Global View Investment Blog

Tis The Season...For Charitable Giving!

U.S. Trust publishes annual statistics on how and why high-net worth families give to charity.  The Executive Summary is always insightful, providing a wealth of statistics into what drives wealthy donors to give and what strategies they use to prioritize and distribute their charitable giving dollars.  For those readers interested, please find the link below:

I’ll just share a few of the stats I thought were interesting in this year’s report.

In 2013 98% of high-net worth (HNW) households donated to charity, compared with only 65% of the general population.  This is the highest rate since 2006 when the study was initiated, and 50% of these donors now give online.

Their motivation?  74% said they want to make a difference, and 63% expressed a desire to give back to the community.  What about tax deductions, you ask?  Only 34% listed tax deductibility as a factor in giving and a full 50% said they would maintain or increase their giving even if deductibility wasn’t allowed.

As you can imagine, HNW households have a plan to accomplish their charitable giving.  73% indicated they have specific planned strategies and 93% target specific causes or geographies.  57% give through either a charitable trust, a private foundation, or through my favorite, the donor-advised fund.  In fact, the study shows donor-advised funds to be the favorite tool for HNW families.  This is unsurprising since these funds provide most of the benefits of a private foundation but without the administrative burdens.

When you look at all the advantages of donor-advised funds, you can see why it is a smart choice.  You could almost call these funds the Swiss Army knife of charitable giving they do so many things so well.

Here’s a quick look for starters:

  • How about less stressful charitable giving for the holidays? By establishing a donor-advised fund through a charitable foundation you are able to write on check before year-end and receive the immediate tax deduction this year, then make grants over time to your favorite charities at a later date when you have more available time.  Getting one tax receipt for your giving also makes life a bit easier for the donor.
  • Ease in giving appreciated non-cash assets. Foundations that help donors with donor-advised funds are often expert in taking donations of assets of any kind, and can easily divide these gifts among multiple charities.  Marketable securities, land, insurance, and private business interests all give the donor the opportunity to avoid paying capital gains taxes (now at a new and higher rate INSERT tax planning blog link).  Many charities don’t have the necessary expertise to receive such gifts.  Donor-advised funds through a charitable foundation provide an easy solution.
  • How about anonymity? Unlike a private foundation you may keep your donations anonymous, much like Mr. Scrooge when he had the prized turkey delivered to Bob Cratchit’s family on Christmas day.  Sometimes clients who have established a private foundation like to make some of their giving anonymously or for causes not in their foundations charter.
  • Legacy Giving. This is an area of increased importance to HNW families, and provides and learning opportunity for the next generation.  Getting the kids and grandkids involved in decisions regarding charities and grants allows the teaching of stewardship and the development of a generous spirits.
  • Flexibility in grant funding. If you have a great year and need to make larger than usual charitable donations you can make the deposit to your fund, then disburse the funds over time to single or multiple charities.  This could be done monthly, quarterly or annually, giving you the flexibility to change your mind, or the amounts donated as you see the impact.
  • For tax reporting and audit, there is only one tax receipt to track. This makes life simpler for the donor and allows easier tax return preparation.



As you can see, donor-advised funds are easy to understand and are both efficient and effective tools for your charitable giving.  Managing your charitable giving through, potentially, a single vehicle gives many advantages, both in this lifetime and as part of your estate plan.  As in other areas of your financial life, there is much opportunity to add value through collaboration between your financial advisor, CPA and attorney.

Fortunately, in our area we have two foundations that do a good job helping donors with such funds.  Our partner Joey Hines in on the board of the South Carolina Christian Foundation and Bobby McDonald, their director does a great job in this area.  We also have the Community Foundation of Greenville, another excellent option.  I’ve inserted links for both of these fine charities below.

If we can help you in any way regarding year-end charitable giving, please don’t hesitate to contact us here at Global View!

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