Charitable Giving Strategies for Your Family

The holiday season is a special time, especially for families. From spending quality time together to sharing celebrated traditions, the spirit of joy and giving is especially prominent this time of year. As you begin to cross friends and family members off of your gift list and wrap presents, have you also been considering making a charitable gift?

When it comes to charitable giving, selecting the causes that are near and dear to you and yours is the fun part. However, what comes next can feel confusing and complex, so it's particularly important to select the giving vehicle that's right for you and your family. Today, I'm breaking down a few of the most popular and incentivizing giving vehicles for you to consider.

Private Foundations

A private, 501c3 foundation is an organization controlled and funded by a family, individual, or corporation that exists solely for charitable purposes. These organizations can either be operating foundations that are directly involved in operating charitable enterprises or they can be non-operating foundations that primarily make grants to charities.

A major pro to private foundations is that they afford greater control to the donor than other charitable giving vehicles. For example, unlike a public charity, a private foundation may be governed exclusively by its donor(s) or by a board consisting of individuals chosen by the donor(s). Private foundations also provide greater flexibility with regard to their investment options and holdings.

On the flip side, private foundations require complex legal work, extensive annual distribution levels, reporting requirements, and organizational constraints. 

Donor Advised Funds

Similar to a bank account, Donor Advised Funds are irrevocable giving accounts that exist to support charitable organizations. In addition to providing several tax advantages to the donor, they are quite easy to set up and simple to use, making them a popular giving vehicle. 

Other advantages to DAFs are that there are no reporting, administrative, or other requirements for the donor, meaning transactions can be completely private, and they can accept assets other than cash, including cryptocurrency, stocks, private business interests, and other financial instruments even after they have appreciated in value.

Charitable Remainder Trusts

Charitable Remainder Trusts (CRTs) are irrevocable trusts that provide the donor(s) or their beneficiaries with an income stream for that individuals lifetime or for a designated period of time. The remainder of the donated assets after that timespan then pass to a designated charity or multiple charities chosen by the donor. CRTs are a smart choice for donors who wish to attend to their philanthropic goals while also planning income for the future.

When considering this option, it's important to keep in mind that gifts to the CRT do not qualify for the annual gift exclusion and that there are limitations on the income tax deduction based on several factors, including number of heirs and life expectancy.

Moscaret Investment Advisory is here to help

As your financial advisor, my objective has always been to make you feel like you are “coming home” — where you feel the most at ease and are confident about your surroundings. If you're unsure about the best giving vehicle for your charitable contribution this holiday season, let me help put your mind at ease. I would be happy to partner with you to ensure that your wealth is working for what matters most to you and your family. Please don't hesitate to schedule a time to start the conversation.