mind.

The most famous verse in the Bible is found in John 3:16, which states that “This is how God loved the world: He gave his one and only Son, so that everyone who believes in Him will not perish but have eternal life.” (NLT) The Bible proclaims that “God loved the world (the object of his love) so much that he gave (love implies action) his one and only Son (the gift)…”

Every gift reveals something about the giver of the gift. What does the gift of Jesus reveal about God? I think it tells us that God is loving. He’s generous and extravagant. He’s thoughtful and aware of our needs. When God gave Jesus he took the initiative and gave first. He didn’t give in response to anything we have given or done. And God certainly gave the best and the most. When we think of Jesus, we realize that the gift is extravagant. And the gift is extravagant to awaken our faith.

But every gift also reveals something about the recipient of the gift. It tells of the value the giver places upon the receiver. When God gave the gift of his Son, we see something about who He is. But we also see something about how he feels about each of us and the value he places upon our lives.  

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Al and Ellen were faced with a tax challenge. They owned $500,000 worth of appreciated stock that they wanted to sell, but faced substantial capital gains tax if they were to do so. They did not need additional income, but wanted to create a legacy through charitable giving that would impact their community and their community of faith. The couple decided to donate the stock to a Donor Advised Fund at their Church, which would allow them to make recommendations each year as to which ministries they would like to benefit. This allowed them the opportunity to diversify their support depending upon needs and affinities therefore honoring their donor intent.

By doing so, they received an immediate tax deduction in the amount of the stock which reduced their tax burden. The stock was sold upon donation and the proceeds reinvested in a balanced portfolio designed to produce an average return of 6%, allowing them to make annual distributions of approximately $25,000.

Finally, they determined to include their children in the decision process for distributions to further their legacy of generosity.

The gift of Jesus Christ is free to all who are willing to receive him. With such generous grace, we carry the privilege of sharing that gift with both our neighborhoods and the nations. When Jesus commissioned the 12 Disciples to go into their first ministry tour, he challenged them by saying, “Give as freely as you have received!” (Matthew 10:8, NLT), reminding us that the gifts of God are not to be consumed, but to be shared. 

You and I have benefited from the generous gifts of God. Through Jesus we have been entrusted with spiritual, mental, emotional, and financial gifts to steward for the sake of the Kingdom of God. Your Church has provided you with the resources you need to properly manage the financial gifts you have been given. Part of good stewardship is maximizing your gifts for the sake of the Gospel and ensuring that the wealth you charitably share is consistent with your values as a Christian person of faith. 

 By using a tool such as a Donor Advised Fund, you can maximize your gifts by reducing taxes, and be a part of funding Kingdom work today!