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šø #0013 - Triple Your Charitable Impact
Discover how Donor Advised Funds can save you on taxes, grow your charitable impact, and help you leave a lasting legacyāgiving smarter has never been easier.
Shrewd Investor
January 21, 2025 ā¢ Read in 9 minutes
Triple Your Charitable Impact Without Spending More
The overlooked giving strategy the wealthy use to save today and give bigger tomorrow.
Picture this: youāve worked hard, built your wealth, and now youāre ready to give backābut how do you ensure your generosity makes the biggest impact?
What if there was a way to grow your giving while slashing your tax bill?
In this edition, Iāll introduce you to Donor Advised Funds (DAFs)āthe secret weapon for philanthropists who want to do more with less.
But thatās just the beginning.
Whatās driving Trumpās bold move to elevate cryptocurrency as a national priority?
Could the luxury marketās pivot from āquietā to āboldā designs signal a larger economic shift?
And how are todayās mortgage rates rewriting the rules of homeownership?
The answers might surprise youā¦
In todayās issue:
Weekly Wisdom - From Thomas Fullerā¦
Best Links - Trump crypto maniaā¦
Deep Dive - Simple strategy the wealthy use to triple their givingā¦
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WISDOM
"Charity begins at home, but should not end there.ā
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BEST LINKS
The most interesting things happening todayā¦
š MARKETS
Will the market boom or bust on Inauguration Day? Historical trends suggest declines, but recent inaugurations saw gainsā¦
Wall Street just wrapped up its best week since Trump's election, with the S&P 500 climbing 1% and tech giants like Alphabet and Amazon leading the chargeā¦
š REAL ESTATE
Mortgage rates for a 30-year fixed loan have surged to over 7%, the highest in two decades. This spike is making homeownership increasingly unaffordable for manyā¦
āæ CRYPTO
President Trump is set to issue an executive order declaring cryptocurrency a national priority, aiming to position the U.S. as a global crypto leader. This move includes establishing a U.S. Bitcoin reserve and appointing a "crypto czar" to oversee the initiative.
President-elect Donald Trump has unveiled a new cryptocurrency token, the Trump meme coin, which has seen its value skyrocket from $10 to $90 before stabilizing around $35. Promoted as a symbol of community support rather than an investment, this move signals Trump's pro-crypto stance ahead of his inauguration.
š LUXURY
The automotive world is buzzing with 2025's standout models that blend power, luxury, and electrification. BMW's i5 M60 xDrive offers a thrilling 593-horsepower ride, while Kia's EV9 GT combines spaciousness with 501 horsepower. McLaren's W1 hypercar pushes boundaries with a 916-horsepower plug-in hybrid system.
Facing declining sales, luxury brands are reconsidering the 'quiet luxury' trend, which emphasizes understated designs without prominent logos. Analysts suggest that this subtle approach has lowered barriers for copycats, diluting brand exclusivity. To reignite consumer interestā¦
DEEP DIVE
This Overlooked Strategy Lets You Save on Taxes and Supercharge Your Giving
Meet Shrewd Investor Philip. Heās worked hard to achieve success as an engineer at a FAANG company, and now his Restricted Stock Units (RSUs) have vestedā¦
As a second-generation immigrant who benefited from community programs to build his education, Philip feels a deep sense of gratitude.
He wants to pay it forward by giving backābut heās facing two challenges:
Heās still working 60ā80 hours a week in his high-pressure tech job and doesnāt have time to manage charitable giving.
Heās worried his contributions wonāt have the impact he envisions.
Philip isnāt only looking for a tax breakāhe wants to make a real difference.
So how can someone like him save on taxes now while creating a bigger impact down the line?
The answer lies in smart philanthropy, and one of the best tools for this is a Donor Advised Fund (DAF).
Why a Donor Advised Fund Might Be the Goldilocks Solution
A DAF is like a personal giving account designed to grow your charitable contributions over time.
Think of it as the perfect middle ground between writing checks to individual charities and setting up a private foundation.
Hereās how it can help you give smarter:
Triple Your Tax Benefits: Donate appreciated stocks or assets to a DAF to avoid paying capital gains taxes and still get a charitable deduction for the full fair market value (up to 30% of your adjusted gross income). Plus, the funds in the DAF grow tax-free, which means you can give more later.
Triple Your Impact: Instead of cutting a check to charities now, the DAF allows you to invest your contributions. Over time, market growth can amplify the amount youāre able to giveāso a dollar today could become three dollars of impact over time.
Batch Donations for Bigger Deductions: If you donāt normally itemize deductions on your tax return, you can use a DAF to batch several yearsā worth of giving into one tax year. This allows you to itemize and maximize your tax savings in that year.
Flexibility and Privacy: You can choose when, where, and how to distribute your funds. Want to give anonymously? A DAF allows that too.
Philipās Smart Giving Strategy
Hereās how someone like Philip could use a DAF to achieve his goals:
Donate Appreciated Stock: Philip can transfer his RSUs (or other appreciated assets) directly into a DAF. Not only will he avoid capital gains taxes, but heāll also get a deduction for the stockās full fair market value.
Invest the Funds for Growth: Instead of giving everything away immediately, Philip can invest his DAF contributions. Over time, the returns can compound, allowing him to make a larger philanthropic impact later.
Plan for Future Giving: With a DAF, Philip has the flexibility to support causes he cares about when heās ready, whether thatās during retirement when he has more time or through a lasting endowment that supports charities for years to come.
The Downsides to Consider
As great as DAFs are, theyāre not without drawbacks. Here are a few things to watch out for:
Platform Limitations: Not all charities are on every DAF platform, so choose a larger provider like Vanguard Charitable or Fidelity Charitable.
Fees: DAF providers charge administrative fees, so shop around to find the best deal.
Lack of Flexibility: Once you contribute funds to a DAF, it is difficult to move them to a private foundation later
Give More by Giving Smart
For people like Philipāand maybe for youāa Donor Advised Fund can be a powerful tool for combining tax savings with meaningful philanthropy.
Itās not just about saving money; itās about making a bigger impact on the world while staying aligned with your long-term goals.
Resources
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The content provided in this newsletter is for informational purposes only and should not be considered as specific advice for any specific individual. The information is prepared by knowledgeable individuals and is not written by certified tax professionals or investment advisors. For personalized advice tailored to your unique financial situation, consult with a qualified tax professional, financial advisor, or attorney.
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