Last week, we visited the Canadian Cancer Society to celebrate Meredith’s (incredible!) Everest Climb for the Cure. Fundraising for her climb was a team effort, and it was important for us to learn first-hand about the impact her initiative will have.

We have since reflected on what we think should be kept top of mind when making charitable contributions, of any size. Such as the importance of being intentional about the organizations that you support and having an appreciation and understanding of where your funds are being allocated.

One way individuals may provide structure and intention to charitable giving, is through establishing a Donor Advised Fund (DAF). DAFs are administered by a third-party and can manage the donations of individuals, families, or organizations. Donations can be made by cash, securities, life insurance policies, or charitable bequests. The funds accumulated in a DAF can be invested, and growth is tax-free.

Taxes are an important consideration when establishing a DAF. The decision to fund a DAF allows funds to be set aside for charity, without needing to be allocated immediately. Because a DAF is held within a registered charitable foundation, all contributions made receive a charitable donation receipt, which can be used as a tax credit. From there, allocations to charities are considered grants, and do not receive tax receipts.

Depending on which organization a DAF is established with, there are varying minimums which must be kept in the fund at all times. A portion of this amount (a minimum percentage) must be allocated annually for charitable purposes.

One benefit of this structure is the ability to involve younger generations in managing a pool of capital. Families may choose to meet at regular intervals to discuss the investments within their DAF, and the organizations which they wish to support with their annual grant. Successor holders can be named on the DAF, to keep it in the family for generations to come.