At its simplest, charitable giving involves a donating a sum to an organization all at one time. This direct approach works well when a donor wants to make an impact immediately. However, it does not allow the donor to increase cash flow, diversify assets, or transfer wealth in a tax-efficient manner, which other giving strategies can.
There are many vehicles and strategies you can use to maximize the impact of your charitable donations. As outlined below, each approach carries a unique set of advantages and disadvantages, depending on your situation.
| Advantages | Disadvantages | Suitable For... | |
| Direct Gifts | Simplicity and immediate benefit to the charity | No involvement in grant-making decisions | Individuals who have identified a charity they want to support and want to make an immediate impact |
| Charitable Remainder Trust | Donor receives current or deferred cash flow and can diversify concentrated holdings without incurring immediate recognition of capital gains | Requires annual administration | Individuals who own low-basis, highly appreciated securities and would like to increase cash flow and diversify assets in a tax-efficient manner |
| Charitable Lead Trust | Charity receives current cash flow; donor or designated heirs receive assets at trust termination; allows for significant tax deduction or tax-efficient wealth transfer | Requires annual administration; must be established as a grantor trust to qualify for income tax deduction | Financially secure individuals who wish to transfer wealth to heirs in a tax-efficient manner and provide current cash flow to a charity |
| Donor-Advised Fund | Easy to establish and maintain; ability to participate in distribution decisions; treated as a public charity for deductibility purposes | Requires donors to recommend IRS-qualified charities for grants, limiting control over management and administration | Individuals who do not require income from donated assets and would like to avoid the cost and administration of a private foundation |
| Private Foundation | Creates an entity that can be named after the family; fosters continued family involvement and control | Requires annual administration; investment income may be subject to excise tax; deductibility limitations are more restrictive than with gifts to public charities | Individuals who do not require income from donated assets and are interested in fostering family involvement with greater control |