• Amanda Adams

If You Want to be Successful at Planned Giving, Know Your Options

3 Types of Planned Gifts

It is easy to get overwhelmed with all the ways to give to charity, especially when it comes to planned giving. Often, people will ask: how do I know what the best option for my situation is? What is the difference between the giving options?

In light of these questions, I have broken down planned giving into 3 types. Additionally, I have listed 5 common gifts, their type, definition, pros, and cons.

Planned giving is the process of charitable giving through financial and/or estate planning. These gifts can be made during a donor's life or when the pass away.

First, there are 3 types of planned gifts. Primarily, the difference between planned giving options is timing. For example, a donor may make a gift to a charity as part of their estate plan. However, the charity may not receive that gift until the donor passes away. The 3 types of planned gifts based on timing are:

  1. Immediate Benefit

  2. Overtime

  3. Later

5 Planned Giving Options

  • Donor-advised Fund

  • Charitable IRA Rollover

  • Charitable Remainder Trust

  • Donation Pledge

  • Charitable Gift Annuity

1. Donor-advised Fund (DAF)

Type: Immediate Benefit , Overtime, and Later Definition: A fund that is:

  1. Set up at a qualified sponsoring organization

  2. The donor makes irrevocable gifts of cash or other assets

  3. The donor receives a donation receipt for the fair market value of the gift.

  4. This receipt may be used for tax-deduction purposes.

  5. With advisory rights, the donor can advise on the fund investment strategy and outgoing grants.

Pros: No required minimum annual distribution, advise on the fund investment, recommend grants, anonymous giving Cons: Advisory rights only. The charity has control of the gifted assets.

2. Charitable IRA Rollover

Type: Immediate Benefit Definition: also known as a qualified charitable distribution (QCD); When a donor does not need the required minimum distribution (RMD) from their IRA, they can donate up to $100,000 to a qualified public charity. Pros: This will count toward the donor’s RMD. Cons: A charitable IRA rollover cannot be given to a donor-advised fund, supporting organization, or private foundation.

3. Charitable Remainder Trust (CRT)

Type: Later Definition: A trust set up by a donor who, after making an irrevocable gift, receives income for life from the trust. When the donor passes away, the remaining assets go to charity. Pros: Depending on how the trust is set up, the donor could receive income from the CRT. Cons: This tool can be expensive to set up and maintain, depending on the trust administrator.

4. Donation Pledges

Type: Immediate Benefit, Overtime, Later Definition: An agreement between a public charity and a donor. Over an established period of time, the donor will make a gift. Pros: This is a useful way to make a large gift in installments. This can help charities that may not have the structure to handle large gifts given in one lump sum. Cons: Depending on how the pledge is set-up, the pledge could be a legally binding contract. Thus, if the donor fails to keep up their side of the deal, the charity may take legal action against the donor or their estate for the remaining pledge amount. For those that are not sure about which charity to give to or wish to support multiple charities, a donor-advised fund may be a better option. Note that a donor cannot make a pledge on behalf of their donor-advised fund.

5. Charitable Gift Annuity (CGA)

Type: Later Definition: A CGA is an annuity provided by a qualified charity in exchange for a donation. As a result, the donor receives income from the authorized charity for life. When the donor passes away, the remaining asset will go to the authorized charity. Pros: A guaranteed stream of income for life. Cons: Not all charities offer charitable gift annuities.


Questions? We have the answers! Email us your questions at info@legacyglobal.org

Legacy does not provide legal, tax, or financial advise. Please consult with your professional advisers.

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