Charitable giving sounds simple until you get into the details, and most people never make it past the first question: where do I even start? In this episode, Tom walks through the giving landscape from cash donations and donor-advised funds to charitable trusts and leveraged giving, and why the reason behind your giving has to come before the structure. He also covers where the IRS has tightened the rules and what to watch for when an appraisal starts doing more work than the deduction should.
Key Takeaways
Start with your why before choosing a giving vehicle. Deduction-first thinking is where charitable planning gets people into trouble.
A donor-advised fund lets you take the deduction now and decide where the money goes later, useful when you know you want to give but haven't picked the cause yet.
A charitable remainder trust can sell an appreciated asset without triggering the gain, pay you income while you're living, and leave the remainder to charity. A charitable lead trust reverses that order.
Charitable trusts are irrevocable, so loop in your CPA and estate attorney before you commit, not after.
If a donation's value depends heavily on an appraisal, make sure it's independent and defensible. The IRS has tightened rules on structures like conservation easements for exactly this reason.
Links & Resources
Keywords
Perennial Pride, Perennial Pride Podcast, Tom Suvansri, charitable giving, donor-advised funds, charitable remainder trust, charitable lead trust, CRAT, CRUT, CLT, estate planning, legacy planning, tax planning, appreciated assets, conservation easements, wealth strategy, financial freedom, proactive tax planning, take control of your finances, Wealth Beyond the Numbers
Episode Highlights
| [00:00:00 - 00:00:59] | Tom introduces charitable giving and why it's a common source of confusion. |
| [00:01:00 - 00:02:37] | Most hesitation comes from not knowing where to donate or what the tax implications are. |
| [00:02:38 - 00:02:59] | Tom reminds listeners this is education, not tax or financial advice. |
| [00:03:00 - 00:03:59] | Cash donations are the simplest starting point for charitable giving. |
| [00:04:00 - 00:04:59] | Donor-advised funds let you donate appreciated stock, take the deduction now, and decide the causes later. |
| [00:05:00 - 00:05:59] | A DAF buys you time and can be a way to involve family in giving decisions. |
| [00:06:00 - 00:07:59] | Charitable trusts let you donate an appreciated asset and avoid the gain when it's sold. |
| [00:08:00 - 00:08:51] | The first decision is whether you need income now or want to build a legacy later. |
| [00:08:52 - 00:09:51] | A charitable remainder trust pays you income while you're living, with the remainder going to charity. |
| [00:09:52 - 00:10:51] | CRATs pay a fixed amount, CRUTs pay a percentage and can accept more contributions over time. |
| [00:10:52 - 00:11:59] | A charitable lead trust reverses the order: charity gets income first, beneficiaries later. |
| [00:12:00 - 00:13:23] | Both trust structures are irrevocable, so the decision has to be made carefully up front. |
| [00:13:24 - 00:14:46] | Leveraged giving lets you deduct an asset's fair market value, not just its cost. |
| [00:14:47 - 00:15:43] | Corporations have long used this with discounted inventory donated at fair market value. |
| [00:15:44 - 00:17:02] | Newer businesses are using leveraged giving to get their products exposure while supporting a cause. |
| [00:17:03 - 00:18:33] | Tom warns that if the deduction is the main focus, that's where problems start. |
| [00:18:34 - 00:19:46] | Conservation easement abuse led the IRS to cap deductions at two to two and a half times cost. |
| [00:19:47 - 00:20:11] | A legitimate appraisal has to be independent and observable in the market, not a guess. |
| [00:20:12 - 00:21:59] | Tom stresses checking whether the charity genuinely needs and benefits from the donation. |
| [00:22:00 - 00:23:59] | It comes down to two things: knowing your purpose and having the right advisors at the table. |
| [00:24:00 - 00:24:56] | Closing message and where to find more from Tom and Perennial Pride. |
