"Philanthropy is a ministry." ~ Arthur C. Frantzreb

• Why Give
• What to Give
• Ways to Give
• How Much to Give

Charitable giving comes in many forms - all of them helpful and beneficial to society. The key is to give in a way that is most consistent with your personal values and passions (see Planning Your Giving). While the ways to make a gift to charity are numerous and varied, most fit into one of nine major giving options:

• Make a Direct Gift to Charity
• Make a Planned Gift to Charity
• Give to or through a Community Foundation
• Create a Community Foundation
• Create a Private Foundation
• Develop a Corporate Giving Program, Foundation or Fund
• Create a Supporting Organization

Click on the links above for a summary of the key points about each giving option. This information is not meant to be all-inclusive, but rather to serve as a first step in helping you move to the next phase of your giving plan. Each donor has unique, specific interests and conditions that must be analyzed in detail together with a professional advisor.

Make a Direct Gift to Charity

Although cash and appreciated securities are the most common types of direct gifts that people make to charity, there are other options that may offer greater benefits to you and the charity (see What to Give for more information).

NEXT STEPS

• Researching Potential Beneficiaries - To find out more information about a particular nonprofit before making a giving decision, or to determine which nonprofits are addressing charitable areas of particular interest to you, see Where to Give.
• Workplace Giving Campaigns - Federated funds participate in annual workplace giving campaigns that raise millions of dollars for local, state and national nonprofit organizations. Workplace giving campaigns allow employees to set up an automatic deduction from their payroll check to be donated to a federated fund(s), and sometimes individual charities, of their choosing.

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Make a Planned Gift to Charity

"Planned giving" is a term commonly used to describe a wide variety of giving vehicles that allow you to give to charity during your lifetime and/or after your death, while meeting your current income needs and providing for your heirs. Planned giving is typically done in conjunction with estate planning, and is a viable option for donors of all income levels.

From a donor's perspective, planned giving is attractive for many reasons. It may allow you to make larger gifts than you otherwise could out of your current assets. Depending on how a planned gift is set up, it may also let you receive a stream of income for life, earn higher investment yield, or reduce your capital gains or estate taxes. Planned gifts often appeal to people who want to benefit a charitable organization but aren't certain how much of their assets they'll need for themselves during their lifetimes.

Planned gifts can be used to benefit a specific nonprofit organization, to establish a fund at a community foundation, to create a supporting organization, or to start a private foundation.

PLANNED GIVING OPTIONS

The most common types of planned giving vehicles are gift annuities, charitable remainder trusts, charitable lead trusts, charitable bequests and beneficiary designations:

Gift Annuities

A charitable gift annuity provides you with lifetime income. To establish a gift annuity, you contribute funds or assets to a nonprofit organization, and that nonprofit in turn makes fixed annuity payments to you from its general assets for the rest of your life. You receive an immediate income tax deduction for a portion of the gift, and a portion of each annuity payment is treated as a tax-free return of the investment. The portion of the gift not used for payments benefits the nonprofit organization.

Charitable Remainder Trusts

A charitable remainder trust allows you and/or other designated beneficiaries to receive income from a trust for your lifetime(s), or for a period of years not to exceed 20. At the end of that time, the balance of the trust is transferred to a charity that you have selected. You can take a charitable deduction for a portion of the gift you make to the trust in the year the trust is formed. (In some cases, additional funds may be added in later years.) The two most common types of charitable remainder trusts are annuity trusts and unitrusts, which differ in how the income you receive from the trust is calculated and distributed.

Charitable Lead Trusts

A charitable lead trust allows you to designate a charity to receive a regular, fixed amount from a trust for a specified time period or the lifetime of a designated person. At the end of that time period, the remainder of the trust passes to your designated heirs or other non-charitable beneficiaries.

Charitable Bequests

The term "charitable bequest" is used to describe anything you give or leave to charity from your estate through a will or a revocable inter vivos ("living") trust. An "estate" is any property, money or personal belongings that you may have at the time of your death. Most people leave an estate when they die, even though they may not have a great deal of wealth. Even an individual with a small estate can arrange to leave a charitable bequest.

You can arrange to bequeath a gift from your estate in several different ways. You can set aside a specific dollar amount, leave a percentage of your estate, or leave any assets left over after your family has been provided for. Some people use a bequest to give a charity something they own, such as a car, home, art or jewelry. Others leave a paid life insurance policy or other financial investments, such as stocks, bonds or CDs. These gifts may provide tax savings (see What to Give). Consult a professional advisor for details.

Beneficiary Designation

By designating a charity as the beneficiary of your life insurance or retirement assets, you can enjoy some flexibility in your charitable giving as well as certain tax advantages. The designated charity will receive the specified assets upon your death, and you have the option of changing the eventual recipient throughout your life. For more information, go to the life insurance or retirement assets sections under What to Give.

