This Faith and Finance podcast is underwritten in part by Eventide Investments, a faith-based asset management firm. Eventide invests from a Christian worldview, helping values-aligned investors pursue integrity, impact, and performance through their portfolios. To learn more about how you can align your faith with your investments, visit faithfy.com/slash Eventide. That's faithfy.com/slash Eventide. 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.
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 800-525-7,000. This is Faith in 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 Burkett. 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.
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. If you'd like to explore whether a donor-advised fund is right for you, we have an article on this topic in the latest issue of our Faithful Steward magazine, an exclusive resource sent directly to our FaithFi partners. FaithFi partners receive Faithful Steward delivered to their mailbox each quarter, along with other resources designed to help them grow in biblical stewardship. You can become a partner with a gift of $35 a month or $400 a year at faith5.com slash give. That's faithfi.com slash gift.
All right, your calls and questions are next after this break. 800-525-7000. That's 800-525-7000. Stay with us. We'll be right back.
As the leading advocate for the Christian financial industry, Kingdom Advisors serves the public by promoting the integration of a biblical worldview across every aspect of the financial services industry. And we serve a growing network of thousands of Christian financial professionals, equipping and empowering them to carry biblical financial wisdom to their clients, peers, and community. For more information, visit kingdomadvisors.com. That's kingdomadvisors.com. We are grateful for support from Movement Mortgage, who provides residential home loans and reverse mortgage options in all 50 states.
Guided by a mission to love and value people, Movement seeks to help individuals and families make informed financial decisions from buying a home to planning for retirement. More information is available at faithfy.com/slash movement. Movement Mortgage LLC supports equal housing opportunity. NMLS number 39179. For licensing information, visit nmlsconsumeraccess.org.
Yeah. Taking your calls today here on Faith and Finance, 800-525-7000. Let's dive in today. We're going to begin in Utah. David, go right ahead, sir.
Yes, I have a Question about some money. I have no debt. And I've just saved up $100,000. And rather than just sitting there, click. There ought to be something better I can do with it.
Yeah. Well, it's a great question and it's a good starting place to just say, listen, I've got this extra money. Let me ask you a couple of questions. Do you have it earmarked for any specific purpose that would help us back into a time horizon for this money? Or is it really just surplus?
It would just be surplus.
Okay, so you're not planning on buying a home or trying to generate any income from it. You've got all that covered. Is that right? Yes, sir.
Okay, and what are your income sources today? Um in construction. I'm seventy to eighty thousand a year.
Okay, great. And in terms of other savings beyond this $100,000, would this be the extent of your reserves, or do you have anything else that's liquid savings? Um we have like emergency fund and probably another forty or fifty thousand.
Okay. Excellent. Yeah, that's great.
So you've got upwards of six months, maybe more, worth of expenses and emergency funds beyond this $100,000. And then what about long-term savings for retirement? Are you contributing to some sort of retirement plan, either individually or at your business? My wife and I both have been maxing out our Roth each year.
Okay. Yeah, and how much have you accumulated there? It's around one hundred and thirty thousand each.
Okay. And how far off is retirement? And I'm not saying we need to follow the cultural perspective on this, that we reach an expiration date where we cease all productive activity. I don't think that's the biblical model. We were created to be productive, but we do recognize there may come a season where you're redirected to service that doesn't offer pay, or you're not able to continue in the profession you're in because it's too taxing on your body, those types of things.
So, you know, how far off would you expect a transition like that to occur where you may need to supplement your income? Hopefully, at least 15 years.
Okay. Yeah, great. And you all would have Social Security at that point. Obviously, you're living fairly modestly, well within that $80,000 a year that you have coming in because you've been able to put away the $100,000. And perhaps even in that season of life, your expenses go down a bit.
And so hopefully, Social Security could cover a big part of that. But, you know, typically what we would say is you'd probably want maybe 12 times your income.
So that'd be about a million dollars. You know, if it was 10 times your income, it'd be about 800,000.
So I think somewhere between 800,000 and a million as a starting point might be a good goal. You guys have about a quarter of a million, but you have time on your side. As you said, you've got 15 years. And even then, maybe you continue working part-time or even beyond your time horizon.
So I think with this $100,000, at the very least, we want to continue to fund fully those Roth IRAs every year. That's a great savings vehicle. Do you have anything? What other types of returns? What retirement plans do you have?
Do you have something at work beyond the Roths? No, self-employed.
So, have you ever looked at what's called a SEP IRA SEP? Have not.
So, this would allow you, you know, with your Roth, you can put in for 2026 if you're, you know, if you're over 50, 50 or older, you could put in 8,600, but you get to the end of that contribution limit pretty quickly. You know, so with the SEP IRA for self-employed individuals, self-employed pension, you can put away quite a bit more money.
So, you're able to put in up to 25% of eligible compensation or effectively 20% of net self-employment income after certain adjustments, subject to the IRIS annual dollar limit. You're going to get a tax deduction on what goes in.
So, it's tax advantaged in the year you put it in. And then you get tax-deferred growth, which really helps because the taxes are not a drag on the investments as they grow.
