Donor Advised Funds
A donor advised fund is an account for your donations. You get your tax break as soon as you deposit money into your DAF, and you can elect to have the funds invested and distribute donations to your favorite nonprofit at any time you want. Hold on to your funds for growth or gift it for impact.
Importantly, the AMuslimFund handles all the administration for your donor advised fund, investing in sharia compliant and halal mutual funds. We vet the nonprofits that you want to support, compile a donor report to help you track your charitable giving, and you get one single tax receipt for each tax year even if you have made distributions to multiple organizations.
Frequently Asked Questions
No. A donor advised fund in a simple alternative to establishing a private foundation. Instead of contending with the onerous financial and legal requirements of maintaining a private foundation, many philanthropists opt instead for donor advised funds that bear their names.
If you already have a foundation, you can terminate it in several straightforward steps, transfer the remaining assets to a donor advised fund at the American Muslim Fund, and continue to pursue your charitable objectives with ease & efficiency through your named fund.
We distribute grants to only tax exempt s 501(c)(3) organizations operating in the United States. We do not fund political campaigns or lobbyist organizations.
We help you to track your donor advised fund in two ways. First, we provide administrative support by providing statements on your donor advised fund account balance, so that you can easily track your donations. At the end of each year, we provide a consolidated tax receipt so you don’t have to track down each individual donation in order to do the taxes.
Second and more importantly, we encourage you to track the collective impact you have had through your donations by assessing how the charities you have supported stack up in their mission delivery. We provide a customized report card that updates you on your supported nonprofits’ progress.
There are five primary tax benefits of setting up a DAF:
- Once the funds or assets are contributed to the DAF, you receive the maximum federal tax deduction available in that year immediately, regardless of when the funds are ultimately distributed to charities. The IRS does mandate some limitations, depending upon your adjusted gross income (AGI):
-Deduction for cash – up to 60 % of AGI.
-Deduction for securities and other appreciated assets – up to 30 % of AGI.
-There is a five-year carry-forward for unused deductions.
- Donating appreciated investments has the additional tax benefit of the donor not recognizing capital gains upon contribution. Additionally, the donation of investments would be recognized at the fair market value.
- Your DAF account appreciates tax free from investments employed by American Muslim Fund.
- DAF accounts are not included in estate taxes.
- Your DAF contribution reduces the impact on the alternative minimum tax (AMT).
Donor advised funds under $20,000 are $125/year. Donor advised funds above $20,000 incur a fee of roughly 0.65% per year. A minimum balance of $500 must remain in the account to stay active.
Donor advised funds also present an opportunity to honor a family member or loved one, to celebrate a milestone, or to create a family legacy or a meaningful memorial tribute. You may name your donor advised fund after you or in honor of a family member, a friend or an organization (e.g., the Adam & Soraya Malik Foundation). Any distributions from the fund carry your family name now and for the next generation. Once it’s established, anyone can make tax-deductible contributions to your fund at any time, in any amount.
When we distribute funds from donor advised funds to secular nonprofits, the donations are clearly marked as something from the American Muslim Fund and hence the Muslim community. These consolidated donations speak louder than individual or anonymized donations and serve to showcase to the wider society the collective power of Muslim philanthropy.
Once the assets are in a donor advised funds, AMuslimFund has legal control over the funds. You as the donor retain the right to recommend to AMuslimFund to make grants to organizations of your choice at any time.
AMuslimFund then carefully reviews all grant recommendations and conducts due diligence checks to ensure that all recommended recipients are legitimate charities and are eligible to receive the grant. If nonprofit does not meet our criteria, we will make every effort to suggest alternatives that fulfill your philanthropic intent.
Yes. When you create your fund, you may nominate a spouse, your children, or other beneficiary to serve as the fund’s advisor, or make decisions about the fund when you pass away.
There is no annual minimum distribution requirement for donor advised funds, unlike private foundations which are required to distribute 5% of their assets. However, to ensure that donated funds do reach worthwhile causes, we ask that you make a distribution at least once in any three year period.
Donor advised funds are great for individuals or families who make cumulative philanthropic contributions of $2,500 or more and want an efficient, cost-effective solution that gives them the flexibility to make grants to multiple charities.
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Yes. You may donate to your donor advised fund complex or unusual assets such as real estate or appreciated securities. By transferring such assets or limited partnership interests to a donor advised fund, you can avoid capital gains taxes & receive an immediate fair-market-value tax deduction, while also supporting the causes you care about.
Timing is critical. To enjoy the tax benefits, the American Muslim Fund must be included in your planning before the sale is initiated. Contact us to discuss more.