Giving Vehicles: The Basics

Many people are catapulted into philanthropy because of a wealth event. Often, their first question is what giving vehicle to use to deploy their philanthropic dollars. We hope this chapter will help you answer these questions:

• What are the types of giving vehicles, or structures, that I can use for my philanthropy?
• What are the pros and cons of each, given my interests and circumstances?

This chapter covers commonly asked questions on methods of giving. We discuss:

• direct giving
• donor advised funds (DAFs)
• private foundations
• limited liability companies (LLCs)

There also are less common types of charitable gifts that may suit your particular circumstances—for example, gifts to nonprofit institutions that provide you an income for life and a deduction for the actuarial value of the remainder, and gifts of art or real estate. (You should consult your tax advisor or lawyer about these options, as well as about other ways of giving through estate planning.)

Your donation only qualifies for a deduction if it goes to a qualified charity—one accorded 501(c)(3) status by the Internal Revenue Service (IRS). Other gifts, such as those to political efforts or for-profit social enterprises, are usually not eligible for tax deductions. While this chapter provides basic details on tax deductible gifts, we recommend speaking to a trusted tax advisor if you have any doubts about the deductibility of a gift.