Coping with Wrenches in the Charitable Giving Toolbox

Grote, Jim
August 2003
Journal of Financial Planning;Aug2003, Vol. 16 Issue 8, p40
Academic Journal
This paper offers a look at changes and trends in the charitable giving landscape in the U.S. The increased exemption equivalent for estate tax purposes makes estate tax savings less of a motivating factor in establishing charitable bequests and trusts. In addition to economic downturn and changes in the tax code, charitable giving has also been plagued by negative reactions to the charitable management of donor funds following the September 11, 2001 terrorist attacks on the U.S. Almost every financial planner interviewed by the Journal of Financial Planning reported a significant decrease in the charitable planning side of his or her business. A more traditional option to private foundations that continues to gain popularity is the donor-advised fund, which some planners nickname the poor man's foundation. These funds allow donors to give cash, stock or other assets to special accounts, claim a tax deduction in the year of the gift, and then recommend how and when the money in the fund should be given to charity. With charitable lead trust the income stream goes to charity and the remainder interest to a noncharitable beneficiary. The National Committee on Planned Giving's (NCPG) 2000 survey of donors uncovered a complex network of motivations behind charitable giving. Another interesting trend in the NCPG report showed an increasing role for planners in the world of charitable giving.


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