A Guide to Charitable Giving Strategies
The state of public health and the economy over the past year and a half led large numbers of people to turn to charities for help. These same forces created both challenges and opportunities for business owners and high net worth families, many of whom have reevaluated what they want their legacy to be.
For those who are initiating or expanding their support for charitable causes in a significant way or substantially increasing their level of impact, charitable giving can be more complex than just writing a check. Consider:
Trusts can help balance one’s lifetime needs with a charitable legacy
Donors who want to help worthy organizations make an impact now, while ensuring they have the resources to support their lifestyle, may wish to consider a charitable trust. Charitable trusts can help accomplish both goals with immediate tax benefits.
In one type of trust, assets are donated for the benefit of an organization using a trust. The donor receives an income stream, while the donor is alive, then the assets completely pass to the organization upon the donor’s death.
Donor-advised funds offer flexibility in giving
Donor-advised funds are now offered by many investment firms and charitable organizations. These fund sallow donors to contribute assets to a pooled fund that is managed with the expectation that the assets will grow over time. The donor decides to what causes they wish to support. Donor-advise funds generally allow tax benefits to be realized at the time of contribution. They also are simpler and have a lower cost to set up and operate than private foundations.
Broaden your thinking of what you can give
Your assets may be diverse, including a variety of investment securities to now intangible assets like cryptocurrencies. Being strategic about what one gives and how it’s given can have an impact not only on donor taxes, but on the benefits provided to charities – For example, if an asset continues to appreciates in value over time, giving the asset itself rather than the proceeds from selling it may provide greater benefit long term.
Consider the impact you want to create
Donors should think in terms of the impact of their giving, rather than just the amount. That means supporting organizations with a good track record of using money efficiently. It may also mean being creative. From a donor who wishes to support health care for pets to another who wishes to support college students’ housing security , we have worked with donors who had a specific vision of how to help.
Be as detailed as possible in giving plans
While the urge to be charitable is a good one, it’s also important to follow through on the details. Sometimes people believe that simply stating their intentions in a will is enough, but too often it is open to interpretation – vague statements about causes to support or imprecise amounts to contribute can lead to years of legal wrangling. Work with professionals to develop a detailed giving plan and share it with your family and advisors.
Over many years of helping families manage their financial wellness and supporting business owners with their work and personal finances, Alerus has become a trusted advisor for charitable giving. We can help you explore this deeply personal and emotional topic and offer ways to help you build your legacy in a way that maximizes impact on the world and offers benefits to your family, now and in the future. Talk to your Alerus advisor today to get started.