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Types of Charitable Giving

A Quick Guide

Charitable lead trust

Pays an annuity or unitrust interest to a charitable institution with the remainder distributed to non-charitable beneficiaries (i.e., your heirs) upon your death.

For more on charitable lead trusts see: Charitable Trusts—Tools for Charitable Giving and Reducing Estate Taxes
   

Charitable remainder trust

Pays annuity or unitrust interest to non-charitable beneficiaries with the remainder distributed to a charitable institution upon your death.

For more on charitable remainder trusts see: Charitable Trusts—Tools for Charitable Giving and Reducing Estate Taxes
   

Net income unitrust

 A net income unitrust is similar to a charitable remainder trust except that each year it pays a stated percentage or the net income earned from the trust, whichever is less. These trusts may include makeup provisions, which allow deficiencies (years when trust income is less than the stated percentage) to accumulate and to be made up in subsequent years if the trust's net income exceeds the stated percentage.
   

Flip unitrust

 Similar to a charitable remainder trust, with certain features of a net income unitrust for a period of time. You transfer cash, securities, real estate or other appreciated property to a trust. The trust pays non-charitable beneficiaries the net income only until a specified time when it "flips" and begins to pay a percentage of the assets revalued annually. The principal passes to the charitable institution when the trust ends.
   

Charitable gift annuity

You make a tax-deductible contribution of cash or marketable securities to a charitable institution. In exchange the charitable institution pays you an annuity of fixed annual payments for life. Annuity payments can begin immediately or can be deferred for a certain term. The annuity is terminated upon your death and the charitable institution retains the principal.

For more on charitable gift annuities see: Charitable Giving and Taxes—Some Tax Implications and Benefits of Charitable Giving
   

Donor-advised fund

You make contributions to an organization which manages a charitable fund and you receive a tax deduction. Then, over time, with your advice, donations are made from this fund to target charities.

For more on donor advised funds, see Four Vehicles for Charitable Giving—Donor-advised Funds, Private Foundations, Charitable Trusts, and Community Endowments
   

Community endowment

A community foundation is a tax-exempt public charity created by and for the people in a local area or within a religious or ethnic community. Community foundations provide grants, either through discretionary income or through donor-advised or donor-directed funds, for a wide range of purposes, largely within the geographic service area of the foundation.

For more on community endowments, see Four Vehicles for Charitable Giving—Donor-advised Funds, Private Foundations, Charitable Trusts, and Community Endowments
   

Private foundation

Private foundations are generally intended to perpetuate a gift or to create a long-lasting entity devoted to charitable giving. Although there is no legal minimum and no firm consensus on the amount that justifies establishing a foundation, one rule of thumb is that an annual minimum of $25,000 should be available for grant-making.

For more on private foundations, see Four Vehicles for Charitable Giving—Donor-advised Funds, Private Foundations, Charitable Trusts, and Community Endowments
article #108, posted 2008-09-05 19:18:25, last update 2008-09-09 13:13:16

>>  For more information, please contact Jonathan E. Brochstein at Weston Wealth Strategies—(203) 319-9876 or contact Jonathan via email.

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