If you've ever wished your giving could be both simpler and more strategic, there's a powerful tool worth knowing about. The Donor Advised Fund, or DAF for short. Hi, I'm Rob West. Today we'll unpack what a donor-advised fund is, how it works, its advantages and limitations, and how it can help you practice wise, intentional generosity. And then it's on to your calls at 800-525-7000.
That's 800-525-7000. This is Faith and Finance, biblical wisdom for your financial decisions. Before we talk strategy, let's start with Scripture. Paul writes in 2 Corinthians 9:7, Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver. Generosity begins in the heart, not in the tax code.
But wise stewardship means we can use tools that help us maximize our impact for the kingdom. A donor-advised fund, when used rightly, can help you do both, give joyfully and steward resources efficiently. Think of a DAF as a charitable checking account designed to support the causes you care about. You contribute cash, stock, or other assets, receive an immediate tax deduction, and then recommend grants to ministries or charities on your timetable. In other words, it separates the act of giving from the act of distributing.
You can make a large contribution in a high income year or before selling an asset for tax advantages and then prayerfully take time to decide where those dollars should go. Behind the scenes, the DAF is managed by a sponsoring organization. For example, we recommend the National Christian Foundation, one of the largest and most trusted Christian providers founded by Larry Briquette and Ron Blue, among others. They handle the record keeping, they issue the grants, they provide the online tools to manage your giving.
So here's a quick example. Suppose you're planning to sell a business or a piece of real estate where you would normally have a significant capital gain.
Well, you could donate it to your donor advised fund before you sell and not have to pay that capital gain. More money goes into the kingdom.
Now, because it's an irrevocable charitable contribution, you receive an immediate deduction for the full amount. The funds can then be invested for potential growth while you prayerfully decide which ministries to support, or you could grant it out immediately. When you're ready, you simply recommend a grant, say $10,000 to your church or mission organization. The DAF sponsor, in our case, National Christian Foundation, verifies the charity and then sends the gift in your name or anonymously. Donor-advised funds have become the fastest-growing vehicle for charitable giving in America, and for good reason.
They combine the flexibility of a personal giving account with the efficiency of professional administration. Here's some of the key benefits: first, simplicity. One contribution can fund all your charitable giving with a single tax receipt and one place to track every grant. Tax efficiency. You receive the deduction when you contribute, not when you give.
Donating appreciated assets can help avoid capital gains taxes, allowing more funds to be directed to ministry efforts. Flexibility: you can give now and decide later where the funds should go, allowing generosity even as you discern where God is leading. legacy planning. You can name successors, such as children or grandchildren, to continue recommending grants and carry on your legacy of giving. Focus on mission.
Since the administration is handled for you, you can spend your energy discerning where God wants you to give. Of course, no giving tool is perfect. There are a few limitations to understand. First, irrevocability. Once you contribute, it's a completed gift.
You can't take the money back. Qualified recipients. Grants can only be made to IRS-approved charities, not to individuals or political causes. And timing of impact. Funds can remain in the account for years, which can delay charitable impact.
That's why at FaithFi, we encourage you to use donor-advised funds for timely generosity, not indefinite storage. A donor-advised fund isn't meant for hoarding resources while ministries wait for support. It's a place to organize your generosity, not store up what God has already called you to give. We recommend the National Christian Foundation. NCF doesn't just process gifts, they provide biblical guidance for giving wisely and joyfully.
Their donor-advised funds, called Giving Funds, help believers simplify giving, reduce their tax burden, and amplify their kingdom impact. If you'd like to learn more, you can go to faithfi.com/slash ncf. That's faithfi.com/slash NCF. And you can open your giving fund in just a couple of minutes. If you'd like to find an advisor to guide you in the process, go to findack.com.
All right, a quick break and back with your questions after this. Stick around. We're grateful for support from Movement Mortgage, who provides residential home loans in all 50 states. Guided by a mission to love and value people and a goal to redefine the mortgage process, Movement seeks to help others achieve their financial goals. You can find out more at movement.com/slash faith.
Movement Mortgage LLC supports equal housing opportunity, NMLS, number 39179. For licensing information, please visit NMLSconsumerAccess.org. Are you looking to maximize your charitable impact this season? The National Christian Foundation has a smart solution. It's called a Giving Fund, and it helps you give more strategically, grow your balance tax-free, and amplify your charitable impact.
