Charitable Giving & Philanthropy
We help clients to meet their charitable and philanthropic goals effectively and efficiently. We encourage our clients to think about their charitable goals, and we suggest tax-efficient ways to meet those goals. This might include outright gifts during your lifetime to a charitable organization, or to a private foundation or donor advised fund for distribution over time. It might include gifts that are split between a charity and friends or family, such as charitable lead trusts or charitable remainder trusts. Increasingly, clients are considering philanthropy to mean more than just a charitable deduction. We can help with this by devising trusts and other family entities that engage in socially responsible investing, or other targeted investment aimed at developing a particular community or industry. Creative, proactive planning is the heart of our practice.
- Private Foundations – Private foundations can be a great way to involve the whole family in charitable giving. Each private foundation is a tax-exempt organization, so its formation and operation must meet all the requirements to qualify for tax-exempt status. We advise the client through all of this, and we look carefully at how the foundation will be funded, whether that will happen during lifetime or at death, to determine the tax benefits and confirm that the foundation will qualify as tax-exempt.
- Charitable Remainder Trusts and Charitable Lead Trusts – If a client wants to make gifts to charity but also wants to benefit family members from the same property, a split-interest gift, like a charitable remainder trust or charitable lead trust, might be a great option. These trusts have many acronyms, like CRAT, CRUT, NIMCRUT, CLAT, and CLUT. Essentially, they divide the trust into two parts: income, which is distributed annually for a certain number of years, and the principal or remainder, which is distributed once the income interest
ends. One of those parts (either the income or the remainder) goes to family or other individual, and the other part goes to charity. These trusts qualify for certain charitable deductions, so they can provide great tax leverage on gifts to individuals while also serving the greater good.
- Donor Advised Funds – Many clients are considering using donor advised funds in place of private foundations. Donor advised funds offer a number of potential benefits. For example, the donor advised fund is managed by a charitable organization, so the management fees tend to be much lower than for a private foundation, and the administrative responsibilities are handled professionally, not by family members. Family members can still be named to direct distributions from the fund, but unlike a family foundation, they cannot be paid for their services to the donor advised fund. When ease and maximizing charitable benefits are the goals, a donor advised fund may be the best option.