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Give to or through a Community Foundation

WHAT IS A COMMUNITY FOUNDATION?

Community foundations are charitable organizations that may administer a number of endowed funds primarily for local purposes, to solve community or regional problems and improve the lives of people in their geographic area. Community foundations are found in most major cities, and in numerous counties and smaller towns. Some are statewide and some are multi-state.

There is another type of community foundation, called a "public foundation," whose primary focus is not a geographic area but rather the needs and interests of a particular issue, demographic segment or denominational group. A public foundation's geographic focus may be local, statewide, national or international. Public foundations typically offer the same giving opportunities and tax advantages as community foundations.

Community foundations allow you to establish charitable funds without incurring the costs of starting and administering a private foundation. Community foundations are administered by a governing body or distribution committee representative of community interests. Because community foundations are public charities supported by donors from across the community, all contributions to community foundations are allowed significant tax benefits.

In addition to creating a fund at an existing community foundation, groups of donors may want to consider creating a new community foundation or other type of public foundation to support their community (see Create a Community Foundation).

TYPES OF COMMUNITY FOUNDATION FUNDS

You can make gifts to a community foundation to create or support several different types of charitable funds, including:

Unrestricted Fund

The income from your gift is used where the foundation's board deems it is most needed.

Field of Interest Fund

You support charitable organizations in a specific field of your choice, such as the arts, education or the environment. Individual organizations are not specified.

Designated Fund

You designate one or more specific charitable organizations to benefit from your gift.

Donor Advised Fund

You can assign family members and others to join you in advising the foundation on how the income or principal from your fund should be distributed. (Note: the requirements about who can continue as your fund's advisors after your death, and for how long, vary for different community foundations.) You can establish a broad purpose for your donor advised fund, or specify a field of interest. The community foundation may charge an annual fee for administering your fund. Donor advised funds can be set up by individuals, families or corporations.

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Create a Community Foundation

Community foundations can be established by a group of citizens interested in serving a particular geographic community or region, or by a group of individuals interested in supporting a specific interest or cause. Once established, community foundations can help existing nonprofits to build endowments, hold funds designated by donors for specific agencies, and make grants to charitable organizations. Community foundations also have a mission to establish and increase flexible permanent funds that can be used at the discretion of the foundation board to meet the needs of the community it serves.

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Create a Private Foundation

WHAT IS A PRIVATE FOUNDATION?

Private foundations are generally founded by an individual, a family or a group of individuals, and are organized either as a nonprofit corporation or as a charitable trust. You can appoint yourself, as well as other family members or friends, to sit on the foundation's governing board.

One common form of a private foundation is a family foundation. Families sometimes use a family foundation as a forum in which family members can work toward common goals, or as a way to instill the value of charitable giving in future generations of the family. Another common option that families use to accomplish the goals of their family philanthropy is to establish a donor advised fund at a community foundation.

Since a private foundation is a charitable organization, it is exempt from federal income tax on its income, although it must pay a 1-to-2 percent excise tax on its net investment income. The gifts you make to establish a new foundation or grow an existing foundation can afford you certain tax advantages; income, gift and estate tax deductions are available under the law. Consult a tax advisor for details.

TYPES OF PRIVATE FOUNDATION

There are three main types of private foundations: private endowed foundation, pass-through foundation and private operating foundation.

Private Endowed Foundation

This is the most common type of private foundation. The foundation's financial assets create a principal - or endowment - that is invested, and income from the endowment is paid out annually to charity. Generally, the principal or endowment is not spent, only the investment income. Therefore the principal can increase with good investment, ensuring the foundation's continuation and growth to meet future community needs. Private foundations are required by law to pay out annual grants and other qualifying distributions totaling a minimum of 5 percent of the fair market value of their assets.

Pass-Through Foundation

A pass-through foundation is a private grantmaking organization that distributes all of the contributions it receives each year (not just 5 percent of its assets). The pass-through option may be made or revoked on a year-to-year basis.

Private Operating Foundation

A private operating foundation uses the bulk of its income to actively run its own charitable programs or services. Examples include the operation of a museum, library, research facility or historic property. Some private operating foundations also choose to make some grants to other charitable organizations.

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Develop a Corporate Giving Program, Foundation or Fund

BENEFITS OF CORPORATE PHILANTHROPY

Many studies show that corporate charitable giving helps improve a company's bottom line. According to data from the 1999 Cone/Roper Cause Trends Report:

• 76% of consumers indicate they would switch brands or retailers to one associated with a good cause, when price and quality are equal.
• 87% of employees at companies with philanthropic programs feel a stronger sense of loyalty to their employer.

