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The Drexel Donor Advised Fund
Why did Drexel University establish its Donor Advised Fund?
Drexel created its Donor Advised Fund (DAF) to partner with donors who share the University's vision and mission. Drexel's DAF provides opportunities to support Drexel, as well as other charitable organizations, with a single, convenient contribution. The following questions and answers explain the advantages and operations of the Drexel DAF:
What are the advantages of giving to Drexel's DAF?
Partnership with Drexel - The DAF allows you to share in Drexel University's mission to fulfill our founder's vision of preparing each new generation of students for productive professional and civic lives while also focusing our collective expertise on solving society's greatest problems.
One Stop Giving - The DAF provides a convenient, cost effective opportunity for charitable giving, particularly the gifting of appreciated assets, like stocks or mutual funds, which would otherwise be difficult or inconvenient to split between your favorite charities. Give now; recommend charities later. And you receive just one concise receipt for income tax purposes.
Charity Recommendation - In addition to supporting Drexel University's schools and programs, the DAF allows you to recommend other charities to receive gifts from your Fund.
Advantages over Commercial Donor Advised Funds and Private Foundations – Drexel seeks to develop long-lasting relationships with its DAF donors. This relational approach is a refreshing alternative to the computerized, internet, telephone-tree driven world of commercial donor advised funds. Also, its efficiency and simplicity make the Drexel DAF an attractive alternative to the expense and complexity of a private foundation.
How does the DAF benefit Drexel University?
Under the terms of the Drexel DAF, the University receives 50% of each distribution made from your Fund. The portion it receives is dedicated to positively impact Drexel students in a college, school or program that you choose.
How Does the Donor Advised Fund Work?
- An account is established in your name when a gift is made to the Fund.
- The assets given (cash, appreciated stock, or real estate) are held by the Fund and are managed and invested by the University
- You can recommend that gifts be made from the Fund to Drexel and to other charitable organizations (as long as the mission or values of the selected charities are not inconsistent with those of the University).
- Your recommendations are reviewed by the Fund’s Selection Committee. When recommendations are approved, the gifts are made directly from your account within the Donor Advised Fund to the selected charities.
How does the Drexel University DAF differ from a private family foundation?
A DAF and a private family foundation are both established to distribute gifts to charitable organizations, but they differ in many substantive areas.
Administrative Responsibilities - The donor who establishes a private foundation is responsible for administrative and investment duties. Drexel University, in partnership with Morgan Stanley GIFT, performs all administrative and investment functions for the DAF. Drexel avoids the complicated tax reporting of a private family foundation in that the DAF is not required to file any tax returns (although its assets and income are included on the University's Form 990).
Income Tax Advantages - There are a number of additional income tax deduction limitations applicable solely to gifts to private foundations.
- Gifts of cash to private foundations can only be deducted for tax purposes up to 30% of the donor’s adjusted gross in- come, compared to 50% for gifts to a Donor Advised Fund.
- Income tax deductions for gifts to private foundations of marketable securities which have been held for over a year are limited to 20% of the donor’s adjusted gross income, compared to 30% for such gifts to the Donor Advised Fund.
Can I move an existing private family foundation to a Drexel DAF?
Yes. For individuals who have established a private family foundation and have found the administrative, management, and tax aspects to be burdensome, the foundation’s assets can be transferred to an endowment account within a Drexel DAF. The individual and the individual’s family will benefit from Drexel's administration and investment services, while retaining the ability to advise the University as to the timing and charitable recipients of the distributions. In addition, the DAF will avoid any annual investment taxes, which were paid by the private family foundation. And, the advisory role for this endowment fund can also be passed from one generation to the next, fulfilling one of the core motivations for many donors who set up private family foundations.
|Foundation must pay legal and accounting start-up costs.|
|Foundation must prepare tax returns and manage assets, accounting, and records.|
|Cash gifts are tax-deductible up to 30% of donor’s adjusted gross income.|
|Gifts of marketable securities (held over one year) are tax-deductible up to 20% of donor’s adjusted gross income.|
|Tax deductions for gifts of real estate or closely held stock must be reduced by amount of capital gains.|
|Investment income is taxed at 2% annually.|
|Foundation must research activities and tax-exempt status of charitable recipients.|
|Drexel University Donor Advised Fund|
|Donor Advised Fund does not charge start-up costs.|
|All administrative, investment, record-keeping, and tax details are managed by Drexel.|
|Cash gifts are tax-deductible up to 50% of donor’s adjusted gross income.|
|Gifts of marketable securities (held over one year) are tax-deductible up to 30% of donor’s adjusted gross income.|
|Gifts of real estate or closely held stock (held over one year) are deductible at full fair market value.|
|Investment income is not taxed.|
|Drexel researches the activities and tax-exempt status of charitable recipients.|
How can I learn more about Drexel's Donor Advised Fund?
If you have questions or would like further information regarding the Drexel University Donor Advised Fund, please contact David Toll, JD, Senior Associate Vice President, Drexel University Office of Gift Planning at (215) 895-4982 or firstname.lastname@example.org.