As an attorney, CPA, or financial advisor, your client base no doubt includes individuals and families who have established donor-advised funds—many of which are set up at Innovia. Donor-advised funds are especially popular because they can potentially offer a client an immediate income tax deduction while also allowing the client to recommend grants from the fund on a flexible schedule to support the causes they care about. Donor-advised funds often are simpler and less expensive to establish and manage than traditional private family foundations.  

Donor-advised funds established at Innovia, versus those established at a national or commercial provider, come with the added benefit of our team’s local expertise and personal service to help your client achieve charitable goals. And that’s not all. As you work with residents of the state of Washington, remember that there can be tax advantages to establishing a donor-advised fund at Innovia instead of at a national or commercial provider. Here’s why: 

• Under Washington law, the charitable donation deduction against Washington capital gains is available only for gifts to “qualified organizations.” A qualified organization must be eligible to receive charitable contributions for federal tax purposes and also be “principally directed and managed” within the state of Washington. 

• For clients who use a national or commercial donor-advised fund sponsor, this rule may come as a surprise. Even if the client ultimately recommends grants from the donor-advised fund to Washington charities, the key question for the Washington deduction is generally whether the organization that owns or controls the donor-advised fund is principally directed and managed in Washington. In other words, the location and management of the donor-advised fund sponsor may matter more than the location of the charitable organizations that eventually receive grants. 

• This creates an important planning opportunity for clients who want the flexibility of a donor-advised fund while also preserving potential Washington tax benefits. A donor-advised fund at Innovia offers the same core advantages clients appreciate about donor-advised funds—simplicity, organization, family involvement, and flexibility—while also providing a Washington-based charitable partner that understands local needs and is principally connected to the communities your clients care about. 

For your clients who already have donor-advised funds at national or commercial providers, this may be a good time to revisit whether that structure still fits their goals. Some clients may wish to transfer part or all of an existing donor-advised fund balance to a donor-advised fund at Innovia, especially if the clients want more local insight, a deeper philanthropic relationship, or a structure that may be better aligned with Washington’s charitable deduction rules as they add appreciated stock or other capital gains assets to the donor-advised fund over time. 

Remember, whether you are working with clients on a donor-advised fund, charitable legacy, or anything in between, Innovia is here for you.