Financial planning and charitable giving often go hand in hand, especially for those looking to make a difference while also optimizing their financial strategies. One instrument that has been gaining popularity in the philanthropic and financial landscape is the Donor-Advised Fund (DAF).

This article aims to provide an in-depth exploration of Donor-Advised Funds. We will dissect their structure, delve into their workings, and evaluate their advantages and disadvantages. Our goal is to help investors and philanthropists discern whether DAFs are a fitting choice for their unique blend of philanthropic aspirations and financial strategies.

What is a Donor-Advised Fund?

A Donor-Advised Fund (DAF) is an innovative tool for charitable giving that provides a way for donors to support their favorite nonprofits while optimizing tax benefits and philanthropic impact. It functions like a charitable savings account: a donor contributes to the fund and becomes eligible for a tax deduction for the year of the contribution, regardless of when the funds are granted to nonprofits.

This vehicle is particularly beneficial for donors because it accepts a wide range of financial assets — such as cash, stocks, bonds, mutual funds, and real estate. Even complex assets like privately held C-corp and S-corp shares, limited partnership interests, and cryptocurrency can be contributed to a DAF.

Each contribution is invested by the sponsoring organization — which can be a community foundation, a charitable fund linked to an investment firm, or a national charity — and has the potential to grow tax-free. This means that the longer funds stay invested, the more money may be available for the donor to recommend as grants to qualified nonprofit organizations.

How Does a Donor-Advised Fund Work?

Understanding the mechanics of a Donor-Advised Fund (DAF) can shed light on why they have become a popular choice for donors. Let’s break down the process:

Advisory Privileges

The term “donor-advised” comes from the advisory role donors play after making their contributions. They can recommend the investment strategy for their fund’s assets and suggest which charities should receive grants from the fund.

However, while donors have the power to advise or recommend, it’s essential to remember that the DAF’s sponsoring organization retains the ultimate legal control over the contributions.

Contribution and Investment

When a donor contributes to a DAF, the assets are legally transferred to the sponsoring organization, and the donor gives up the ownership they once had. Despite this, they gain advisory privileges to suggest how these assets should be invested to grow the fund. This feature allows donors to increase their philanthropic impact over time.

Grant Recommendations

Another aspect where donors can exercise their advisory privilege is grantmaking. They have the flexibility to choose when and to which IRS-qualified public charities the fund’s assets are granted. This provides an adaptable way to manage charitable giving, allowing donors to support multiple charities over time, respond to urgent needs, or devise a long-term philanthropic strategy.

Administrative Roles

One of the key advantages of DAFs is the administrative convenience they offer. The sponsoring organization handles all administrative tasks, including ensuring legal compliance, conducting due diligence for grants to qualified nonprofits, and issuing grant checks to charities. This feature relieves donors from tracking receipts for tax purposes, as the organization provides consolidated tax documentation.

The Pros and Cons of Donor-Advised Funds

Like any financial tool, Donor-Advised Funds (DAFs) come with a unique set of benefits and drawbacks that can vary based on individual circumstances. Let’s delve into a more detailed look at the advantages and potential disadvantages of DAFs to help you make a more informed decision.

Benefits of Donor-Advised Funds

1. Immediate Tax Deduction: As soon as you make a contribution to a DAF, you become eligible for a tax deduction in the same year, even before you’ve decided on the specific charities you want to support. This feature allows you to strategically plan your taxes while taking your time to make thoughtful philanthropic decisions.
2. Tax-Free Growth: Funds in a DAF are invested, allowing them to grow tax-free. This means your initial contribution can potentially increase, amplifying your philanthropic impact over time.
3. Flexibility and Convenience: DAFs offer significant flexibility. You can contribute a wide range of assets, recommend grants at your own pace, and even suggest the investment strategy for your funds. Plus, the administrative convenience takes the hassle out of the philanthropic process, as the DAF sponsor handles all the logistics.
4. Legacy Planning: DAFs can be an effective tool for instilling a tradition of giving within your family. You can appoint successor advisors, such as children or grandchildren, ensuring your philanthropic efforts continue through generations.

Drawbacks of Donor-Advised Funds

1. Lack of Absolute Control: While you have advisory privileges, the final control rests with the DAF sponsor. This means you can suggest grants and investments, but the sponsor has the ultimate decision-making authority.
2. Minimum Contribution Requirement: Many DAFs have a minimum initial contribution requirement, which may be substantial. This can make DAFs less accessible for those with smaller amounts to donate.
3. Irrevocability: Contributions to a DAF are irrevocable. Once you’ve donated, you cannot take it back, even if your financial situation changes.
4. Delay in Charitable Impact: Since you can distribute donations over time, there may be a delay in funds reaching charities and effecting change.

