Charitable giving can take different forms–some offering significant tax and financial advantages–and many donors use a combination of giving vehicles for philanthropic and financial synergy. This chart, along with the guidance of a philanthropic expert, can help you decide which of these popular options are best for you.
| GIVE DIRECTLY (No charitable entity/vehicle involved) |
GIVE TO A PUBLIC CHARITY | GIVE TO A DONOR-ADVISED FUND (DAF) | MAKE A LIFE INCOME GIFT | GIFT THROUGH A PRIVATE FOUNDATION | |||
| Restricted Contribution | Unrestricted Contribution | Charitable Remainder Trust | Charitable Gift Annuity | ||||
| How does this work? | You identify a need and directly pay for and/or provide assistance in any way you choose without regard to any tax considerations. | You contribute to an existing tax-exempt public charitable organization that then uses your gift to accomplish charitable purposes. | You contribute to a DAF, a giving account that allows you to recommend grants to other charities and allows undistributed funds to grow tax-free until it is granted out. | You irrevocably contribute money or property now and receive income (for yourself or others), deferring your eventual gift to charity until the income payments have ended. | You irrevocably contribute money or property to a charity now and, in exchange, receive an annuity for yourself or others. | You create and fund your own tax-exempt organization (a private foundation) to accomplish charitable purposes. | |
| What is the minimum gift? | Any amount | Any amount | Depends upon DAF sponsor; can range from $0 to typically $10,000 or more. | Practical minimum is $250,000. | Depends upon organization; often $25,000. | Typically, $1 million | |
| When would I consider using this vehicle? | You want to have maximum control, immediate impact, and tax savings and legacy are of secondary importance to you. | You want maximum tax advantages and are willing to trust the public charity to use your gift in keeping with restrictions you have placed on your gift. | You want maximum tax advantages and are willing to trust the public charity to use your gift for its charitable purposes in support of its mission. | You want maximum tax advantages and wish to support only registered 501(c)(3) public charities. | You want or need to retain a fixed annuity or percentage payment for life and are willing to defer your ultimate gift. | You want or need to retain a fixed annuity for life in exchange for your gift. | You want significant tax advantages, maximum control, flexibility, and advanced grantmaking capabilities (grants to individuals, overseas grants, etc.); option to hire staff (including family); and the opportunity to build a meaningful legacy. |
| What are the key tax advantages? | No income tax deduction or other tax savings. |
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| Who controls how my gift is used? | You have complete control; you give your money as you see fit. | Public charity governing board controls how and when your gift is used in keeping with restrictions you have placed on your gift. | Public charity governing board controls how and when your gift is used. | You advise the DAF sponsor as to how your gift is to be used, subject to approval by the DAF sponsor. | You name the public charity or private foundation that is to receive the charitable remainder, and your gift can be general or restricted to a particular purpose. | Your gift to the public charity that issued the annuity can be general or restricted to a particular purpose. | Your foundation’s governing board (on which you may serve) controls how and when your gift is used. |
| How creative can I be with my giving? | You can be as creative as you want to be. | You can be creative with your giving recommendations, although additional steps may be required. | N/A | N/A | You can be as creative as you want (e.g., award grants such as scholarships, operate direct charitable activities and more) as long as certain IRS rules are followed. | ||
| Is there a required minimum amount that must be given away each year? |  |
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N/A | 5% of the prior year’s average assets ($0 in the initial year) | ||
| Can I give anonymously? |  |
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Typically, No | ||
| Can my giving continue even after my lifetime? | |
No, but with a permanent endowment fund your gift can continue in perpetuity. | Yes, via a charitable beneficiary, depending on policies. | |
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| Can I name a successor to control my giving after I’m gone? | |
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Yes, in alignment with the policies of the DAF sponsor. | |
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| Can publicly raised funds be contributed to this vehicle? | N/A | |
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N/A | Yes, if a foundation is holding a fundraiser for itself. | ||
| What are the startup costs? | None | None | None | Typically, $1,000 or more | None | Typically, $5,000 for incorporation and filings | |
| What are the annual costs? | None | None | Costs for administration and investment management vary depending upon the DAF sponsor; typically range from 0.5% to 1%. | Typically, about 0.75% to 1% | None | Annual administration costs are typically 0.5% to 0.75% plus investment management expenses. | |
| Can my family be involved in my giving decisions? | |
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