fbpx
4 MINS READ

Why You Should Consider Providing a DAF in Your Financial Wellness Benefits

  • Groundswell
  • September 23, 2022

With 42% of employees in full-time work struggling to make ends meet, financial wellness benefits are no longer a bonus perk that Human Resources can offer. They are a business priority. Uncertain economic conditions, from the aftershocks of the pandemic to rising inflation, compel employees to make their money go further. Financial wellness benefits offer a framework for investing in the future, and no more so than with donor-advised funds (DAFs). Employees don’t have to compromise on their charitable giving because of financial health challenges. In fact, DAFs can unlock some attractive tax advantages. 

What Are Financial Wellness Benefits?

Employees are increasingly looking at the financial wellness benefits a company offers with the same interest they pay to the starting salary, health and well-being perks, and flexible working options. That’s because financial stress is on the rise. When workers are preoccupied with their personal finances, they’re not only less productive. They’re also likely to seek a more attractive offer from an alternative employer. Workers want the most sought-after financial wellness benefits:

  • Retirement planning ranks as the #1 priority. Employees want to feel secure about their future after work.  
  • Insurance is another must-have. Health, life and disability coverage provides a safety net should circumstances change.  
  • Financial education can help employees save, limit their tax liability, and build a budget that supports personal growth. 
  • Investing opportunities allow employees to put their money to work so that they’re earning even when they’re away from the office. 

Why It’s Important

Personal and professional lives are never completely separate and that’s why employee benefits are so important. Bearing in mind that one in four employees claim that financial worries negatively impact their professional performance, companies who take the initiative with financial wellness packages should look forward to:

Salary isn’t everything, particularly to Gen Z. One of the issues that the Great Resignation highlighted is that workers are fleeing roles that don’t align with their personal goals, but they will invest their skills in a company culture built around strong values.

Corporate giving is one of those values that still register high on the wishlist. There’s a sense that a company’s obligations don’t stop at its internal gender equality, diversity and inclusion goals. The impact a business makes on the local and wider community is just as important, and philanthropy is a key measure for supporting that vision. 

Why You Should Include Donor-Advised Funds

The benefit that a DAF brings to corporate giving is that it balances philanthropy with financial benefits for the employee. By donating through a DAF to a public nonprofit sponsor organization, employees can gift cash, stock, real estate or other assets. Donations of the latter (real estate and assets) tend to happen at the corporate level, but individual employees can unlock immediate tax advantages by gifting cash or stock through a DAF. The advantages of giving through a DAF include: 

Reduce Tax Liability

Individuals can claim a tax deduction of up to 60% of their adjusted gross income if they give through donor-advised funds — and there’s no need to submit piles of extra paperwork to the IRS. 

Avoid Capital Gains on Stocks and Securities

That’s particularly attractive for workers at tech firms or startups, where stock options and signing bonuses are a key employee retention strategy. Employees at Amazon, for example, receive restricted stock units (RSUs) that yield big dividends in years three and four. 

The only restriction on giving through DAFs is that the threshold is usually high. Although the minimum donation with some brokerages is as little as $5,000, these are the exceptions. Morgan Stanley and Vanguard, for example, start at $25,000, making them more suitable for giving at a corporate rather than individual employee level. 

That’s why Groundswell is so innovative within the corporate giving space. Employees can have their own DAF and get started with as little as $1, meaning that any employee can access a personal giving account and enjoy the tax benefits immediately. Find out more about corporate giving as an employee benefit by contacting us today.

  • Groundswell
  • September 23, 2022