Now, if we take this and apply it to your situation, and these wouldn't be exact numbers, but just to give you a ballpark, on $80,000 of self-employed income, you know, the maximum contribution. If we use this 20% of net self-employment earnings after deducting half of the self-employment tax, you know, it'd probably be in the neighborhood of somewhere between $14,000 and $16,000 a year. The exact amount is going to depend on your Schedule C income and your self-employment tax calculation.
So let's say you were able to put in roughly $15,000 this year and then you did another $15,000 next year. You could slowly get this in and reduce your overall taxes in the year that you make the contribution as well. But it would take you some time.
Now, if your wife is also employed by the business and is paid reasonable wages, she could have her own. If not, then she couldn't. But that would be one option. And I think perhaps, you know, either using maybe a robo-advisor to get that done at Fidelity or Schwab, like Fidelity Go or the Schwab Intelligent portfolios, or maybe you hire an advisor, a certified kingdom advisor to manage the Roths and help you get this $100,000 deployed through a tax. Account combined with a SEP, I think could be a great option.
And then you're not having to make the investment decisions. And if you wanted that, you could find a certified kingdom advisor at findacka.com. But how does all that sound? That sounds great. Yeah, good.
So I think that'd be the direction that I would go. Again, that website, findaca.com. Or if you wanted to do it yourself, you know, you could use one of the Robos or you could go to soundmindinvesting.org. The Soundmind Investing newsletter would give you mutual funds that you could, you know, do it yourself and essentially use their system of recommendations to buy and sell the funds that fit your risk profile. But I think as you continue to accumulate wealth, I mean, you've already got essentially $350,000 between the 100 and the two Roths.
That's a good bit of money. And it'd probably be worth your while to have an advisor step into that. But hopefully that helps you, David, give you a few things to think about. We appreciate your call. And if I can help further along the way, don't hesitate to reach out.
Let's go to Montana. Hi, Jerry. Go ahead.
Well, hi. Thank you for taking my call, Rob. I enjoy listening to your program quite often. And I would like to ask you a question that I haven't heard before, but this is my particular issue. I have a balance due at the hospital.
And I have been trying to whittle that down one hundred dollars a month. And when I get my statement, I get the same balance that I had the last statement, and I don't have them show any credits that I have put on that account.
So I have put two different calls into them. They said, well, we'll call you back within three days. I never get the call.
So I put in another call and say, I really would like to know if you can show me where my payments are being reflected. And then my other thought was: well, why don't I call the Office of the Administrator and say, hey, how come I can't get any response when I'm trying to whittle down my bill? Yes.
Well, I'm so sorry to hear that you're going through this, Jerry. And you're doing all the things I would have said. First of all, you absolutely want to take an active role in resolving this payment discrepancy. You know, I would continue to call because I'd love for you to be able to do this electronically. It's certainly more expedient.
But as a second measure, perhaps you send copies through the mail with payment proofs to the hospital's billing department and ask that they either email you or through the mail, acknowledge the discrepancy and show you documentation that your payments have been applied because this proactive step is going to take that step toward getting this resolved. It could be that they're being misapplied to a different patient's account or not processed due to errors in entering the information. Although the fact that it's happening over and over again tells me that it's something. Bigger going on here, but whether it's through the mail or over the phone, you just need to stay on it and continue to hound that billing department until you get an answer. I would have said, as a next measure, and you've done this, let's go to the hospital's administration as a next step.
I've got to take a break, stay on the line, we'll talk a bit more off the air. We'll be right back. Money always seems to ask for more. More income. or savings.
More security. But what if the better question is, how much is enough? This Faith Phi Field Guide isn't just a book to read. It's a practical guide that helps you prayerfully answer that question for your own life. one step at a time.
Order your copy of How Much Money is Enough today at faithfi.com/slash shop. That's faithfi.com slash shop. Faith in Finance is grateful for support from Eventide Investments, a faith-based asset manager pursuing investing that makes the world rejoice. Eventide invests from a biblical worldview, helping values-aligned investors pursue integrity, impact, and performance through their portfolios. More information is available about how you can align your faith with your investments at faithfi.com slash Eventide.
That's faithfi.com slash Eventide. Great to have you with us today on Faith and Finance. We're going to get to as many calls as we can here in our final segment today. Let's head to Mississippi. Roy, how can I help?
Yes, I listen to you guys a lot. I have a goofy kind of question. My son has. started a plan through his own efforts with the various securities out there that he's been involved with for Oh, several years. And he was giving me a list of some of the stocks Amazon and oh, Cisco, all kinds of tech stuff.
And he's garnered about a million dollars doing this, but he's asking me if I'm interested in joining and throwing the money I have into his plan. And jokingly, he says, I want people that like to not spend money. And I'm kind of throwing that around in my mind. The thing that concerns me, or one thing anyway, is he's not a real strong Christian. And uh The other is what might be the plus and minuses of putting my money in a joint account with him and other friends of his and like his son and his daughter and And that kind of thing.
And he's curious if I want to throw my 401 in there. And I know there's going to be penalties if I do that.
