Planned Charitable Giving

Blaine Bowers |

Planned Charitable Giving

Standard donations or "checkbook giving" to charities or favorite causes are often tax deductible, but planned charitable giving allows you the opportunity to maximize the personal, financial and tax benefits of your gifts.  

Once you know what charity or cause you want to contribute to, you may also want to consider:

  • What kind of property do you want to donate? (cash, stocks, real estate, life insurance)?
  • Do you want the gift to take effect during your life or at your death?
  • Do you want to retain an interest in the property you donate?
  • Do you want to be involved in deciding how your gift is spent?

Gifting Strategies

There are many ways to make your donation; from a simple outright cash gift to a complex trust arrangement.   Here are five of the most commonly used strategies:   

1) Outright Gift

An outright gift is an immediate gift for the charity's benefit only.  It can be made during your life or at your death via your will or other estate planning document.  Examples of property that you can gift are cash, securities, real estate, collectibles and life insurance proceeds.

2) Charitable Trust

A charitable trust lets you split a gift between a charitable and a non-charitable beneficiary, allowing you to integrate financial needs with philanthropic desires. The two main types are a charitable remainder trust and a charitable lead trust.

A typical charitable remainder trust provides an annuity or unitrust interest for one or two persons for life. An annuity interest provides fixed payments, while a unitrust interest provides for payments of a fixed percentage of trust assets (valued annually).

At the end of the trust term, assets remaining in the trust pass to the charity. This can be an attractive strategy for older individuals who seek income. There are a few other variations of the charitable remainder trust, depending on how the income stream is calculated.

With a charitable lead trust, the order is reversed; the charity gets the first, or lead unitrust or annuity interest, and the non-charitable beneficiary receives the remainder interest at the end of the trust term.

3) Charitable Gift Annuity

A charitable gift annuity provides a fixed annuity for one or two persons for life. It's easier to establish than a charitable remainder trust because it doesn't require a formal trust document. 

4) Private Foundation

A private foundation is a separate legal entity you create that makes grants to public charities. You and your family members, with the help of professional advisors, run the foundation--you determine how assets are invested and how grants are made. But in doing so, you're obliged to follow the many rules and regulations governing private foundations. 

5) Donor-Advised Fund

Similar to but less burdensome than a private foundation, a donor-advised fund is an account held by a charity to which you can transfer assets. You can then advise, but not direct, how your assets will be invested and how grants will be made.


Tax Benefits

Charitable giving can provide you with great personal satisfaction. But let's face it, the tax benefits are valuable too. Your gift can result in a substantial income tax deduction in the year you make the donation, and it may also reduce capital gains and estate taxes.

With a charitable remainder trust, you generally receive an up-front income tax deduction equal to the estimated present value of the interest that will eventually go to charity.

Charitable contribution deductions are generally limited to 50% of your adjusted gross income (AGI), or 30% or 20% of AGI depending on the type of charity and the property donated.  Disallowed amounts can generally be carried over and deducted in the following five years, subject to the percentage limits in those years. 

Your overall itemized deductions may also be limited based on the amount of your AGI.  The charity must be a qualified public charity in order for you to enjoy these tax benefits.

Remember, not all tax-exempt charities are qualified charities for tax purposes. To verify a charity's status, check IRS Publication 78, or visit

Accredited Investors

There are some special programs which have potential to create significant tax benefits above and beyond typical charitable planning arrangements are available to Accredited Investors.  These programs are often offered through private placement and may offer tax credits and/or deductions.   For an individual to be considered an accredited investor, they must have a net worth of at least one million dollars, not including the value of their primary residence, or, have income of at least $200,000 each year for the last two years (or $300,000 together with their spouse if married) and have the expectation to make the same amount this year.


Please contact me if you have any questions and I'll be glad to help.  You can reach me in a variety of ways by clicking here.