Philanthropy and Wealth Management | Five Strategies to Amplify Your Giving

If you ask five people why they make charitable contributions, you will most likely get five different answers. Whether they want to better their communities, support causes close to their hearts, or have a positive social impact, one thing unites all donors—the desire to do good. Rarely will you hear someone cite tax benefits as a reason for giving, but this doesn’t mean the tax benefits should be ignored. When high-net-worth individuals (HNWIs) make donations with tax efficiencies in mind, it often results in more meaningful contributions and better financial health. Whether you are an active donor or considering donating, uniting philanthropy and wealth management must be a central part of your financial strategy.  
 
Below, we will examine five of the best strategies to help amplify your giving. 

Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs) are strategic tools that enable high-net-worth individuals to align their philanthropic goals with effective wealth management. Both types of trusts provide a mechanism for individuals to contribute to charitable causes while simultaneously gaining financial and tax benefits. They each offer unique structures that balance immediate charitable support with long-term financial planning, allowing donors to create a meaningful legacy. 

Donating appreciated assets, such as securities or real estate, is a powerful way for high-net-worth individuals (HNWIs) to amplify their charitable giving while reaping significant tax benefits. By contributing assets that have increased in value, donors can avoid paying capital gains taxes on the appreciation and claim a charitable deduction based on the asset’s fair market value.  

For example, if you donate stock worth $20,000 that you purchased for $10,000, you can deduct the full $20,000 from your taxable income, maximizing the impact of your gift. This strategy supports charitable causes and helps reduce your taxable estate, making it an effective tool for aligning philanthropy with financial planning. 

For individuals aged 70½ or older, QCDs offer a way to donate directly from an IRA to a charity, satisfying Required Minimum Distributions (RMDs) while avoiding taxable income. This strategy is particularly useful for those who do not need their RMD for living expenses but want to support charitable causes. 

Creating a private foundation offers donors greater control over their charitable giving, allowing them to make grants to multiple organizations and involve family members in philanthropy. While foundations come with administrative responsibilities and costs, they offer significant tax benefits, including deductions for charitable contributions and the ability to retain control over assets. 

Integrating philanthropy and wealth management is essential for high-net-worth individuals seeking to make a meaningful impact through their charitable contributions. By employing strategies such as Donor-Advised Funds, charitable trusts, and donating appreciated assets, donors can amplify their giving while optimizing tax efficiency. This strategic approach not only enhances the benefits of charitable giving but also supports long-term financial goals. 

At 5280 Associates, we understand that effective philanthropy requires a thoughtful balance between giving and wealth management. Our commitment to transparent, flat-fee financial planning empowers you to pursue your philanthropic vision without worrying about hidden costs. Let us guide you in creating a comprehensive strategy that aligns your charitable goals with your financial objectives, ensuring your legacy leaves a lasting impact.