The purpose of the American Gift Fund giving option is to transfer assets to charitable causes. American Gift Fund encourages donors to focus charitable decision-making on what best supports their preferences and giving goals—with an assessment of six key factors.
While comparing and contrasting your philanthropic options, keep in mind that many of them make excellent complements to one another. For example, a Donor Advised Fund can be used in conjunction with a private foundation to manage anonymous gifts or carve out assets that should be invested differently.
Six key factors when considering giving preferences
Tax options
Outline the timing and types of assets you often gift, and ensure your giving tool allows for optimal tax deductions. Deductibility limits vary based on the asset donated, giving options, and personal benefit derived from the gift. For example, a donation to a charitable gift annuity, which allows the donor to receive income, does not allow for as substantial a tax deduction as a direct gift.
The most tax-effective assets to donate are also sometimes the most difficult. If relevant, choose a tool that supports liquidation of complex special assets or appreciated securities. Giving options that provide a donor with income may allow for other tax advantages.
Cost
Decide what you are willing to pay for a specific philanthropic option, with the fundamental understanding that the more money spent on fees, the less is available for charity. Most giving options have associated administrative fees to cover startup, employee, and service costs, and others may necessitate legal or accounting expenses. Investment fees, often overlooked against other less subtle fees, play a crucial role in long-term giving plans. Over time, high expense ratios may erode returns and minimize charitable impact.
Control
Determine how much direct oversight and decision-making power are needed for each aspect of your philanthropy, including areas such as grant-making, investing, or administrative work. Often, strict legal regulations will dictate a donor's rights or ability to exercise control with different giving tools, and some giving options permit donor input or advice without allowing the donor to exercise direct control over the assets.
Charitable giving
Ensure the giving tool allows you to support charitable causes in sync with your mission and, if desired, affords you the ability to give to multiple charities on a consistent basis or grant one large sum in the future.
Legacy charitable giving
Leaving a philanthropic legacy is a personal decision that can take various forms, from bestowing assets to others, to naming a charity as a beneficiary in a will, or continuing a family tradition of giving.
Recognition and anonymity
Legally, not all giving tools can be sensitive to wishes for anonymity, while some may be able to cater to specific recognition requests. For example, private foundations are required to file public reporting returns that include information on grants, trustees, and employees, whereas grants from an account with a Donor Advised Fund can maintain donor confidentiality, when preferred.