In 2018, Giving USA reported that a record-breaking $400+ billion was given to charity. Americans generally give to charity for two reasons: to support a cause they care about, or to leave a legacy through their support. When giving, many choose to give through cash donations. Others realize that cash donations may affect tax benefits given to a charity, and opt for an alternative gift that can maximize the benefits. These options, outlined below, are direct gifts, charitable gift annuities, pooled-income funds, gifts via trust, and donor-advised funds.

Charitable Giving Options

Direct gifts are exactly what they sound like; donations made directly to an organization. They may be deductible from income taxes depending on your situation.

Charitable gift annuities, which are completely different from insurance annuities, allow donors to give money, securities, or real estate in exchange for the charitable organization to pay the donor a fixed income. When the donor passes away, the assets pass to the organization. These are a good way to enable donors to receive constant income and still benefit the organization.

Pooled-income funds are contributions from multiple donors that are pooled into a single fund, and are invested by the charity. Income is distributed to the donors based on their share of the fund. These funds allow donors to receive income, manage taxes, and make a future gift as well.

Gifts in trust allow a donor to both leave assets for their beneficiaries and also leave gifts for a charity. There are two types, with the first being a charitable remainder trust. With these, the donor will receive a lifetime income from the assets before they transfer to the charity after the donor’s passing. The second type, a charitable lead trust, works in almost the opposite fashion; while the donor is alive, the trust’s income from the assets will go to the charity, and upon the donor’s passing, assets will be passed to the donor’s beneficiaries.

Donor-advised funds are a giving vehicle used to allow donors to make a contribution and receive a tax deduction. Over time, donors can recommend grants to their favorite charities.

Make Well-Informed Choices with FSG

All of these charitable giving strategies are governed by tax rules and regulations. The benefits and considerations should be weighed carefully with a qualified financial professional. Call FSG today for a consultation on the best charitable giving strategies so that you and your favorite charity benefit the most from every gift.