If you want a donor-advised fund that aligns with your values, open a giving fund today and start making a bigger difference for the causes you love. Learn how at faithfi.com forward slash NCF. Great to have you with us today on Faith and Finance. You know, as we think about really the outworking of living as a faithful steward, clearly, what should be one of those clear things? One of the clear byproducts of living this way is generosity.
You know, we should see money flowing into God's kingdom. In fact, I had a great visit with Paul David Tripp just the other day, and he was talking about this idea that perhaps the primary reason God entrusts to us what He does is not. First, so we could provide, but first, so we can give. An interesting thought, though, is that perhaps that primary outworking of our management of the King of Kings resources as a steward is so that we can be loving our neighbors and serving others and being partnered with God as co-laborers in His activity and participating in part through our giving, through our generosity.
Something to think about today.
Well, we want to turn the corner and take your financial questions today. Whatever is on your mind. Financially, we'd love to tackle it. Spending plans, we know that's challenging. Investing, that can be challenging.
Getting out of debt, giving wisely, whatever it is today. The number 800-525-7000. Again, that's 800-500. 525-7000. Any financial questions, you can call right now.
All right, let's go to Arkansas. Go ahead, Shauna. Thank you for taking my call. Yes, ma'am. I'm going to try to make this as simple as possible and maybe have to.
trust you to lead me to ask the right question.
Okay. My husband has just been diagnosed with a pretty serious health condition.
So If I am by myself, we're trying to make a decision about downsizing. Our current home, we owe about one hundred ninety eight thousand. and our interest rate is 4.5%. The home that we are thinking about buying is one hundred thirty seven five with the current interest rate. for however long we we make the loan, 15, 20, or 30 years.
So in your opinion, Is it a wise move to stay where we are or to downsize if all his income goes away and it's just me? Yeah. the lower price on a home. Sure. And the lower payment or do we stay where we are?
A couple of questions. First of all, I'm so sorry to hear about your husband's health situation. Let's pray that the Lord intervenes there and miraculously heals him. But if the Lord calls him home, yeah, I love the fact that you're thinking through what the future looks like.
So you would buy the new home, you're saying you're estimating $175,000. Would you be able to buy that with cash? It would be 137. Oh, 137.
Okay. And would you have enough coming out of the existing home? We know that. Not to pay cash for it, we would make, we probably make about $50,000. um on the cell of the house.
The current count. All right.
So you'd have, let's call it maybe a hundred thousand dollar mortgage. Um After expenses for moving and the purchase expenses and that kind of thing? That's what I I'm thinking, yes, sir.
Okay. And have you run your budget just to kind of figure out what income sources you would have and what that looks like based on this new $100,000 mortgage? Yes, I have.
Okay. You know, what I would say is, Shauna, just given where interest rates are today, you may not see a whole lot of decline in that mortgage payment even by Cutting it from $198,000 to $100,000 just because you're going to go from the 4.9 up to about, you know, 7%. And so, you know, it's not going to give you a whole lot of savings.
Now, if it does, though, provide you because it's smaller and less upkeep, and it, you know. Just makes day-to-day life a little bit easier and gives you, you know, just some simplicity there. You know, I would say let's factor that in. But all things being equal, especially given the fact that you have some nice retirement income that's going to shore up your financial situation for you specifically moving forward, I'd probably sit on this for a little longer, see if we can get to a place where interest rates come down over the next year or two, and then look at making this change, unless you feel like something is really imminent with him, or secondly, you know, you just need to simplify your overall situation. But I think just from a math standpoint, especially given that you're going to have some good income in retirement just based on the work you have done and are continuing to do, I'm just not sure that we're going to accomplish what you were hoping to accomplish, just given that jump in interest rates we're going to experience and restarting the mortgage amortization, where now, you know, the vast majority.
Of every payment is just going to interest and not principal. Does that make sense? Yes. Mm-hmm. Yeah.
Okay. But give me your thoughts on that. Kind of, how are you processing that, and what would that mean for you? I think you are thinking right along the same Same lines I was thinking. In terms of the mortgage payment remaining the same because of the current interest rate.
My goal would be to have that $100,000 mortgage paid off if I could within the next five years.
So in my mind, that sounds like it might be a good just throw every penny I have to trying to get that paid off.
So then in my retirement you know, I I would be without a house payment. Yeah. Well, that would be great. Yeah, if you have the ability to do that, I mean, I wouldn't rob yourself of liquidity. You know, I want to make sure you still have a really nice emergency fund to fall back on.
