Best Tools To Facilitate Your Charitable Giving


Being generous with your money is admirable in and of itself. Leveraging the right tools to facilitate your generosity takes your giving to the next level because it helps you be even more efficient and intentional.

Living a prosperous life often means you have the opportunity to be generous with your money. Most of the people with whom I work are entrepreneurs and self-made and have a desire to do good with the money they earned having grown up humbly. They want to be good stewards of their hard-earned wealth. Philanthropy provides a much-needed purpose for their money that fulfills their values of generosity and reciprocity.

Giving money away deserves a strategy as well. The better you plan for your generous giving, the more money you potentially have to share with the people, institutions, and causes you care about the most. 

Here are six tools you can utilize to give efficiently when you are ready to support your favorite charity:


1. A donor-advised fund

This fund, otherwise known as a DAF, is managed by a sponsoring organization that handles the administration of the fund. Once the account is funded, the donor can support organizations with the fund over the years with a small minimum donation from the DAF required annually. The donor reaps the benefits of the tax deduction for the year it is given. The donation can usually be deducted at the current market value, not the amount paid if the asset has appreciated, thus reducing future capital gains taxes substantially. Additionally, a donor-advised fund contributes to your legacy of giving and eliminates any estate taxes on the funds left in the account upon your death.

2. Private foundations

Affluent families, individuals, or businesses can start a private foundation. Typically a large lump sum of money is deposited into the foundation. Additional deposits can be made at any time. Each year a portion of the fund is donated to the charity or charities of choice. One example of a private foundation is the Bill and Melinda Gates Foundation, which is currently the largest foundation in the U.S.


3. Charitable remainder trusts (CRTs) 

A charitable remainder trust allows you to give away assets now and receive an income stream for life or for a specific time period (e.g., 10 years). At the end of this time period, the remaining trust assets go to the charity you selected at the beginning of the process. A charitable deduction is received at the time the CRT is funded for the present value of the gift expected to go to charity at the end of the income term.

4. Charitable lead trust

Charitable lead trusts allow a donor to gift stocks, real estate, or other income-producing assets to the trust. The trust pays an income stream to designated charities for a specified term, and the remaining assets are transferred to non-charitable beneficiaries. This allows the charitable organization to have a long-term stream of income and allows the donor to receive a charitable deduction either upfront or as the income stream is being paid. 

5. Qualified charitable distributions

A qualified charitable distribution (QCD) allows a donor to direct a portion of their required minimum distribution (RMD) from a retirement account to a qualified charitable organization. You must be age 70 ½ or older and the charitable distribution must be made before the deadline to take your RMD. The amount of the QCD is excluded from your taxable income which can reduce your tax burden substantially. The maximum amount of QCDs you can make in a year is $100,000.

6. Direct gifts

For donors who enjoy full control and spontaneous giving to one or multiple charities, a direct gift can be the easiest way to donate. If donating directly, it is with after-tax dollars and qualifies for a write-off when you file your taxes.




Everyone understands that charitable organizations accept monetary donations. However, there are other ways to give besides just writing a check or giving cash. To maximize your tax benefits and gift to charity, there are two additional strategies that philanthropists use, especially when incorporating a donor-advised fund, a private foundation, or a charitable remainder trust. 

First, appreciated securities can be a more tax-efficient way to fulfill your charitable goals. Most affluent individuals become philanthropists because they have invested in various vehicles over a long period of time. If you have held stocks, bonds, securities, or EFTs and they have appreciated substantially, the tax savings can be considerable if you gift appreciated assets. Typically, you receive a charitable deduction for the fair market value of the asset and also avoid having to pay capital gains on the sale of the asset. For example, if you have stocks worth $50,000 for which you paid $38,000, you can donate them to a charity and receive a charitable deduction for $50,000. This can save the donor approximately $12,000 in capital gains taxes if he had sold the stocks directly, then donated the proceeds. 

Second, real estate can be donated to the charity of choice. Philanthropic donors often donate an empty lot for a church to build or expand. Just like appreciated securities, real estate may have increased in value and raw land or income-producing real estate can be donated. Selling it directly requires you to pay capital gains taxes on the profits, thus reducing the effective amount you can donate to a charity. 

Related Content: 4 Steps to Conduct Due Diligence on Charities

With six savvy tools and additional ways to donate, it’s easy to facilitate your charitable giving. Speak to your wealth adviser today to discuss the solution that is right for you. 


Prosperity Road, LLC (“PR”) is a registered investment adviser offering advisory services in the State of California and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. All written content provided is for informational purposes only. Opinions expressed herein are solely those of PR, unless otherwise specifically cited. PR does not endorse any financial products nor does it profit from mentioning any specific products or services. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant, or legal counsel prior to implementation.