Charitable Giving

Strategic Charitable Giving | Blackwell Financial Services

Each of us is motivated by various reasons when it comes to gifting assets or a portion of our income to charitable organizations. Some derive fulfillment from assisting those less fortunate, while others simply wish to share their good fortune. The realms of art, sciences, and education owe much of their sustenance to individuals who, in appreciation for their contributions, choose to give back to the community or the institutions themselves.


Tithing, involving the contribution of a portion of income, typically 10%, holds immense importance as a practice of gratitude and generosity in various religious and spiritual contexts. Beyond its spiritual significance, tithing contributes to community services, supports those in need, and fosters a sense of shared responsibility, emphasizing the positive impact of aligning personal values with tangible actions.

Currently, the tax code provides incentives for those inclined towards charitable giving. Tax deductions are offered for immediate contributions, and for estate owners, charitable gifts can effectively reduce the size of the estate, aiding in minimizing estate taxes.

Frequently, individuals designate a charitable beneficiary in their will to support the organization posthumously. Through strategic charitable gifting techniques, a donor may benefit the charity during their lifetime without compromising the income generated by the asset. Understanding how properly structured charitable gifts can yield current benefits for both the donor and the charity is crucial for those with a philanthropic inclination.

Charitable Remainder Trust

A remainder trust empowers the donor to transfer an asset while retaining the right to the income it generates. The asset becomes the "remainder," owned by the charity. Properly structured remainder trusts may qualify for a current tax deduction. Three types include:

Unitrust: The donor receives income based on a percentage of the current fair market valuation of a trust asset. Adjustments are made annually as the asset is revalued.

Annuity Trust: Instead of a percentage of the asset value, the donor receives a fixed amount annually.

Pooled Income Fund: Donors pool their assets in a fund operated by the charitable organization. They then receive a share of income from the fund throughout their lifetime, varying each year based on the underlying assets' valuation.

Charitable Lead Trust

Also known as an Income Trust, this vehicle transfers income rights to the charitable organization. Generally, the income rights are assigned for a specified period, after which the remainder passes to the donor.

Charitable planning involves complex tax considerations that should be discussed with a qualified tax or financial professional.

For more information of charitable planning, please contact us today.

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