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In season of giving, consider donor-advised funds

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Charles Eberly is managing partner of SevenBridge Financial Group in Harrisburg.
Charles Eberly is managing partner of SevenBridge Financial Group in Harrisburg. - (Photo / )

At SevenBridge Financial Group, an independent financial advisory firm based in Harrisburg, we work with a number of high-net-worth clients in the community – both corporate clients and entrepreneurs. We also work with a number of privately held businesses. And because many business owners are asked to give, we assist with an overall gifting plan.

This is the time of year for year-end planning and the discussions often focus on charitable giving. At SevenBridge, we are proponents of donor-advised funds. Donor-advised funds are the fastest-growing charitable giving vehicle in the U.S. because they are one of the easiest and most tax-advantageous ways to give to charity, and they are of no cost to set up. Yet, when we recommend donor-advised funds to our Pennsylvania clients, most have never heard of them.

People in our community have traditionally given to their churches or other local charities. However, we have found that when we set up a donor-advised fund for them, their giving is taken to a different level. Charitable giving becomes more of a plan and is incorporated into taxes, estate planning, investment strategies and appreciated securities. As a result, we work with clients on long-term giving strategies and, consequently, their donations tend to be larger.

We have found that, when our business-owner clients are in the preparation phase of selling their closely-held business, we raise the topic of charitable donations and we discuss the option of donating shares of their private business into a donor-advised fund. We are currently working with several clients in this situation and they end up saving on taxes and reducing capital gains while supporting their favorite charities.

We recommend that people in our area take a more strategic look at their charitable giving. At SevenBridge, we recommend that our clients have a short- and longer-term goal of giving. We encourage clients to continue to donate to their local community nonprofits. But it’s also a good idea to take time to consider the possibility of endowing a scholarship or making a significant donation to a college or national nonprofit. We work with clients to develop a donation timeline often based on pay-outs or liquidity from the sale of a business.

In addition, we urge clients to consider the best donation vehicles. In the past, family foundations were very popular – but today, it’s hard to justify the cost and complexity of family foundations when there are simpler and cheaper options.

Charles Eberly is managing partner of SevenBridge Financial Group, a wealth management firm in Harrisburg.

SevenBridge Financial Group LLC (“SevenBridge Financial Group”) is an SEC-registered investment advisor located in the Commonwealth of Pennsylvania. SevenBridge Financial Group and its representatives are in compliance with the current filing requirements imposed upon SEC-registered investment advisors by those states in which SevenBridge Financial Group maintains clients.

SevenBridge Financial Group provides the SevenBridge Donor Advised Fund (“DAF”) to clients, via the Dynasty Network Charitable Gift program, maintained by Dynasty Financial Partners (“DFP”), Crown Philanthropic Solutions, LLC (“Crown”) and Renaissance Charitable Foundation (“RCF”). The DAF allows the Advisor to actively manage assets that have been donated to and are owned by RCF, while charging an investment management fee. The Advisor’s DAF participation is in conjunction with approval by the RCF Investment Committee for the Advisor to operate as an advisory manager on the platform. Crown and RCF are independent companies and unaffiliated with DFP or the Advisor.

The views expressed in the referenced materials are subject to change based on market and other conditions. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. The information provided herein does not constitute investment advice and is not a solicitation to buy or sell securities.

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