So what might the penalties be? Yeah. Wow. Yeah, a lot there. Let's kind of walk through this.
There wouldn't be any early withdrawal penalties, but you could trigger a massive tax consequence by pulling that money out of the 401k because it would all be added to your taxable income in the year that you would draw it as ordinary income. And so, you know, that could certainly push you up in a higher tax bracket. It means a pretty big bill, and you lose that tax-deferred growth moving forward.
So I wouldn't recommend that. I also want to just encourage you to be cautious here. You know, whenever family and investments intersect, I think at the very least, it's wise just to proceed with caution and slow down because you certainly want to understand the risks, the liquidity, meaning if you change your mind, can you get out? The fees. You know, and whether this investment is appropriate for your stage of life, the last thing we would want is for this to go a direction other than what you expect or he expects.
I'm not saying he's trying to do anything disingenuous here, but when it comes to investments, it's going to be beyond his control, the ultimate outcome. And I think, you know, the last thing we would want is some sort of relational collateral damage here, or for you to be in a position where you have harmed yourself financially, you know, moving forward, given that this is your nest egg. I appreciate your desire to be supportive and not turn him down. And yet, at the same time, this is a pretty significant decision with real tax implications and real sustainability, because your biggest risk in this season of life is what's called longevity risk: that you could outlive your money, especially if you take more risk than is appropriate and you lose some of it. Do you know what type of investment?
Investment, this is, is it a private investment, or is it something that's publicly traded on the stock market? It's private. He doesn't trust anyone else out there.
So it's all. money he's invested over the years. And we were with the SP for a while, but he got out of that. And of course, he's regretted doing that now. But Yeah, yeah, it's mainly just a private thing he's created himself, you know.
Yeah. And that just adds more risk. Again, not that he's not skilled as an investment selection person, as a stock picker, so to speak. But whenever you go into a private investment, there is less regulation. Often, you know, these private investments lack any liquidity.
And so, you know, your ability to get out of it is going to be significantly less.
So, you know, I would stay away from this. I mean, if you wanted to go into it, again, I'd want to try to keep it inside the retirement structure, the pre-tax structure, which would mean that you could use what's called a self-directed IRA. You could do a search on that. You'd have to find a self-directed IRA custodian, and they would often allow you to invest. But I would keep it probably no more than 5% of my investment just because, again, this is not the season of life for you to both mix family and money.
Yeah. And especially in a private investment, you know, the ownership structure, the liquidity, the creditor risk, you know, just all of these things, potential family conflict, are a big downside. In terms of a joint tenancy situation, you know, I would stay away from that as well. That's going to create gift tax considerations, estate planning issues. It just adds a whole lot of complexity unnecessarily.
So I would just keep everything in your name alone. I would probably encourage you just to avoid this altogether. But if you did do it, I would do it only no more than 5%. And I would use a self-directed IRA to keep it in that tax-deferred environment.
Okay, thank you so much. I just wanted to get your position on that kind of thing. I know the difficulties with family. You never think anything is going to crop up, and yet it always seems to rear its ugly head at some point. Thank you.
Unfortunately, it does, but I appreciate you, Roy. Thanks for calling today. Let us know if we can help further along the way. Let's finish up in Indiana. Go ahead, Kay.
How can I help you? Hi, Rob. Thanks so much for taking my call. I appreciate your show. It's brought really good conversations with my financial advisor.
Today I'm calling about Roth IRAs. I have two kids that are in their early and mid-20s, and I'm really encouraging them to get started, even if it's a small amount, investing in a Roth IRA. And I wanted to know a good place for them to look where they're not going to have everything eaten up by fees because it's probably going to be a smaller contribution to start out with. Yeah, it's a great question. I love that you're encouraging them in that nothing better than to start a Roth IRA early.
The power of that tax-free combating is amazing. If they were going to pick their own investments, like exchange-traded funds or mutual funds, then I would say either Fidelity or Schwab would be great. Fidelity has no account minimums, they have commission-free ETFs. It'd be a great place for you to go with little or no fees. Charles Schwab, same thing: zero account minimum, a broad set of index funds, no trading fees.
So, those would be great if they want to pick their own investments. If they want kind of a robo solution where the algorithm would pick the investments for them for a small fee, I would look at. First one is Schwab again, but it's the Schwab Intelligent Portfolios. That's the Robo solution inside Charles Schwab. And then the second one is called Betterment.
So do-it-yourself, Fidelity or Schwab, just a straight investment account, RoboAdvisor, Schwab Intelligent Portfolios, or Betterment, okay?
Okay. Can I ask real quick a second question?
So we're not real savvy on the investing side.
So, and I've heard you mention Soundmind Investing. Would that be a good beginning? It totally would. Yeah. So they could get the Soundmind Investing newsletter and they would provide every month if they wanted to exactly which mutual funds to buy.
They have a phenomenal track record. They're all believers. And you'd be really pleased with that. Oh, awesome. Thank you so much.
All right.
Soundmindinvesting.org is the website. Thanks for your call. Big thanks to Lisa, Jim, Dan, and Doreena. We'll see you tomorrow. Bye-bye.
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