Final Thoughts

Donor-Advised Funds provide a unique approach to philanthropy, intertwining the act of giving with strategic financial planning. With immediate tax benefits, the potential for tax-free growth, and the ability to streamline your charitable giving process, they offer a practical solution for many donors. Plus, their capacity for accepting a variety of assets makes them an accessible option for donors at many different wealth levels.

However, it’s crucial to acknowledge that DAFs may not be the perfect fit for everyone. Aspects like the loss of absolute control over contributed assets, the potential fees, and the irrevocability of contributions are important considerations to keep in mind.

Whether a DAF is right for you will depend on your unique financial circumstances, your philanthropic goals, and your personal preferences. Professional advice can be invaluable in this decision-making process. Ballentine Capital Advisors can help you gain a clearer understanding of how a DAF might fit into your overall financial and philanthropic strategy.

In the end, the key is to approach your charitable giving with both your heart and your head. The right financial tools can help you maximize your philanthropic impact and make your giving as meaningful and effective as possible.

Have a great weekend!




Source: Ballentine Capital Advisors 

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Golf Tip of the Week

Collin Morikawa’s 7 Best Tips to Becoming a Smarter Golfer

For many competitive golfers, school is a means to an end—a bridge from junior golf to competitive college and amateur events.

That wasn’t the case for Collin Morikawa.

His parents insisted school and golf progress together—and that transformed him into the multi-dimensional athlete he is today, one who earned a business degree from one of the top schools in the country, Cal-Berkeley. With two majors and three other PGA Tour wins already to his name, Morikawa, 26, doesn’t freewheel around courses with brute strength. He problem-solves his way through them.

“I remember that from the first time I met him,” says the PGA Tour’s Max Homa. “He was 19, but he had a better head on his shoulders than most pros.”

To use a business metaphor, Morikawa has become the CEO of his game. His mission statement: Think smarter and play better. Navigate a round in the most perceptive way possible.

“We’re all searching for something to play better,” Morikawa says. “There are technical things to consider, but everyone can play better by doing things that are simpler and smarter.”

Here, Morikawa shares seven clever ways to improve your game without countless hours of practice. You can put them in action tomorrow. —Luke Kerr-Dineen

1.IMAGINE A WINDOW, AND THEN BREAK IT

MORIKAWA: Most golfers aim based on where they want their ball to land—they lock onto that spot. But all golfers have shot shapes they need to account for, and when I focus too much on where I want the ball to finish, my natural left-to-right shape gets too severe on its way to getting there. That causes me instinctively to start aiming more and more left without realizing it, and the result is a big, wipe fade that’s hard to control.

To fix that problem, I learned to aim where I want the ball to start, not finish. I think of the fairway as a hallway, and my start line is a window at the beginning of that hallway that I want to fire my ball through. I like this aiming technique better because it forces me to commit to my start line and shot shape. If you use it, you will rein in those really curvy drives that are tough to keep in the fairway—even when they land there.

KEEP ON-COURSE THOUGHTS EXTERNAL

A big difference between pros and amateurs is the emphasis of their focus— external (pros) versus internal (amateurs). When we’re taking the club back, we’re focused on the target. We’re reacting to something outside of ourselves. Everyone else is thinking about themselves—how to take the club back or how to shift weight, etc. Don’t get me wrong; pros have swing thoughts, but when we’re on the course, all that matters is creating the feels needed for the shot we’re trying to produce.

2.FIND YOUR DISPERSION PATTERN

Every golfer has a pattern—a certain direction they like to see their shots move, and a common miss to go with it. My pattern is left to right. I hit fades about 80 percent of the time, and my misses are shots that start a little left of my target and fly straight instead of curving back. I know I’m better off missing it slightly off the toe of the clubface because a toe fade will travel straighter than a heel fade. The lesson: Having a pattern isn’t a bad thing; it’s not knowing your pattern and adjusting for it that can cause big problems.

I’ll often pop quiz myself to double-check my accuracy. On the range, I’ll hit 20 balls with the same club to the same target and see how the balls travel and how far apart they land. For me, I’m trying to land my midirons within 10 yards of my target. I’ll give myself one point for every ball that stays in that area.

Your dispersion with the same club might be 20 yards, but that’s OK. Try my point system to help build accuracy while learning how far apart your shots land. If you get fewer than 12 points, increase your target zone. What you’re doing is becoming more familiar with where your ball could end up in relation to your target, and hopefully you’ll account for that when making club selections and choosing where to aim.

