Here are a few tools for giving during your lifetime, and a comparison of their relative complexity. Definitions follow.
|
Tool |
Complexity |
|
| 1 | Write a check |
Low |
| 2 | Transfer a stock, bond, mutual fund |
Low |
| 3 | Set up a Donor-Advised Fund |
Low |
| 4 | Transfer real estate; remainder/life estate |
Medium |
| 5 | Charitable Gift Annuity; Pooled Income Fund |
Medium |
| 6 | Charitable Remainder Trust, Charitable Lead Trust, Private Foundation, etc. |
High |
Charitable Gift Annuity: An agreement between a donor and a Qualified Organization (QO) whereby the donor irrevocably makes a gift of cash or stock and, in turn, the QO agrees to pay a fixed annuity to one or two beneficiaries for life. Upon the donor’s death, the remainder is the QO’s to utilize for charitable purposes.
Charitable Lead Trust: A legal device used to set aside money or property of one person for the benefit of one or more persons or organizations. This type of trust allows for a regular, fixed amount to go to a QO for a specific number of years. At the end of that time, the remainder of the trust passes to the donor’s heirs.
Charitable Remainder Trust:A legal device used to set aside money or property of one person for the benefit of one or more persons or organizations. This type of trust allows one to take a deduction for a gift to the trust in the year in which the trust is formed. The donor receives income from this type of trust for life and after the donor’s death, the assets pass to the designated QO.
Donor-Advised Fund: A charitable investment account administered by a QO or investment organization. Donors can open a fund in a donor advised program by making a contribution and receiving an immediate tax deduction. The donor no longer controls the funds contributed, but can recommend grants to QOs of their choice.
Life Estate: The right to use real estate or trust property, and receive income for it, during one’s lifetime.
Pooled Income Fund: Cash or stock donated by separate donors and commingled in a single investment fund. Each donor receives share of net income each year. QO keeps donor’s share upon donor’s death.
Private Foundation: A 501(c)(3) organization, further defined in the IRC section 509(a), that does not qualify as a QO. Generally, a Private Foundation is a nonprofit organization established and supported primarily by private funds (for example the funds of a single donor or family). Private operating foundations conduct their own programs, expending funds directly for charitable activities. A private non-operating foundation supports charitable activities by making grants to QOs.