On this week’s episode, Roger is joined by Casey Mushrush, J.D., AIF to discuss charitable giving strategies.

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Hosted By: Roger Abel
Guest: Casey Mushrush, J.D., AIF
Produced By: Molly Nordlocken

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Charitable giving is an essential part of the wealth management process, and there are several strategies that affluent individuals can use to make a meaningful impact on the causes they care about. In this article, we will discuss five charitable giving strategies that are commonly used by individuals with substantial wealth.

1. Donor-Advised Funds: Donor-advised funds are a popular charitable giving vehicle that allows donors to make a tax-deductible contribution to a fund, which is then invested and managed by a charitable organization. Donors can recommend grants from the fund to support the causes and organizations they care about. Donor-advised funds provide a convenient and tax-efficient way for individuals to support charitable causes while also allowing them to maintain control over their charitable giving.

2. Charitable Trusts: Charitable trusts are another effective charitable giving strategy that wealthy individuals can use to support their favorite causes. There are two main types of charitable trusts: charitable remainder trusts and charitable lead trusts. Charitable remainder trusts allow donors to receive income from the trust for a specified period, after which the remaining assets are distributed to a designated charity. Charitable lead trusts, on the other hand, provide income to a charity for a specified period, after which the remaining assets are distributed back to the donor or their beneficiaries. Both types of charitable trusts offer tax benefits and can be an effective way for individuals to support charitable causes while also providing for themselves or their heirs.

3. Private Foundations: Private foundations are independent legal entities that are typically funded by a wealthy individual or family. These foundations are governed by a board of trustees and can support a wide range of charitable activities, including grantmaking, public charity support, and charitable activities. Private foundations offer a high degree of control and flexibility for donors, allowing them to establish their own charitable mission and support the causes and organizations they care about. However, private foundations also come with additional administrative and compliance requirements, making them a more complex charitable giving strategy.

4. Donating Appreciated Securities: Donating appreciated securities, such as stocks, bonds, or mutual funds, can be a tax-efficient way for individuals to support charitable causes. When donors contribute appreciated securities to a qualified charity, they can receive a tax deduction for the fair market value of the securities without having to recognize the capital gains. This can be a particularly effective strategy for individuals with highly appreciated securities in their investment portfolios, allowing them to maximize their charitable giving impact while also minimizing their tax liability.

5. Impact Investing: Impact investing is an emerging charitable giving strategy that allows individuals to support social and environmental causes through their investment activities. Impact investors seek to generate measurable social or environmental impact alongside a financial return, often by investing in businesses or organizations that are aligned with their charitable mission. By harnessing the power of capital markets, impact investors can drive positive change in the world while also achieving their financial and philanthropic goals.

In conclusion, there are a variety of charitable giving strategies available to individuals with substantial wealth, each offering unique advantages and opportunities for making a positive impact on the causes they care about. Whether through donor-advised funds, charitable trusts, private foundations, donating appreciated securities, or impact investing, affluent individuals have a wide range of options for supporting charitable causes and leaving a lasting legacy of philanthropy. By working with their financial advisors and legal professionals, individuals can develop a charitable giving strategy that aligns with their values and goals, ensuring that their wealth is put to good use for the betterment of society.