Maximizing Charitable Impact for P&G Employees with Donor Advised Funds

Procter & Gamble employees have a rich tradition of supporting their communities, often through payroll deductions to organizations like United Way and ArtsWave. While payroll deductions are convenient, they may not offer the best tax advantages. By using a Donor Advised Fund (DAF) and funding it with appreciated stock, P&G employees can amplify their charitable impact while optimizing their tax benefits.

Why Choose a Donor Advised Fund Over Payroll Deductions?

Payroll deductions are straightforward but come with limitations compared to a DAF:

• Lost Tax Deduction Opportunities: Payroll deductions are made with post-tax income, so employees miss out on immediate tax deductions unless they itemize. With the current state and local tax (SALT) limitations, you may find you are not itemizing and in this case you are getting no tax benefit for your payroll giving.
• Missed Opportunity to Donate Appreciated Stock: Many P&G employees hold stock with significant capital gains. Selling these shares incurs capital gains tax, but donating them to a DAF avoids this tax entirely [4]. Using the stock for giving also helps you diversify what is likely an over concentration in PG stock!
• Lack of Bunching Benefits: A DAF enables "bunching," where employees can combine multiple years’ worth of donations into one year to surpass the standard deduction threshold, maximizing tax savings. With the limitations on SALT, bunching your giving has become more important.

Benefits of Funding a Donor Advised Fund

• Immediate Tax Deduction: Contributions to a DAF are deductible in the year they’re made. Donors can also separate the act of giving from claiming the deduction, enabling strategic tax management. Once funded, the appreciated stock can also be sold (diversified) and reinvested for future giving.
• Avoid Capital Gains Taxes: Donating appreciated stock to a DAF eliminates capital gains tax, directing more of the asset’s value to charity instead of the IRS. It also avoids having to give stock directly to each charity, instead the DAF accepts the stock and the charities receive a simple check.
• Easier tracking: A DAF simplifies donation tracking by centralizing all giving in one portal.

How P&G Employees Can Use a DAF for Charitable Giving

• Establish a DAF: Open a DAF with a provider like Fidelity Charitable, Schwab Charitable, or another trusted custodian.
• Fund with Appreciated (P&G) Stock: Transfer appreciated stock directly to the DAF. These shares can then be reinvested within the DAF, left in a money market, or cash.
• Support United Way or ArtsWave: During P&G’s annual open enrollment, direct your DAF to distribute grants to these organizations (or others), allowing P&G to track your giving while funds come from the DAF.
• Distribute Grants Over Time: Unlike payroll deductions, a DAF lets you control the timing of grants, offering flexibility to support charities on your schedule.

Switching from payroll deductions to a Donor Advised Fund funded with appreciated stock allows P&G employees to maximize tax savings while continuing to support their favorite charities. This tax-efficient strategy aligns with smart financial planning and amplifies the impact of your giving. Don't underestimate the value of this simple change!