Donor-Advised Funds
WHAT IS A DONOR-ADVISED FUND?
A donor-advised fund (DAF) is a flexible, tax-efficient charitable giving tool. Individuals, families, or corporations make an irrevocable, tax-deductible contributionāsuch as cash, securities, or other propertyāto the WELS Foundation. Then, at any time afterwards, they may recommend grant distributions to the WELS ministries that are meaningful to them.
Donor-advised funds have grown in popularity with the rise in the standard deduction, allowing donors to “bunch” charitable contributions in a single year to itemize deductions while distributing gifts to ministries over time.
WELS Foundation’s donor-advised fund program offer a simple, lower-cost alternative to a private family foundationāproviding the same opportunity to make a lasting impact without the administrative burden.
KEY FEATURES
- Minimum Gift: $10,000 to establish a fund.
- Personalization: You may personalize your fund by naming it and recommending distributionsāanonymously if you chooseāto any WELS Ministry listed in the WELS Yearbook.
- Distribution Guidelines: Distribution recommendations must be at least $250. Up to 50% of the annual distribution requests may be directed to qualified, non-WELS charitable organizations.
- Legacy Giving: You may also designate successors (typically for up to 20 years after your lifetime) to continue making distribution recommendations, ensuring ongoing support for your home congregation or other cherished WELS ministries.
BENEFITS OF A DONOR-ADVISED FUND
- Joyful Giving: Support the Lordās work in the area closest to your heartāincluding WELS congregations, mission work, schools, and other ministries.
- Tax Advantages: You receive an income tax charitable deduction in the year you contribute, and you can avoid capital gains tax on gifts of long-term appreciated assets.
- Flexible Timing: Make your gift now and decide later which WELS ministries to support.
- Family Stewardship: Involve your children and loved ones in recommending grants, passing on the joy and responsibility of Christian giving.
Donor-Advised Fund FAQs
What are the investment options for my donor-advised fund, and when is each appropriate?
You have two investment options: a money market account and the WELS Balanced Fund.
Money market account: ideal for short-term distributions. These are lower investment returns, but no market volatility.
WELS Balanced Fund: more appropriate for longer-term distributions. Offers the potential for growth over time, but comes with potential market volatility.
What organizations can I recommend to receive distributions from my fund? Can I recommend distributions to non-WELS charities?
You may recommend distributions to 501(c)(3) organizations that are either WELS ministries or ministries in fellowship with WELS. While the primary intent of the fund is to support WELS ministries, distribution recommendations may also be directed to qualified non-WELS charities.
What distribution amounts are allowed from my donor-advised fund?
Minimum distribution: $250
Maximum distribution: Up to 100% of the fund’s current market value
How can I add funds to my donor-advised fund?
You can contribute cash, marketable securities, and/or other assets (subject to WELS Foundation board approval) to your donor-advised fund at any time. Gifts of appreciated securities or real estate may also offer capital gains tax benefits.
What are the annual expenses of my donor-advised fund?
The donor-advised fund fee schedule is competitive and aligned with those of larger discount investment companies (like Schwab, Fidelity, and Vanguard).
| FUNDING ASSET | MIN. INITIAL GIFT | ANNUAL ADMINISTRATION FEE* | DISTRIBUTION FEE*** |
|---|---|---|---|
| Cash | $10,000 | First $500,000: 0.60%** | 0.15% per distribution |
| Marketable Securities | $10,000 | $500,001 to $1,000,000: 0.30% | 0.15% per distribution |
| Illiquid Property (board approval required) | $10,000 | $1,000,001 to $2,500,000: 0.15% | 0.15% per distribution |
| More than $2,500,000: Call | 0.15% per distribution |
*Administrative Fee: processed quarterly based on quarter-end market value, or at time of distribution. **or $100 (whichever is greater)
***Minimum Distribution: $250, Maximum Distribution: Up to 100% of the fund’s current value
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