When you are inventorying your assets as you plan your estate, it is a good feeling to recognize that you are in a position to give something back through ongoing charitable giving. Giving to your favorite charities is indeed its own reward, and there are those who feel that a growing wave of philanthropy may be the antidote for some of our nation’s ills.

Two of the wealthiest people on the planet, Warren Buffet and Bill Gates, recently issued a challenge to their fellow billionaires, asking them to pledge that they will give away at least half of their wealth to charitable causes. Buffet himself has donated over $6 billion to the Bill & Melinda Gates Foundation over the last few years alone.

It is impractical for most people to create their own charitable foundations because of the expense involved in creating one. A very efficient alternative that has been steadily gaining in popularity are donor advised funds, and they make it relatively simple to create a lasting legacy of charitable giving.

The way to take advantage of this charitable giving vehicle is to place assets into a donor advised giving program. As the name of the vehicle implies, you as the donor can advise the charity on how to endow grants from the assets that you contribute, but the contributions that you make do become the property of the charity.

There are also tax benefits when you create a donor advised fund. You get an immediate tax deduction for the fair market value of the contribution, but if you donate appreciated securities they are not subject to capital gains taxation. Plus you have a ready receptacle for contributions that provide tax efficiency at the end of a given year without having to scramble to establish a new relationship with an IRS approved charitable organization.

Tags: Advance Planning, Donor Advised Funds, Estate Planning, Inheritance Planning