A version of this article originally appeared in Sophisticated Giving's 2023 Charity Register.
What is charitable planned giving? My shorthand definition is that it’s any charitable gift that takes more thought than just writing a check, or these days, doing a quick online gift with your credit card.
To put it more formally—it’s charitable giving that takes place in the context of a donor’s overall tax, financial, and estate planning, and which is also a reflection of the donor’s values.
The matter of values does come first. Sometimes a discussion of planned giving can get lost in the weeds of tax law strategies, and the acronyms—CRATS, CRUTs, CGAs, etc.—can become overwhelming. But a donor thinking about a planned gift first needs to focus on addressing some fundamental personal questions, with answers unique to them. These questions include:
- What portion of my wealth do I want to devote to myself (while I’m living) vs. my loved ones (while I’m alive or after I’m gone) vs. charity?
- What charitable causes do I care about? What priority do I want to give amongst these causes?
- Do I want to give big, one-off lump sums to charities, or do I want to create a longer-term legacy? There does not need to be an all-or-nothing answer to this question.
If you think about yourself in relation to these questions, you can see how each person’s own special mix of values comes into play. The answers are not “cookie-cutter.”
Here at The Columbus Foundation, we work with donors and their professional advisors to explore donors’ values, define their plans, create a long-term charitable fund to carry out those plans, and develop a document setting forth the future use of their charitable fund. So, if your client has determined that they want to engage in planned giving, what assets and techniques can they use?
During their lifetime, planned gifts might take these forms:
- Cash: This might not just be a matter of writing a check or making a credit card gift. If your client is over 70 ½ years old, they could consider making a tax-favored qualified charitable distribution from their individual retirement account directly to a charity—possibly to establish a charitable fund at The Columbus Foundation.
- Publicly traded securities: Appreciated, publicly traded securities, such as stocks traded on an exchange and mutual funds, allow donors not only to obtain a tax deduction but also to avoid paying tax on gains in such assets.
- Privately held business interests and real estate: These gifts are more complicated but can be very generous.
- Life insurance: Existing life insurance policies that clients no longer need for their original purpose can make great gifts.
Now, I’ve always been told not to use the “d” word when talking about charitable giving, because it’s unpleasant to talk about death. But, as it happens to all of us, it’s important to keep in mind. Here are some ways to provide for a planned gift after your death:
- Bequests under a will, or a revocable trust that serves as a will complement or substitute.
- Naming a charity as a beneficiary of a retirement plan or life insurance policy, on a beneficiary designation form. This form is often just as, or more, important than one’s will because these assets can make up the bulk of many people’s wealth.
- Brokerage accounts put in “transfer-on-death” format, and bank accounts put in “payable on death” format.
Then there are so-called “life income gifts” that can make a stream of payments to clients and/or someone else for a certain period of time, with what’s left going for a charitable purpose, including to a charitable fund at The Columbus Foundation. These techniques include:
- Charitable remainder annuity trusts and unitrusts.
- Charitable gift annuities.
This is just a brief overview of possibilities in the world of planned giving. I’ll end by saying that my colleagues at The Columbus Foundation and I are happy to talk to you and/or your clients about ways to create a planned gift that makes the most sense for them and their family’s unique tax and financial lives, and for the charitable causes they care about.
For nearly 80 years, The Columbus Foundation has served as the vehicle through which thousands of people have expressed their own ideals and optimism through philanthropic investment in our community. Contact us if you are interested in learning more about how The Columbus Foundation can help your clients achieve their desired impact.
About The Columbus Foundation
The Columbus Foundation serves thousands of individuals, families, and businesses that have created unique funds and planned gifts to make a difference in the lives of others through the most effective philanthropy possible. The Columbus Foundation is Your Trusted Philanthropic Advisor® and is one of the top ten largest community foundations in the country.
