Philanthropic Giving

charitable giving

Families often choose to gift assets or income as part of a broader desire to create lasting impact beyond their own financial success. 

Philanthropic giving allows them to align their wealth with their values, support causes they care deeply about, and set an example of generosity for future generations. 

Whether through direct gifts, donor-advised funds, or charitable trusts, these strategies not only support meaningful change in the world but can also provide significant tax advantages and strengthen a family’s legacy of purpose-driven stewardship.

 

Presently, the tax code offers incentives for gifting of one’s assets or incomes. Tax deductions are given for current contributions and, for estate owners, charitable gifts can reduce the size of the estate to help minimize estate taxes.

Often times, an individual will designate a charitable beneficiary in their will to benefit the organization after the individual dies. By using charitable gifting techniques, a donor may be able to benefit the charity while living without having to sacrifice the income that an asset can generate. Understanding how properly structured charitable gifts can provide current benefits for both the donor and the charity could be important for the charitably inclined.

Donor-Advised Fund

A Donor-Advised Fund (DAF) is a powerful and flexible way to give to the causes you care about while maximizing tax benefits and simplifying your charitable strategy.

While you can contribute cash, the most strategic way to utilize a DAF is through gifting appreciated securities or other appreciated assets. Donors receive an immediate tax deduction but can grant the funds to your favorite nonprofits over time. It’s like having your own private foundation without the administrative burden.

  • Immediate Tax Deduction: Receive a charitable deduction in the year you contribute, even if you distribute the funds later.
  • Grow Your Giving: Contributions can be invested and grow tax-free, allowing you to give more over time.
  • Simplify Your Giving: Centralize your charitable contributions in one place, with a single year-end tax receipt.
  • Give Strategically: Time your contributions to align with tax planning goals, such as high-income years or the sale of a business.
  • Engage the Family: Involve children or loved ones in the giving process and pass down values of generosity and impact.

Whether you’re looking to make a one-time gift or create a long-term legacy of giving, a Donor-Advised Fund can be a smart and meaningful solution

Charitable Remainder Trust

A remainder trust enables the donor to transfer an asset while retaining the right to the income it generates. The asset becomes the “remainder” which is owned by the charity. Remainder trusts, if properly structured, can qualify for a current tax deduction. There are three types of remainder trusts:

Unitrust: A unitrust the income the donor receives is based on a percentage of the current fair market valuation of a trust asset. Each year, as the asset is valued, the income is adjusted based on the new valuation.

Annuity Trust: Instead of a percentage of the asset value, the donor is paid a fixed amount annually.

Pooled Income Fund: Donors can pool their donated assets in a fund that is operated by the charitable organization. The donors then receive a proportionate share of income from the fund that is paid throughout their lifetime. Payments can vary each year based on the valuation of the underlying assets in the fund.

Charitable Lead Trust

Also known as an Income Trust this vehicle transfers the income rights to the charitable organization. Generally, the income rights are assigned for a specified period of time after which the remainder passes to the donor.

Charitable planning involves tax issues that should be discussed with a qualified tax or financial professional.

For more information of charitable planning, please contact us today.