This is our final Crypto for Advisors newsletter of 2024. We are taking a break next week to relax before what we believe will be an action-packed 2025 in the crypto space.
This year, we’ve published 51 newsletters dedicated to educating advisors about digital assets. Our readership has nearly doubled from 24K to 44K active subscribers. We thank the many advisors who have signed up and engaged with us every week. As always, we enjoy hearing your feedback and suggested newsletter topics, so please reply to this email or connect with me on LinkedIn to share your thoughts and ideas.
In today’s issue, Phil Geiger from bitcoin financial services provider Unchained explains what bitcoin donor-advised funds are and how they work.
Then, Eric Tomaszewski from Verde Capital Management answers questions about funds and potential tax implications in Ask an Expert.
Happy reading.
In recent years, donor-advised funds (DAFs) have surged in popularity as a philanthropic vehicle, offering a flexible way for individuals to manage their charitable giving. Adding to the appeal is the emergence of bitcoin DAFs, which combine the flexibility and tax benefits of traditional DAFs with the unique advantages of on-chain assets.
The Rise of Donor-Advised Funds
A DAF is a charitable giving account that allows donors to contribute assets to a fund, receive an immediate tax deduction, and then recommend grants to charities over time. DAFs have grown exponentially in recent years. As of 2024, there are around 2 million DAF accounts in the United States, holding a combined value of over $250 billion.
DAFs offer convenience and control. Donors can contribute at any time, make investment decisions to grow the fund’s assets and increase the amount for charity, and then direct grants to qualified charities when ready. This allows individuals to align their giving with their financial situation and support a variety of causes over the long term, but they don’t necessarily have to distribute their donations immediately.
Tax Benefits of Donor-Advised Funds
The tax advantages of DAFs are one of the primary reasons for their popularity. When donors contribute to a DAF, they can take an immediate charitable deduction for the full value of their contribution, subject to IRS limits. This applies whether the donor contributes cash, bitcoin, securities, or other assets. For example, in the case of appreciated cryptocurrencies, a donor can avoid paying capital gains taxes, which can be significant on investments that have appreciated over time.
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