By Daniel Staffenberg, Executive Director

It’s the afternoon of December 21. It’s the busiest time of the year, but this year seems to be so much worse. You are feeling the pressure of family, holidays and finishing up year-end business. Jewish Community Foundation of Greater MetroWest NJ can help.

Moshe's Law: Waiting for you at home are a pile of year end bills, charitable donations that need to be paid, and some year-end tax issues that your accountant has asked you to deal with. There has to be a better option, a way you can make the charitable impact you want and avoid all these hassles. You call your advisor to share your misery. She is happy to listen but adds to the stress when she reminds you about a conversation you had earlier in the year. She had suggested making a large charitable gift by year end to offset some of the taxes associated with what has been a very good year. Good idea, but where to give?

In the past you have supported Jewish Federation, Rutgers, and your synagogue annually out of your checkbook. But this is going to be a sizeable gift, so it makes sense that the funds come from appreciated securities. Furthermore, you don’t really want to give these funds away carte blanche. You want some assurances that your philanthropic wishes and vision are carried out properly. On top of that you’ve been discussing with your partner how to engage your family in the discussion. Because of this issue of control, a foundation of some sorts makes sense. Your advisor had mentioned, during that first conversation, a private foundation or a supporting organization. But this would take six months or longer to get IRS approval. And besides, these options can be expensive to set up, aren’t the best option from a tax efficiency stand point, and are a hassle to operate.

You look again at the calendar, knowing that neither the IRS nor your advisor will give you slack on that year-end date. This frustrating end-of-year scenario leads to sleepless nights for many individuals and families. Keep your cool. You do have a powerful alternative: a Donor Advised Fund (DAF) with the Jewish Community Foundation of Greater MetroWest (JCF).

Underlying the popularity of DAFs as a strategy of family philanthropy is the fundamental concept of financial capital. Basically, an individual’s estate (income plus net worth) consists of two parts:

• The first part is family capital. This is the wealth an individual can spend between now and the time they die and what can be given to heirs. Family capital is the wealth that families keep.
• The second part is social capital. This is the wealth that can’t be kept, spent before death, or given to heirs. The government has mandated that a significant portion of every individual’s wealth be used to support the general welfare of the country. Most individuals give up their social capital in the form of taxes. But when they do, they also give up control of that wealth. Many people have little understanding of where our tax dollars go, and virtually no control over how these dollars are used.

Traditionally, individuals could distribute their social capital without giving up control of its use by establishing a private foundation. But private foundations are complicated, inflexible, expensive to establish, require IRS approval (which can take months), very public, and difficult to manage. On top of all that, the tax advantages are not as good as those for gifts to donor advised funds.

Another way to protect social capital is through a Supporting Organization with JCF. This option is appropriate for individuals who want the independence and “feel” of a private foundation but also want the tax advantages of a public charity. The supporting organization enjoys tax-advantaged status as a public charity because of its stated intention to support one or more public charities.   But Supporting Organizations also come with complex tax regulations, substantial set-up expenses (and that IRS approval), and take control away from the family.   Needless to say, while JCF is glad to open supporting organizations, they are not for everyone.

Fortunately, a Donor Advised Fund (DAF) with JCF is a simple, flexible, and cost-effective way for donors at every level of wealth to practice family philanthropy. It allows you to capture, manage, and distribute most, if not all, of your social capital to charitable organizations of your choice. In so doing, you turn what would have been tax dollars used at the government’s discretion into charitable dollars used by organizations whose missions and values reflect your own. You give up your social capital but retain “virtual control” over its ultimate use.

And because our DAF operates with the resources, support, and experience of JCF, with 65 years of experience, providing all the administrative and reporting services, you and your family can concentrate on the enjoyable and emotional side of philanthropy. The JCF program holds more than $78 million in DAFs and has a strong track record of outstanding customer service and family philanthropic support. In addition, the soon-to-be-launched online investor’s platform will provide additional convenience. This could be your perfect solution!

While it may seem early to be thinking about year-end planning – after all, we just ushered in the Jewish new year of 5776 – the end of 2015 is quickly approaching, so there is no better time than the present. If you would like to learn more about our Donor Advised Fund program or get involved, please contact me at (973) 929-3060 or visit us online at www.jcfmetrowest.org.  Stay connected with JCF Greater MetroWest on Facebook. I look forward to speaking with you soon.