But if you've got quite a bit of surplus right now, trying to get that mortgage down, which gives you more to roll into the next home, if you decide to go ahead with downsizing, you know, once interest rates hopefully are at least on par with what you've currently got, maybe slightly higher, but maybe in the fives, I think that would be ideal. Yeah, if I got a fifteen year mortgage, I would be down, you know, in the high fives. And the monthly payment wouldn't be too awful much different than what I pay currently. Yeah. So that that was a thought I had this morning too.
I know. It's a big decision whenever there's things in life going on. There are, and when there's unknowns as well.
So let's just pray and ask the Lord to give you some wisdom here as you proceed. We'll join you in that. And if I can help further along the way, don't hesitate to reach out. I appreciate you. Much.
Thank you for helping me. You're welcome, Shauna. Lord, bless you. Let's go to Boston. Hi, Maria.
How can I help? Oh, hi. Thank you, Mr. West. Thanks so much.
I talked to you, I think, about two and a half years ago. I don't expect you to remember. Yeah, you you said check in. I used to work overseas full time. And so I've been home ten years.
Anyway, my question is, I wondered if I could not take a loan, but I'm sixty one, if I could Take out money from my four hundred one K to pay off my car loan because I guess I believe it might be a good idea. But I have, you know, the numbers for my budget and income and everything if you you know. I would probably not do that. You know, I see here in my notes, your car loan is at 6.7%. You know, here's the thing: you know, that money is, you're not going to pay a penalty on it because you're over 59 and a half, but it is all going to be taxable to you.
But more than that is, it's no longer there to continue growing and to be able to be converted to an income stream.
So there's an opportunity cost to that. And as much as I don't love you paying 6.7% on that car loan, I would rather you leave that 401k money right where it is and then at the appropriate time, have you convert that to an income stream to supplement Social Security?
So unless you just have a real conviction to be debt-free as soon as possible, I would leave the 401k money right there and just try to pare back your spending as much as possible. and free up as much as you can to pay towards surplus. Just out of your current cash flow as opposed to the 401k. That would be my best advice, just because I'd like for you to preserve that account if at all possible. Thanks for your call.
All right, one more break, and then back with our final segment. Call right now, 800-525-7000. Managing money doesn't have to feel overwhelming. or disconnected from your faith. The FaithFy app helps you budget with purpose, combining easy-to-use tools like digital envelopes with biblical wisdom and a Christ-centered community.
Whether you're new to stewardship or are looking to grow in generosity, The FaithFy app equips you to honor God with every financial decision. Join over 70,000 others and start today by downloading the app from your app store or by visiting FaithFuy.com and clicking App. That's FaithFi.com and click app. We are grateful for support from Praxis Investment Management. Since 1994, Praxis has offered investment products designed to meet practical needs for everyday investors seeking to steward their assets consistent with their desire to promote positive social and environmental impacts.
Praxis aims to bring a faith-based approach to ETFs, mutual funds, multifund portfolio solutions, and money market accounts, reflecting their 500-year-old Anabaptist Christian faith tradition. More information is available at PraxisInvest.com. Helping you see God as your ultimate treasure. This is Faith and Finance. I'm Rob West.
Hey, are you looking for an advisor who shares your values?
Someone who's met high standards and character and competence, including pastor and client reference, training in biblically wise financial advice, a regulatory review, at least 10 years of experience, annual CE requirements.
Well, that's the Certified Kingdom Advisor designation. It's the only financial services industry designation that's widely accepted across all the major firms. There's 1,800 CKAs throughout the U.S. and Canada. And if you'd like to find an advisor who shares your values, who can bring that technical expertise, but really with that foundation of biblical wisdom, you can search for a Certified Kingdom Advisor on our website.
Just go to faithfi.com. That's faithfi.com. Click find a professional at the top of the page. All right, let's head back to the phones. Let's go to Arkansas.
Carol, go ahead. I'm calling about my husband. He passed away recently. He has an IRA. And I have an IRA.
His IRA is less than 70,000. And my financial advisor recommended that I just roll. his IRA over into mine that I could do that. Is that so? Was that the easiest thing to do?
Yes, it often is. You know, as a spouse, you know, you're in the unique situation, which is where you can do this rollover, where you essentially roll his IRA into your own, and it becomes yours.
So it's no longer an inherited IRA. And then the funds continue to grow tax deferred, and you control the investments and the future withdrawals. And then you would not have any required minimum distributions until you reach your own required minimum distribution age, which would be either 73 or 75. That's generally the best choice for most folks.
Okay, I'm 71 right now. And we also have our home in an irrevocable living trust. Am I able to sell that since we have that in a trust? Or does it have to stay in the trust? Say that again, what's inside the trust?
