I love Thanksgiving week. Growing up as a kid, Thanksgiving week was a short week in school because we got two days off. Thanksgiving week reminds me of spending time with my grandpa, dad, and uncles going deer hunting. Sitting in a deer stand when it is -15 degrees for 8 plus hours may not sound fun, but it was a great bonding experience with my family.
Pumpkin pie is my favorite food, and I usually have multiple pieces (if there is enough). Sweet potato casserole and Turkey are close seconds.
Four years ago, my wife and I hosted our first Friendsgiving with some of our closest friends. Friendsgiving has turned into an annual tradition and it is a blast. One of my friends makes White Castle stuffing, which sounds terrible but tastes fantastic.
But if I take a step back and reflect: what is the true meaning of Thanksgiving? In this post, I will discuss how my family is giving back and why we are considering opening a donor advised fund.
The true meaning of Thanksgiving
The first Thanksgiving was celebrated by the Pilgrims after they finished their first harvest back in October 1621. According to Wikipedia, there was a three-day feast attended by 90 Native Americans and 53 Pilgrims.
Fast forward to today, Americans eat 46 million turkeys each Thanksgiving. More people celebrate Thanksgiving than Christmas!
For me, Thanksgiving is a time to get together with family and friends and celebrate life. But I also think about those that are not as fortunate as my family is…
In the past, my wife and I talked a lot about finding charities to give to, but we didn’t make it a priority. And because we didn’t make it a priority we didn’t donate like we wanted to.
In 2017, we made a positive change and I am so happy that we did. I am going to share a few of the things we did. My intention is not to brag or boast, but to hopefully motivate you to give to things that you care about. Here are a few things that we cared about this past year:
- When Hurricane Harvey hit Houston, we couldn’t believe how much damage there was. It was awesome to see JJ Watt start a fund that ultimately raised over $37 million. We jumped on board and made a significant donation to the Red Cross efforts made in Houston.
- One of our cousins has Cystic Fibrosis. Growing up, I also had a friend who had Cystic Fibrosis. Finally, I work with a company that makes a vest therapy device to help children with Cystic Fibrosis. So I participated in a walk and donated to the cause.
- Another close friend of mine has a niece that they recently found out has Type 1 Diabetes. Watching their journey is difficult. I wish them and anyone else that has a child with Type 1 Diabetes my best wishes. We made a donation to a recent walk that my friend’s family participated in to help with the efforts in finding a cure/better solution to live with Type 1 diabetes.
Another avenue that my family could help contribute to various charities that I recently read about is something called a Donor Advised Fund (DAF).
The Donor Advised Fund
According to Fidelity Charitable:
A donor-advised fund, or DAF, is a charitable giving vehicle sponsored by a public charity that allows you to make a contribution to that charity and be eligible for an immediate tax deduction, and then recommend grants over time to any IRS-qualified public charity.
One of my favorite personal finance bloggers, The Physician on Fire, has two excellent articles on what a DAF is and how he uses DAFs. Specifically, when the PoF experienced large capital gains on his investments, he set up a DAF to contribute to and reduce his taxable income.
Like any donation to charity, your donation is tax-deductible. You can deduct up to 50% of your adjusted gross income. Therefore, when you make a cash donation make sure you keep your receipts for tax season. If you contribute to a DAF, the tax piece is easier to track because you only contribute to one entity. From there, you can contribute to different charities.
Like I mentioned earlier, the PoF was able to reduce his taxable income by contributing gains from his taxable account directly into his DAF. If you have long-term assets that have appreciated (e.g. stocks), you can donate these assets to charity. When you make this donation, it is like making a cash donation where you can deduct the amount from your annual gross income – up to 30%!
Other benefits of DAFs
- Tax-free growth. The money that you contribute into a DAF can be invested. The growth of your investments in a DAF are tax-free! Therefore, you can front load so you can front load your DAF now and let your money grow. Down the road, you could make your DAF act like a mini-retirement fund.
- For example, using the 4% safe withdrawal rule you could contribute to a peak value of $250k in your DAF. This would allow you to safely withdraw $10k each year and distribute that to a charity of your choice. Maybe you want to fund a scholarship each year – this would enable you to do so, in theory, forever!
- You have the choice to appoint who you want the money to go to.
- As I mentioned earlier, using a DAF simplifies taxes because all the money is in and out of one fund.
Costs to start a DAF: Vanguard and Fidelity
Here are two other articles I would recommend reading:
JL Collins: How to Give like a Billionaire
Other bloggers sharing #actsofkindness:
Thanks to ForiegnBornMD for hooking me into this conversation. I enjoyed your post: Holiday Season, Giving Back, #actsofkindness.
- Original poster: ChiefMomOfficer: I’m Sick of Christmas Materialism – Instead Lets Make a Difference #actsofkindness
- 1st chain: KiwiandKeweenaw Simplifying through #ActsofKindness – Kiwi and Keweenaw
- 2nd chain: PhysicianOnFire A Quarter Million in DAF – A Retirement Goal Achieved
- 3rd chain: BudgetOnAStick An Unexpected Gift
- Working Optional: Thankful For What I Have Received
- Mama Fish Saves: Top Charities to Get Kids Involved in Giving