Category: How We Serve

Another great way to accomplish a charitable legacy and receive significant estate tax benefits is by using charitable trusts.  Planned gifts to charity are deductible without limit and reduce the taxable estate.  There are two main types of charitable trusts, Charitable Remainder Trusts (CRT) and Charitable Lead Trust (CLT), that are outlined below.

The Charitable Remainder Trust

A Charitable Remainder Trust (CRT) is a common and effective estate planning tool.  A donor may use a CRT if they would like their up-front interest to go to a non-charitable beneficiary (such as a spouse or other family member) and the remainder to a charity.  The CRT is an irrevocable trust that is tax-exempt and may be useful to defer gain on an asset.

The Charitable Lead Trust

A Charitable Lead Trust (CLT) is also an irrevocable trust but the lead interest goes to a designated charity and the remainder to a non-charitable beneficiary.

There are many different options for charitable estate planning.  Please speak with your professional advisor to learn more about the options that would work best for you.  For more information about estate planning available through The Community Foundation, please see our Toolkit or contact Donor Services at donorservices@cfsloco.org or call 805-543-2323.

Donor Advised Funds (DAFs) are often explored as viable alternatives to private foundations and are popular options for donors nationwide.  DAFs provide donors an immediate tax break, investment growth opportunities of charitable assets and are sustainable through retirement. There are three main benefits of Donor Advised Funds.

1. Reasonable start-up costs.
2. Excellent opportunity for the donor to research charitable organizations and find a match for their philanthropic interests.
3. Ability for moderate income donors to involve family in charitable giving.

For donors with more substantial charitable intentions, a DAF may also be considered as an alternative to a private foundation.  These are the main advantages of a DAF over a private foundation:

1. Higher Grant Distribution Rates: DAFs often make grants of 15 percent to 30 percent each year.  The Council on Foundations website indicates that private foundations grant an average of 6.23 percent of assets to charity on an annual basis.

2. Access for Donors: Many individuals can create a DAF with $10,000 or more. Private foundations are much more expensive to fund and operate.  The development or creation of a private foundation could involve an expenditure of $10,000 simply to create the organization.  In addition, the private foundation has substantial operating costs each year.

3. Staff Oversight and Donor Support: About 5 percent of private foundations have professional staff. The Community Foundation highly qualified staff with great expertise in making effective charitable grants.  Giving grants with optimum charitable impact requires a level of expertise that is more likely to be found with the public charity staff managing a DAF.

For more information about the different types of charitable funds, please see our Toolkit or contact Donor Services at donorservices@cfsloco.org or call 805-543-2323.

Source: The Council on Foundations