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Donor-Advised Fund Sample Case: Henry Family
John and Tracy Henry typically gift $10,000 cash annually divided among 10 favourite charities. The Henry's derive satisfaction from giving, but need tax deductions to help offset taxable income each year. They realize that if they were to gift their flow-through investment after it converts to mutual fund shares they will save substantial taxes and reduce the effective cost for making donations. The Henry's, however, have been reluctant to gift shares because of the paperwork involved in transferring these shares to 10 different charities in December.

The Donor-Advised Fund ("DAF") may be the best solution for the Henry's. Instead of writing 10 cheques to their favourite charities, the Henry's decide instead to gift $10,000 of the shares they received when their initial flow-through investment converted into a mutual fund.

By using their DAF they received the following benefits:

• Simplified and consolidated charitable giving. Instead of writing 10 cheques or transferring stock 10 times, the Henry's can make one transfer of shares to their DAF account

• Immediate income tax deduction for the entire amount contributed

• Establishment of a tax-free account for managing future gains and income

• Flexible options for recommending grants on their own timetable to charities of their choice
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