Planned Charitable Giving
Charitable giving can bring personal satisfaction and can also play an important role in your estate plan.
If you’re planning to donate money to charity, then consider implementing a tax-smart charitable giving strategy that could help you give more to support the causes you care about while increasing your tax savings.
You could donate appreciated securities rather than cash, start a foundation, or create a donor advised fund. Donors who plan to give more than $100,000 may want to consider a charitable lead trust (CLT).
Azzad’s financial advisors can help you choose a strategy that’s right for you.
Charitable lead trust
A charitable lead trust (CLT) is a special kind of trust that allows you to give money to charity while also giving you the opportunity to reduce income, estate, or gift taxes, or even transfer assets in a tax-efficient way.
When you fund the trust, a percentage you determine will donated to a charity each year. At the end of the trust term, the balance returns to you or your family. You can learn more and see a detailed hypothetical example on our CLT page.
With more than $600 billion in assets in the United States, foundations are among the world’s leading institutional investors. As such, most tend to be invested for the long term. Sadly, the values that drive the mission and goals of foundations may be completely disconnected from the way their assets are managed.
We can help your foundation leverage its assets more fully for its core philanthropic purpose, while managing risk and creating lasting value. If you desire to incorporate your values into your endowment’s investment management, then consider our Ethical Wrap Program for your foundation.
Donor-advised fund – an affordable alternative
A donor-advised fund can achieve many of the goals of private foundations without the legal, administrative and accounting costs. As a public charity, the program may also provide higher charitable contribution deduction limits. Your donor-advised fund also allows you to name multiple advisers and contributors so you can promote charitable giving in your family or business.
How a donor-advised fund works
Instead of giving directly to your favorite charity, you make an irrevocable contribution to your donor-advised fund account. You receive a tax deduction in the year you make your contribution and then can decide when and how much to give to your favorite charity. Meanwhile, Azzad invests and manages your donor-advised fund assets, potentially enabling them to grow and increase your giving power over time.
Align your tax needs and charitable giving goals
You receive a tax deduction in the year you make a contribution to your donor-advised fund account. So, even if you have not yet decided on your charitable cause, you can still receive the tax benefits. Let’s say, for example, you sold some property, and the sale would put you into a higher tax bracket. You can contribute to your donor-advised fund, enabling you to take a larger tax deduction in the same year, and then use these funds to support your favorite charity (or charities) over time. You can even avoid capital gains taxes by donating appreciated securities to your donor-advised fund account. Contributions above IRS limits can be carried over and deducted in future years (consult your tax adviser for more information).
Making your grant recommendation
You may make grant recommendations whenever you wish, based on your account’s assets. Simply complete a grant recommendation form and indicate how you wish to be identified to the charity. You may use your name, or request the grant be made anonymously or in memory of or in honor of a particular person. The minimum grant amount is $250. Your grant must be made to an IRC-approved charitable organization.
You can open a donor advised fund account with as little as $5,000. Call us at 703-207-7005 to learn how to get started.