Charitable deductions appears deceptively simple…Find an organization doing good work for a cause you support, write them a check and then, if you remember, claim a deduction for it at tax time. In reality, philanthropic giving gets a lot more complicated than that, especially if you’re donating large sums of money, if you care a great deal about the impact of your contributed dollars, if you wish to maximize giving while minimizing tax liability, and if you want to be careful about compliance rules and regulations, especially for international gifts. In those cases, hiring a financial advisor with a comprehensive knowledge of the ins and outs of philanthropy is a good idea.

Are there special philanthropic advisors?

There are, though you may not need one, depending on your situation and your giving goals. Some professionals bill themselves as “charitable financial advisors” or “philanthropy advisors” as a specialty. But many others simply roll their charity guidance offering up into their broader advisory and financial planning services. There is a designation called Chartered Advisor in Philanthropy (CAP), which ensures that an advisor is well versed in philanthropic matters. But even without that designation, many Registered Investment Advisors (RIA) and Certified Financial Planners (CFP) will have expertise in this area. To search for an advisor with a strong grounding in philanthropy, try the website of the International Association of Advisors in Philanthropy (

How can a philanthropic advisor help with charitable deductions?

Whether it’s your regular financial advisor or an outside philanthropy specialist, an advisor focusing on your charitable giving and charitable deductions will begin by getting a detailed understanding of who you are, what your financial situation looks like, which causes you seek to support, and what impact you want your giving to have. All of that information is crucial in order to devise a long-term, sustainable giving strategy that will benefit both you and the organizations you support. Many people find that just having that initial conversation is a huge help, since it forces them to zoom in on their priorities and articulate ideas and values that might have previously existed only as murky or vague notions.

You may already have a specific organization in mind as a recipient of your donor dollars. But if not, a philanthropic advisor can be of great help in identifying charities that are reliable, efficient, and reputable. And while there are good rating services for philanthropies, having your advisor do their own vetting (including digging through an organization’s financial filings) can bring even greater peace of mind.

Next, the advisor will begin laying out some of the many strategies and vehicles for giving, seeking simultaneously to achieve the charitable impact you desire and to reap the greatest possible tax benefits in the form of charitable deductions.

For most of us, it’s hard enough keeping track of our household bills, taxes, and investment portfolios. Undertaking a significant amount of charitable giving produces yet more paperwork. A skilled advisor will manage your charitable portfolio in much the same way as an investment portfolio, keeping up with the reporting, monitoring the charities’ performance, measuring your impact and, as necessary, suggesting changes either to the philanthropies you support or the vehicles by which you support them.

What strategies do advisors sometimes suggest?

Philanthropy advisors are intimately familiar with an array of giving structures, techniques, and arrangements, and will help you find the ones that best suit your circumstances. Among them:

  • Qualified Charitable Distributions (QCDs). Rather than reaching for their checkbooks to support the causes they believe in, people age 70.5 and older may send money directly to a charitable organization from their IRAs. Not only are these contributions tax-free, but they also effectively reduce your income, which could mean lowering your tax bill. And, if you’re over age 73, your QCD can satisfy some or all of your required minimum distribution.
  • Donor Advised Funds (DAFs). These giving vehicles are increasingly popular. You put your dollars into your fund for an immediate tax deduction and later distribute them in the form of grants to the organizations you support. But while they’re awaiting distribution, those funds aren’t just sitting there. The assets are invested so that they grow over time, increasing your charitable impact.
  • Donating assets, not just cash. An advisor familiar with your entire financial situation may find opportunities for alternative forms of giving that could bring benefits you’d otherwise overlook. For example, if you own a real estate property or a stock portfolio that has significantly appreciated in value, you might have to pay capital gains tax on it. But not if you donate the appreciated assets. In that case, you not only avoid the capital gains tax but also may deduct the assets’ fair market value as a charitable gift.
  • Bequeathing. Many people want to leave charitable funds behind when they pass away. A philanthropic advisor can provide guidance on integrating your philanthropic goals with your estate plan, through well-targeted, thoughtful distributions designed to maximize your impact.
  • Donation-bunching. If you tend to make small annual donations that don’t exceed the threshold of the standard deduction, your advisor may counsel you to give several years’ worth of contributions in a single tax year so that you can itemize on that year’s taxes, further reducing your liability.
  • Setting up a foundation. It’s a serious undertaking comparable to establishing a business, but if you’re serious about creating significant, lasting charitable impact, then a philanthropic advisor can get you started on creating a private foundation that distributes grants. It’ll be a team endeavor, combining the efforts of tax professionals, attorneys and others, but your philanthropic advisor will be a key player.
  • Establishing a Charitable Remainder Trust. This structure is designed to reduce your taxable income while supporting your charitable goals. Your money sits in the trust for a specified number of years, during which it distributes an income stream back to you. At the end of the predetermined period, the remainder of the funds are allotted to the charity you wish to support.

Help at all levels

As the above examples should make clear, philanthropic advisors can provide a valuable service whether you’re just getting your start in life or have high net worth and are looking for a sophisticated solution. Their up-to-date knowledge about the philanthropic space can help you avoid costly mistakes and get you the most bang for your charitable buck while providing you with savvy tax advantages.

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