Why Your Giving Strategy Matters
As people grow older, gratitude often inspires a desire to give back. Thoughtful charitable giving strategies add purpose to wealth—they allow you to share your blessings and create a lasting impact.
But while generosity comes from the heart, the smartest giving strategies also engage the head. Just like different vehicles serve different purposes—a truck for towing or a van for families—different charitable vehicles serve different philanthropic and financial goals.
Whether you’re just beginning to explore charitable giving or reviewing an existing plan, choosing the right charitable vehicle can help you give effectively while also aligning with your financial and tax situation.
Donor Advised Funds (DAFs): Flexible and Accessible
A Donor Advised Fund (DAF) acts like a charitable investment account, allowing you to contribute cash, stock, or even alternative assets. Contributions are tax-deductible—up to 60% of your adjusted gross income for cash gifts.
Advantages:
- Flexibility: No deadline for donating funds, so you can plan gifts over time.
- Collaboration: Multiple family members can contribute to the same fund.
- Simplicity: Lower administrative burden compared to a foundation.
Considerations:
- Irrevocable: Once donated, funds can’t be reclaimed.
- Limited control: You can suggest how funds are used, but final decisions rest with the charity.
Private Foundations: Control and Legacy
A Private Foundation gives donors full control over how assets are invested and distributed. It can be established by an individual, family, or corporation and can continue indefinitely, creating a lasting legacy.
Advantages:
- Complete control over charitable direction and investments.
- Legacy-building: The foundation can exist for generations.
Considerations:
- Complex setup and ongoing management requirements.
- Annual IRS filings and oversight by a board of directors.
This vehicle suits those who want a hands-on role in managing their charitable mission.
Charitable Remainder Trusts (CRTs): Giving That Pays You Back
A Charitable Remainder Trust (CRT) allows you to donate assets into a trust while receiving annual income from it for a set period. When the term ends, the remaining assets go to your chosen charity (or even your own foundation).
Advantages:
- Provides an income stream for life or a set number of years.
- Enables significant charitable gifts without disrupting your cash flow.
Considerations:
- Requires legal guidance and careful structuring.
- Irrevocable once established.
Charitable Lead Trusts (CLTs): A Legacy for Both Family and Charity
A Charitable Lead Trust (CLT) works in reverse of a CRT. The charity receives payments first for a set number of years, and what’s left eventually goes to your heirs, often with reduced estate or gift taxes.
Advantages:
- Balances philanthropy with family wealth transfer.
- Potential estate and gift tax benefits.
Considerations:
- Structurally complex and irrevocable.
- Requires professional coordination with your attorney and financial team.
How to Decide Which Vehicle Fits You
Your ideal charitable giving strategy depends on:
- Your giving goals:Do you want to give now, later, or leave a legacy?
- Your financial picture:How important are tax benefits or ongoing income?
- Your desired level of control:Do you prefer simplicity or hands-on management?
A thoughtful charitable plan aligns both your generosity and your financial goals—maximizing your impact while supporting the causes that matter most.
If you’d like to explore which charitable giving vehicle best suits your goals, reach out to discuss your options with your Cornerstone team.
Opinions expressed in this article are those of the author/speaker and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. The foregoing is not a recommendation to buy or sell any individual security or any combination of securities. CSP #934339. Exp. 11.18.26
