May 9, 2013

Single Point of View | Charitable Planning

When it comes to charitable planning and philanthropy, the three pillars of giving are time, talent, and treasure. For the treasure part of the equation, there are many ways in which one can give to a cause or organization. 

Below is an overview of various charitable planning techniques many families use.  Each of these strategies has pros and cons and it is up to each family to define their philanthropic goals and then to determine which solution(s) are optimal for them. 

Which solution is right for you?


The Donor Advised Fund

The Donor Advised Fund can be a simplified, low cost way to donate without the administrative costs and challengesof a private foundation.
The Donor Advised Fund enables the donor to accelerate charitable contributions into the current year without necessarily making grants to any public charities in that year.
Both commercial sponsors (Examples: Fidelity, Schwab, Vanguard) and not for profit organizations (Examples: The Boston Foundation, Combined Jewish Philanthropies) offer a platform for the Donor Advised Fund.
Other characteristics of the Donor Advised Fund include:
- Streamlined tax reporting
- Easy online access for        
      - Tracking gifts
      - Managing donations
      - Analysis of giving history
- Ability to establish reoccurring or one time grants
- Donations can be anonymous or named
- Large selection of approved nonprofit organizations and charities
- Separate donation to charity from tax deduction
- Ability to invest and grow money
- Collaborate with your family on giving strategies
- Ability to gift non-cash assets (highly appreciated stock, real estate)

Our View

There is debate over Donor Advised Funds limiting the immediate impact to America's Charities.  The fact that the current tax laws allow for an immediate tax deduction to these funds, yet do not require any gifts to be made from them immediately is a topic of ongoing debate (Is the money getting into the hands of the charitable organizations that need it, or sitting in an investment account?).  
Recognizing that all planning strategies come with positives and negatives, we feel that Donor Advised Funds (when implemented for the right reasons) can be a great benefit to those who are looking to make a philanthropic impact, yet, want to simplify and organize their giving without the high costs associated with operating a private foundation.