Charitable Donations – Structuring Your Philanthropic Legacy

    Published: 06-16-2009
    Views: 12,567
    Andrew Hastings, Vice President of National Philanthropic Trust, discusses ways you can structure an enduring philanthropic legacy that can last well beyond your lifetime.

    Andrew Hastings: Hi, I am Andrew Hastings, Vice President of National Philanthropic Trust. I am talking about ways you can structure an enduring philanthropic legacy that can last well beyond your lifetime.

    Two very popular and sophisticated vehicles for doing so are the private foundation and the Donor Advised Fund. Both of these are excellent ways to make gifts doing your lifetime and beyond.

    Private foundations are especially well known. Many foundations such as the Ford Foundation or the Bill & Melinda Gates Foundation have had a tremendous impact on our nation and society. Donor Advised Funds are less well known but they are becoming increasingly popular and are the nation's fastest growing charitable giving vehicle. A Donor Advised Fund offers many of the same benefits as a private foundation and it provides several advantages as well. Let's take a look at some of those advantages. First, a Donor Advised Fund is much easier and less costly to start up. It can take a few months to establish a foundation and start up cost can be substantial often involving several thousands of dollars on legal expenses. On the other hand, a Donor Advised Fund has no start up cost and the paper work is minimal. The fund handles the administration and documentation of your grant making and the ongoing management fees are far less than those for a private foundation.

    You can create your fund immediately by making a donation to a wide range of parent charities that administer Donor Advised Funds. These include community foundations, universities, religious organizations or a public charity like National Philanthropic Trust, which specializes in Donor Advised Funds. Second, with a Donor Advised Fund, you can make a single donation to your fund and then over time recommend grants from the fund to a wide range of philanthropic interests. Third, with the Donor Advised Fund, you receive an immediate federal income tax deduction for your contribution to the fund, and the fund's assets are invested and may continue to grow tax free. Donor Advised Funds also offer higher tax deduction limits compared to a private foundation. Donor Advised Funds also have no excise tax on investment income.

    Fourth, a Donor Advised Fund also offers you greater privacy. With a Donor Advised Fund, the names of individual donors to the fund can be kept confidential and if you wish, you can even make your grants anonymously. A private foundation, on the other hand, must file public tax returns that detail the grants made, the names of trustees, staff salaries and other private information. And finally, a Donor Advised Fund can exist beyond your lifetime. With your Donor Advised Fund, you have the option by their naming successors such as your children, grand children or other family members to become advisors to the Donor Advised Fund after you die, or you may name charitable beneficiaries to receive the balance of the Donor Advised Fund assets or receive a percentage of the assets for the lifetime of the fund. Either way, you can create an enduring philanthropic legacy. I hope this information helps you donate to a great cause. Thank you and keep giving wisely.