3.X-OUT THOSE NASTY SPOTS ON THE COURSE

It might sound like a bad idea to think about the places you don’t want to go before hitting a shot, but that’s exactly what I and a lot of other pros do. We’re not thinking about it while we’re over the ball, but a lot of prep work goes into a shot before we step in, including where not to miss.

Before tournament rounds, I’ll draw big Xs in my yardage book and then play away from those areas. Finding the Xs is something you should do if you want to avoid big numbers on your scorecard. Penalty areas, deep bunkers and out-of-bounds markers are some obvious ones, but here’s another you might not have thought about: According to analytics, missing on the short side of the green—the side nearest the hole—reduces your chance of getting up and down by 40 percent when compared to the opposite side. What that should tell you is that before you hit your approach shot, identify the short side, put a big X on it in your mind, and do what you can to play away from it. That’s why knowing your dispersion pattern with each club (tip No. 2) is so helpful!

FIND THE COVER NUMBER

A lot of TV announcers think we’re firing at pins more than we actually are. We’re rarely taking dead aim, and when we do, it’s very situational. Most times we’re playing to a specific part of the green. One thing players always do is get their “cover number”— that’s the number it takes to carry some form of trouble, like a false front on the green or a bunker. Remember, that number is the absolute minimum to carry your shot to a decent spot, so be generous in your club selection to make sure it does.

4.PRACTICE ONE BALL, ONE SHOT

You might love to beat balls on the range, but I hate it. I didn’t grow up on a range hitting ball after ball to the same target without giving the results much thought. I grew up practicing on the course, and I got a lot more out of that.

When I was a junior golfer, my coach, Rick Sessinghaus, would have me hit a shot, and after I did, he would toss another ball down and ask me to hit it to the same spot—but in a different way. That type of practice taught me how to be creative and adapt much easier to whatever scenarios I encounter during a round.

I didn’t realize it at the time, but the way I was working on my game was a form of random practice. There’s a lot of good research showing it’s the best way to practice and improve your skills. I still practice that way, and it’s something you should do, too—even if you don’t have access to a course like I did. After you’ve worked on your dispersion pattern (tip No. 2), spend the rest of your time trying to hit a lot of different shots on the range. It might be a 70-yard slice that you need once a year to get around a tree, or a low-trajectory shot with a lob wedge. Constantly switch clubs and give yourself new problems to solve. When you teach yourself how to work something out, you’ll remember it forever.

5.PUNCH YOUR WAY BACK TO BETTER BALL-STRIKING

I’m known for my fade, but I grew up hitting a draw. It wasn’t until the summer before I went to Cal that I changed my preferred ball flight. I probably hit a thousand punch shots that summer to groove my fade. To this day, whenever my contact isn’t as good as I’d like it to be, the first thing I do is go back to hitting punch shots. I don’t always like doing it, but I know a punch iron shot solves a lot of my bad habits by forcing me to be more efficient with my body’s movements.

If you’re struggling to make crisp contact with your irons, try punching it to get things back in order. Make a full backswing, but hit down and through the ball, finishing with the shaft pointing back at your belt. Sometimes momentum will carry the shaft farther into the follow-through, and that’s OK. The key here is to stay compact with your movements.

Hitting punch shots helps prevent you from swaying going back and stopping your body rotation as you swing through—two big ball-striking mistakes. The best part is that it teaches you to bring the low point of your swing forward, which means you’re compressing the ball with a descending blow before taking a divot. Remember that feel when you go back to full-swing iron shots.

6.ADJUST YOUR FEET FOR CONSISTENT SAND PLAY

Standard advice for greenside bunker shots is to open the clubface wide, then open your stance and swing hard, cutting across the ball on an out-to-in path along your stance line. It’s the technique I learned growing up, but I find it’s too extreme for such a simple shot. I’ve abandoned it for an easier way to get it close from a bunker. I’ll share that technique in a second.

First, understand that all you need to focus on in a bunker is the low point of your swing. It needs to be in the sand under your ball, which means your club should enter the sand in the same spot every time. That’s it—pretty simple.

I’ve adopted a new-school method to get the same low point every time. Instead of setting up with my left foot open, I drop my right foot back, which aims my feet out to the right of my target. Doing so puts more weight forward, forces me to turn around my lead leg, and steepens my swing just enough to put the low point in the perfect spot without having to do anything else. I don’t have to think: I just pull my right foot back and swing—and it works!

