Charitably Minded: What Giving Vehicle Is Right For Your Clients?

Charitable giving in the United States has seen an upward trend, with a 4% increase in donations in 2021 compared to the previous year. Private individuals contributed the majority of these donations, accounting for about 67% of the total amount given. Donor-Advised Funds (DAFs) have emerged as one of the fastest-growing forms of giving following changes to the tax code in 2017. While DAFs remain popular, other options for tax-efficient charitable donations include Charitable Lead Trusts, Charitable Remainder Trusts, and Endowments. These legal agreements allow financial advisors to offer clients various ways to distribute their assets and property to charitable causes and organizations.

Charitable trusts share several common features, such as moving assets out of a client's estate to potentially reduce taxes upon death and allowing donors to deduct some of their contributions within IRS limits. However, each type of charitable offering, including DAFs, Charitable Lead Trusts, Charitable Remainder Trusts, and Endowments, has unique attributes.

This whitepaper discusses how these different charitable options provide flexibility and opportunities to align personal financial goals with philanthropic endeavors. Understanding how these options operate enables you to help clients select the most suitable approach that offers maximum benefits for their charitable cause.