Hi, I’m Erik Wolfers. I’m the founder and managing member of First & Main Financial. We’ve been helping clients successfully get their kids through college and into and through retirement since 2001. Today I want to talk a little bit about direct investments and donor-advised funds.
Just a refresher on donor-advised funds—for as little as $5,000 you can donate money into a donor-advised fund and get a tax deduction in the year that you make the donation. For as little as $5,000 you can (kind of) have your own foundation. You can give money into it every year if you like, or in some years, and get a deduction for the donation in any year that you make the donation. There may be certain tax circumstances that you wouldn’t get a deduction, but most people will. Then, you can direct the funds inside of your donor-advised fund to your favorite charities or causes overtime, over your lifetime or over a fixed period of time. Of course, the more money you put in, the more you can send out to your favorite charities on a regular basis. A lot of charities like to get ongoing donations annually or monthly so they can budget and plan and expand.
The option of doing direct investments inside of a donor-advised fund is making an investment in a company itself that’s making a social impact. One company that springs to mind is a company in India where they help folks that are disabled get jobs. It turns out often times it’s hard for disabled people to get jobs in India. Someone who has a disability, maybe they’re blind, maybe they’re deaf, maybe they’re unable to walk, may be better a better fit than the person who doesn’t have the disability; because the person is more able in in facets of their life that are opposite of their disability. Someone who is deaf may have special abilities with respect to the use of their eyes, or vice versa—if someone is blind they may be able to hear and do work that’s more attuned to hearing than someone who is not blind.
As opposed to traditional investing, which you can do inside of a donor-advised fund, if you want to go into directly into an impact investment it is possible. There aren’t always options available, but new options do spring up all the time.
These companies are for-profit even though they’re focused on social change or global change. You can participate directly in someone making that change, providing the capital for them and if they do well, they’ll return it and you’ll make money on your investment.
We’re taking new clients all the time and we’re here to answer questions about donor advised funds or anything else related to personal finance. If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.