MATCH YOUR LEAD HAND TO YOUR CLUBFACE

I’ve been asked a lot why my lead wrist is bowed at impact. The truth is, I have no idea. It probably happened as a result of all the punch shots I hit. I do know that it leads to more clubface control—at least for me. When that wrist is flexed as it approaches the ball, as opposed to extended, it helps square the clubface. You don’t have to bow that wrist like I do, but a swing thought is to have the back of your lead hand pointing at the target at impact. If it is, there’s a good chance your clubface will be, too.

7.ACCOUNT FOR YOUR PUTTING TENDENCIES

For a long time, the biggest problem with my putting was that I had no idea what I was doing. I’d putt well and have no idea why, and I’d putt poorly and have no idea why. I brought on putting coach Stephen Sweeney to change that, and he’s been great.

He helped me realize that my full-swing tendencies were showing up in my putting stroke. Most golfers have no idea that your driver’s swing can affect your putting stroke, but it can. Because I mostly hit fades with the driver, I’d set up and swing my putter similarly. My shoulders would be open, and I would swipe across the ball. It became a big issue, especially on long and mid-range putts in which the ball would start more left than I expected. (Unlike a fade off the tee, the ball doesn’t curve back on target when it’s rolling on a green.)

It’s important to understand your tendencies and make adjustments to counteract them. I use a claw grip to do that, as it helps prevent my right hand from taking over and starting my putts too far left.

The other big change I’ve made is that before taking my grip, I place my hands on either side of the shaft so the palms are facing. This helps square my shoulders and stroke. I wish I had done it sooner, but, hey, it’s never too late to learn something that moves you closer to genius golf!




Tip adapted from golfdigest.comⁱ

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Recipe of the Week

Buffalo Chicken Cheese Balls

15-20 Balls

Ingredients

• 1 store-bought rotisserie chicken
• 1/4 cup hot sauce (recommended: Frank’s Red Hot)
• 1 teaspoon ground black pepper
• 1 3/4 cups sharp Cheddar
• 1/4 cup freshly sliced scallions
• 1 cup all-purpose flour
• 3 eggs, lightly beaten
• 2 cups panko bread crumbs
• Vegetable oil, for frying

Blue Cheese Dip:

• 1/2 cup packed blue cheese, broken up
• 1/2 teaspoon hot sauce
• 2 teaspoons Worcestershire sauce
• 1 teaspoon salt
• 1/2 lemon, juiced
• 1 teaspoon chopped garlic

Instructions

• Have oil heated to 350 degrees F.
• Pick the meat from the chicken and discard the skin. Place the chicken in a large bowl and add the hot sauce, pepper, cheese, and scallions, and toss to combine. Roll the chicken into 2-ounce balls, about the size of a golf ball.
• Place the flour, eggs, and bread crumbs in 3 separate bowls. Roll each ball in the flour, then the egg and then the bread crumbs. Set aside.
• When the oil is hot fry the chicken balls in batches. Cook for about 2 minutes per batch. Remove the chicken to paper towel-lined plate to drain the excess oil.
• To make the sauce, combine all ingredients in a large bowl and adjust the seasoning if necessary. Serve the chicken alongside the dipping sauce.

 

 

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Health Tip of the Week

What Heat Can do to Your Body

Sweating

It’s your natural cooling system. Your body pushes sweat out onto the surface of your skin. As the air absorbs it (evaporation), it draws heat away and cools you down. This works better in drier climates where humidity is low. You might get very tired and sometimes seriously ill if it doesn’t work quickly enough.

Heat Exhaustion

It happens in extreme heat when your body can’t get cool enough and sweats away too much water and salt. You get pale and clammy, and your temperature often goes over 100 degrees. You also may be tired, weak, lightheaded, and nauseated, and have a headache. Get to a cool shaded area, lie down, and drink something with salt and sugar. Sip water if that’s all you have. If you ignore it, it could lead to heatstroke, which is an emergency. 

Heatstroke

This is heat at its most dangerous. You can’t control your body temperature, which can go above 104 degrees. Your skin gets warm and dry. You might get confused or agitated, and have a fast pulse, nausea, and a headache. Call 911 right away. Left untreated, it may cause seizures, coma, and can be life-threatening. Get to a cool area, sip something (if you can), and pack ice under your arms and between your legs.

Dehydration

When it’s very hot, you can sweat away too much fluid, along with essential minerals like sodium and potassium. You may be thirsty and pee less than usual, and your mouth and tongue might feel dry. You could even feel dizzy, lightheaded, and confused. Head for a cool place and drink something balanced with salt and sugar (such as an oral rehydration solution). Serious cases need emergency care, including fluids you get through an IV.

