Donor Advised Gift Fund Basics

Donor Advised Gift Fund Basics

September 22, 2020

Tagged As: Wealth Management

What is the Hills Bank Non-Endowed Donor Advised Gift Fund?

The Hills Bank Non-Endowed Donor Advised Gift Fund (the “DAGF”) is a charitable investment account that is opened in your name and that can be used for the sole purpose of making future donations to 501(c)(3) charitable organizations of your choice.

How do I open an account?

Contact your local Hills Bank Trust and Wealth Management Officer, and they will walk you through the account opening paperwork and assist you in choosing an investment objective for the account. You will need to make an initial donation of $10,000 in cash, marketable securities or commodities to the account when it is opened. Additional contributions having a value of $2,500 or more may be added to the account at any time.

What happens after I open the account?

Your initial and any future contribution will be invested pursuant to the investment objective that you have chosen. You can use the funds in the account to make a donation to a 501(c)(3) charitable organization of your choice at any time in the future. Once you have decided that you are ready to make a donation, just call your Hills Bank Trust and Wealth Management Officer and notify them of the name of the charitable organization and the amount you desire to donate. We will handle the rest. Once the donation has been made, we will send you written confirmation of the gift.

What are the benefits of opening a DAGF?

There are several potential tax benefits available to individuals who make contributions to DAGFs. These benefits include, but are not necessarily limited to:

1. Most contributions to a DAGF are recognized as an itemized tax deductible donation for the tax year of the contribution. This feature provides you with the opportunity to utilize your tax deduction immediately, while still allowing you extra time and opportunity to identify 501(c)(3) organizations to which you desire to make donations and spread those donations out over an unlimited period of time.

2. Appreciated securities can be contributed in-kind, which allows you to avoid capital gains taxes when the securities are sold within the DAGF.

3. Commodities such as grain, soybeans, and corn can also be contributed in-kind to the DAGF. There is no itemized tax deduction available for a contribution of commodities. However, cash basis farmers can exclude the sale proceeds from their reportable income while still deducting the costs associated with growing the crops on their individual tax returns.

Talk to Your Tax Preparer Today

All contributions to the DAGF are irrevocable and non-refundable. Therefore, please discuss your long-term charitable giving plans with your legal and tax advisors and then contact Hills Bank Trust and Wealth Management at 1-800-899-8858 or Trust@HillsBank.com for more information.

Investment products are not a deposit, not FDIC insured, not insured by any government agency, carry no bank guarantee, and may go down in value.