External benefits of corporate giving:

• Improved customer loyalty.
• Enhanced reputation and standing in the community.
• Increased positive name recognition and brand awareness.
• New and enhanced relationships with key community leaders and officials.
• Beneficial business-to-business relationships with nonprofits.
• A reservoir of goodwill within the community.
• Healthier, more livable and economically stronger communities.

Internal benefits of corporate giving:

• Competitive advantage in attracting and retaining employees.
• Leadership and development opportunities for employees.
• Exposure of senior staff to new ideas, points of view and important social movements.
• Improved internal communication and common purpose.

CORPORATE GIVING OPTIONS

If you own a family business or are an officer of a corporation, there are at least four options for you to consider for your company's charitable giving: a corporate giving program, a corporate foundation, a corporate donor advised fund, and employee matching & non-cash giving.

Corporate Giving Program

Many corporations operate an annual giving program to make charitable grants, funded as part of their annual operating budgets. Business owners can blend their family business with family philanthropy by channeling their charitable support through their family corporation(s). A corporate giving program has no independent endowment, and its budget is typically administered by corporate staff and directed by the CEO or an advisory committee of management staff members. A corporate giving program is not subject to the rules and regulations governing private corporate foundations.

Corporate Foundation

A company can create a corporate foundation as an independent, tax-exempt private foundation. A corporate foundation is usually started with a single gift that can become the endowment, to which the company can add future contributions as it wishes. The foundation's officers are usually the company's owners and key executives, although leaders from headquarters communities are sometimes included. At some companies, employee committees make giving recommendations about projects they believe are worthy of support. The corporate foundation is subject to the same rules and regulations applicable to other private foundations.

Corporate Fund

Companies can create their own donor advised funds at a community foundation of their choosing. For more information on this option, see Give to or through a Community Foundation.

Employee Matching & Non-Cash Giving

In addition to awarding cash grants to charity, companies often offer to match their employees' gifts of cash and volunteer time to nonprofit organizations. Many companies assist and encourage their employees to give by organizing workplace giving programs (also known as "federated funds") and by facilitating payroll deductions for employees' charitable gifts. Companies sometimes match gifts that their employees make through workplace giving programs.

Some companies also organize employee workplace volunteer efforts, donate "in-kind" gifts of their products, or offer their services to charities on a free "pro bono" basis.

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Create a Supporting Organization

A giving circle gives you a hands-on opportunity to collaborate with others to practice giving in a supportive environment.

WHAT IS A GIVING CIRCLE?

A giving circle is, in general terms, a group of donors who place their charitable dollars into a pooled fund, and decide as a group which charities to support. Giving circle donors often commit to participation for several years at an established dollar level, and the funds are typically donated to nonprofits chosen by the entire group.

Giving circles vary in structure, size and charitable focus. Some giving circles are very informal, nothing more than a group of friends with a bank account who meet in each others' homes to discuss and decide on where their funds will go. Other giving circles have hundreds of members and governing boards, and may use a community foundation to manage the financial aspects of their giving.

Some giving circles offer members an option to designate part of their annual dues to nonprofits of their own choosing (this can be done anonymously), with the remainder going into a fund for joint decision-making. Many giving circles offer their members a chance to work on grantmaking committees and evaluate nonprofits firsthand via site visits and other volunteer activities. And often, giving circles provide a venue for discussion of broader issues related to philanthropy, such as financial planning.

Operating a giving circle may involve significant legal and tax issues. It is important that you consult with a professional advisor for further information and guidance before forming a giving circle.

GIVING CIRCLE EXAMPLES

Here are a few examples of some established giving circles:

Community Capital Alliance

Twin Cities-based Community Capital Alliance is a nonprofit, non-partisan, volunteer-led organization dedicated to engaging young citizens in community service and problem solving, and to helping develop the next generation of citizen leaders. The Alliance integrates three vehicles of community involvement: financial investment, volunteer service and educational programs. For more information, see the Alliance's Giving Story, or contact:
- Catherine Gunsbury, gunsbury@worldnet.att.net.

Social Venture Partners
www.svpseattle.org

Social Venture Partners seeks to develop philanthropy and volunteerism to achieve positive social change in the Puget Sound region. Using the venture capital approach as a model, SVP is committed to giving time, money and expertise to create partnerships with nonprofit organizations.

WHAT IS A SUPPORTING ORGANIZATION?

Supporting organizations are operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes of one or more specified public charities. Community foundations are often - though not always - the public charities supported by these types of organizations.

Supporting organizations are complex legal entities, and in simplest terms can be described as a "hybrid" of a donor advised fund (see Give to or through a Community Foundation) and a private foundation (see Create a Private Foundation). There are three basic types of supporting organizations, and each option reserves a varying degree of the supporting organization's governance for the trustees of the beneficiary charity.

Because of the complex nature of supporting organizations, it is important that you consult a professional advisor for further information and guidance.

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