Compare giving options

The purpose of giving options--private foundations, donor-advised funds, trusts, or others--is to transfer assets to charitable causes, but choosing the right tool for you and your mission can be a complex process. Rather than enter the debate over which giving tool is best, we encourage you to focus your decision-making on what best supports your preferences and giving goals--with an assessment of six key factors.

Rank each factor by importance to you (high, medium, low). Then, relate your priorities to the characteristics in the table below. If a giving option seems like a good fit for your preferences, click to learn more about its guidelines and benefits.

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.

Your giving preferences

Tax efficacy


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 or level of input


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.
  Distribution to charity


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 giving options


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. By their very makeup, some planned giving options cannot support specific charitable wishes and intergenerational philanthropy after a donor passes (e.g., direct giving).
  Recognition v. 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.



  Characteristics
 
Giving tools Tax
efficacy*
Cost
Level
of input
Distribution
to charity
Charitable
legacy
options
Recognition
v. anonymity

Charitable
gift annuity
Limited Low Minimal Restricted Some Some flexibility

Charitable
remainder trust
Limited High Maximum Some
restrictions
Some Flexible

Direct giving Full None Maximum No
restrictions
None Some flexibility

Donor-advised
fund
Full Low Moderate Some
restrictions
Many Flexible

Private
foundation
Partial High Maximum Some
restrictions
Many Not flexible



*In this table, tax efficacy refers only to the charitable deduction. For more details on other tax benefits and considerations for each giving option, refer to its respective page.


This information represents Vanguard Charitable's understanding of current tax regulations related to charitable giving. Consult a tax advisor regarding your own tax needs.