Benefits of Donor Advised Funds from Dave H.

A few months ago as we were saying goodbye to 2022, most business owners were faced with the annual ritual of preparing for tax deadlines and wondering if we took the appropriate steps in the preceding year that will take advantage of the many tax saving opportunities that exist.  Many of us in the homebuilding industry have enjoyed many prosperous years over the last decade and, despite COVID and the recent downturn, 2022 turned out to be another great year.  Our business was no exception, and towards the end of 2022 I found myself looking for new ways to effectively reduce our taxable income.

Over the years I have been aware of Donor Advised Funds (DAF’s), but never really took the time to learn what they are really about and how they work.  After meeting with our financial advisor and learning more about DAF’s, I could kick myself for not taking advantage of this earlier.  As a long-time volunteer and board member of the Home Builder’s Foundation, as well as a contributor to other charities, this program was just what our company was looking for.  We were able to set up DAF in the name of our company and contribute a lump sum to this fund at the end of the year.  In our case, we set aside the amount that we anticipate contributing over the next three years.  Our taxable income for 2022 was reduced by the total amount, resulting in a significant tax savings in year where we needed every deduction we could find.  The best part is that we now have an investment-grade fund that is set aside specifically for charitable giving, and it is earning interest at much higher rate than just sitting in a checking or savings account.

As with any investment fund, you will need to consult with your financial advisor or CPA to learn more about the requirements of setting up and using this fund for your charitable giving.  As our industry enters what many anticipate will be a few slower years, it’s nice to know that we have funds already set aside that will allow us to continue our support of such wonderful organizations like the Home Builders Foundation. – Dave Highfield, Principal Fortress Framing

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