Heat Rash

It happens, often in hot humid weather, when you sweat so much that your sweat glands get blocked. When your pores can’t get rid of it, you break out in tiny red bumps. It’s more likely at your armpits, groin, neck, elbows, and under the breasts. Babies aso can have the same type of reaction, especially under their chin or in their groin area, You can help prevent it and treat it if you wear light, loose, absorbent clothing like cotton. Try to stay as cool and dry as possible.

Sunburn

Bare skin burns if it’s in the sun too long. It may get reddish, itchy, painful, and warm to the touch. If serious, you could have blisters, headaches, fever, and nausea. In the long run, sunburn increases the risk of developing skin cancer, Go inside as soon as possible. Drink plenty of water, and don’t pop any blisters. A cold, damp cloth and aloe vera lotions may help soothe the pain. Better yet, prevent sunburn with clothes, hats, and broad-spectrum sunscreen of at least 30 SPF.

Fainting

It’s more likely when you’re new to a hot place, so take care to stay hydrated. Heat can dehydrate you and make it harder for your brain to get enough blood. That may make you dizzy and pass out. It might be worse if you stand for a long time or get up suddenly. Getting used to a hotter place can take up to 2 weeks. If you feel faint, lie down and raise your legs above your head. Go to a cool area and drink fluids as soon as possible.

Heat Edema

Heat can cause your fingers, toes, or ankles to swell and make your skin feel tight. It’s not serious and usually goes away when you cool down and elevate your legs. Talk to your doctor if it causes pain, keeps happening, or doesn’t get better.

Higher Heart Rate

When you get hot, your heart may beat faster. It does that in order to pump more blood to your skin, where it can release some of that extra heat. As a result, other parts of your body may not get enough blood. This could make you tired and sluggish, especially if you’re trying to do hard physical or mental work.

Lower Blood Pressure

When you’re hot, you sweat. That makes you lose fluids and electrolytes. In addition, heat makes your blood vessels dilate to increase sweating. Together, these things can drop your blood pressure, sometimes enough to make you dizzy or even pass out. It could be even worse if your heart doesn’t pump normally and isn’t able to adjust to the greater demand.

Confusion

You may find it harder to concentrate and do hard tasks as things heat up. It’s usually nothing to worry about, and you can fix it with a rest in a cool place and something to drink. But if you’re already sick from the heat and you become seriously confused about where you are or what you’re doing, it could be a sign of heatstroke, which needs immediate medical care. 

Should You Exercise in the Heat?

You might be fine exercising outside when it’s 85 degrees and the humidity is low. But if the humidity hits 80%, it’s like it’s really 97 degrees. (That’s the “effective temperature,” which you can check online.) Even if you’re healthy, that makes you more likely to get heat exhaustion. Wear loose clothing, drink plenty of water, and know the signs of heat-related illness. Or just take your workout indoors!

Precautions

When a heat wave hits: 

• Drink lots of water, even if you’re not thirsty.
• Avoid caffeine and alcohol, which dehydrate you.
• Eat lighter meals, more often.
• Wear lightweight, light-colored clothing.
• Check on loved ones who live alone or don’t have air conditioning.
• Stay inside as much as possible and avoid outdoor chores.
• Never leave a child or pet alone in a car, even if it’s not that hot outside.

Extreme Heat

It can be life-threatening, and heat exhaustion and heatstroke aren’t the only reasons. Heat can also trigger heart issues, and even worsen breathing problems, as it boosts air pollution. Your city or local health department may have online information about where to find public pools, air-conditioned spaces, medical assistance, and other help during a heat wave.




Tip adapted from WebMD.comⁱⁱⁱ 

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Ballentine Capital Advisors is a registered investment adviser. The advisory services of Ballentine Capital Advisors are not made available in any jurisdiction in which Ballentine Capital Advisors is not registered or is otherwise exempt from registration.

Please review Ballentine Capital Advisors Disclosure Brochure for a complete explanation of fees. Investing involves risks. Investments are not guaranteed and may lose value.

This material is prepared by Ballentine Capital Advisors for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.

No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. You should not assume that investment decisions we make in the future will be profitable or equal the investment performance of the past. Past performance does not indicate future results.

Advisory services through Ballentine Capital Advisors, Inc.

ⁱ https://www.golfdigest.com/story/collin-morikawa-seven-smart-ways-to-play-better-tomorrow
ⁱⁱ https://www.foodnetwork.com/recipes/aaron-mccargo-jr/buffalo-chicken-cheese-balls-recipe-1944818
ⁱⁱⁱ https://www.webmd.com/first-aid/ss/slideshow-effects-of-heat