Our home. Everything else is payable on death, but our home is in an irrevocable living trust.
Okay. And you're looking to sell it now while you're still alive? Is that what you're asking? I was wondering if I would be able to. And you said it's revocable, correct?
Irrevocable. Oh, it's irrevocable.
Okay. So, with an irrevocable living trust, generally that means that the terms cannot be changed once it's established, including who controls and who benefits from the assets.
So, what is it you're looking to do? You're looking to just sell that property and move into something else? If I did, if I because it's 15 acres and I'm not able to take care of it myself.
So if I did, I would probably move to town would be would be what I would do to downsize. Got it. It's not a big home or anything, but yeah, it it's just Whether I'm going to be able to take care of it or not, I'm not going to do anything for a while because it's just a recent just recently passed.
Okay. And are you the trustee? I think so, yes. And then it goes to my children.
Okay. Yeah. You're just going to want to check the trust docs because essentially the trust, not the individual, owns the property.
So your ability to sell depends entirely on your role and what the trust document allows.
So if you're the trustee, then you manage the assets for the beneficiaries.
So generally, you can sell a property if the trust document authorizes it, but the proceeds have to stay in the trust. They don't go directly to you. And then the money can be reinvested or used to buy a smaller home. If the trust terms allow, which generally they would.
So you can't remove the proceeds for personal use unless you're also a beneficiary and the trust permits it.
So I think it really is a matter of you going and visiting with an estate attorney, hopefully the one that created this, and just reviewing those trust docs.
So you understand, first of all, are you the trustee? and a beneficiary and then what permissions exist within the trust. But generally, as trustee, you would be able to sell the home, the proceeds would go back into the trust, and then the trust would be able to buy another home that you would be able to use until such time as you pass away. Oh, okay. Thank you.
Thank you. But I would visit with a trust attorney. I think that's really your next step. Do you know the estate attorney that put this all in place? Yes, I do.
Okay, great. That would be your next call. I'd get some time on the calendar to reach out to that person. Thank you very much. We appreciate your call today.
Lord bless you. Let's finish up today in Minnesota. Hi, Angie. Go ahead. Hi.
We have a term life insurance policy that is coming to an end, and we can cash it out or we could roll it into a whole life policy, but we have other adequate life insurance.
So we're just wondering with a child going to college in about a year and a half, if there's a way to put that money in a savings account. for that. expenditure that would not uh be it painful for taxes. Yeah. Angie, the only question I have is, you know, with term insurance, just plain term insurance, there is no cash value.
You just pay the mortality expense during the term. And if you don't collect on it, meaning you don't pass away, you drop it. And I realize that you could say, well, then the money's gone. But it's kind of like your car insurance. You pay the premium to offset the risk and you hope you never have to collect.
And that's true of term insurance. There may be a few exceptions. One is what's called a return of premium rider, but that's an optional add-on to a term life policy that if you outlive the term, it pays you all or some of the money you spent on the policy payments. Do you think that's perhaps what you have? It must be.
Either that or does a whole life Policy does that? A whole life will have cash value. Yeah, it's not term. That's a combination of a savings vehicle and the life insurance. It's much more expensive than term insurance, but it does build up savings.
And I would say, depending upon the tax treatment on that, I would probably go ahead and well, the first question is: do you need the death benefit? Are you all still working? Yeah. And do you have any other insurance or is this your only policy? Oh no, we have several other policies.
Life insurance policies? Yeah. Okay. Yeah. Well, the key is just to make sure you have the proper amount of coverage.
So at a minimum, you want 10 to 12 times your income on the person's life that's generating the income.
So if you're making $60,000 a year, you know, you'd want to have somewhere between $600,000 and $720,000 on the person who's earning the $60,000. And that's going to give you enough to generate enough income to get through until you would have normally retired and started taking Social Security.
So first thing is I determine how much life insurance do we need at this point and what policies do we have. To cover that, and then if you have enough coverage. then I would drop that policy and to your point, take that cash value and invest it or build up your emergency savings with it. Thanks for your call. I hope that helps you.
Folks. What a privilege it is to be able to help you navigate your financial lives in light of biblical wisdom. Our goal here is to be hopeful and encouraging, but always to give you wise counsel rooted in biblical truth. Here on Faith and Finance. Big thanks to my team today.
Certainly couldn't do this without them. Devin Patrick, Pat Montague. Also thankful for Jim Henry and the great work he does, and everybody here at Faith Phy. Have a wonderful weekend, and we'll see you on Monday. Bye-bye.
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