Charitable Success Solution®

Charitable Gifting Strategies with Added Benefits- Donate Smarter!

Some people see charitable giving as a means to an end, wanting to benefit from the transaction and looking for tax savings. Others want to help the charity and are not necessarily looking for personal gain. What if you could  combine the two more effectively and donate smarter? What if in fact you could take advantage of available tax laws and strategies that benefit the donor and result in an even larger donation. The Charitable Success Solution® can be a critical process toward achieving both charity and donor goals.

Our Charitable Success Solution™ utilizes new Pooled Income Funds (PIF) and Charitable Lead Trusts (CLT) to offer well-designed giving strategies that can enhance a donors retirement and estate planning while satisfying benevolent interests.

What are some options?

NEW Pooled Income Fund (PIF)

A type of mutual fund comprised of gifts that are pooled and invested together. Income from the fund is distributed to both the fund’s participants and named beneficiaries according to their share of the fund. If you are a donor to the fund, you and the other income recipients you choose receive quarterly payments for life, and upon your death the value of the assets will be transferred to the beneficiaries. Basically, a pooled income fund allows you to do three things: 1) ensure a perpetual income, 2) claim a current tax deduction and 3) make a future gift to charity.
For example, say you own stock with a value of $100,000. Then you donate the stock to the pooled income fund to eventually fund scholarships for underprivileged students and reserve for yourself an income interest for life. In the transfer of stock to the fund, you do not recognize a capital gain on the appreciated value since original purchase, so you avoid capital gains tax. You will also receive a charitable deduction for the year you enter into the pool, lowering your taxes.

  • This is the granddaddy of them all. 2018 looks to be a historic high tax deduction for new pooled income funds (less than three years old).
  • Why is the tax deduction so high? Revenue ruling 96-1
  • A PIF is very similar to a charitable remainder trust, the difference is that the donor doesn’t have the legal cost of setting up the trust. The charity has set it up and bears the administrative cost.

Charitable Lead Trust

A trust designed to reduce beneficiaries’ taxable income by first donating a portion of the trust’s income to charities and then, after a specified period of time, transferring the remainder of the trust to the beneficiaries. Using a CRT the donor is able to reduce taxes upon the estate left by the deceased. This is done by donating to charities from the estate until all taxes are reduced. Once this is accomplished, the estate is then transferred to the beneficiaries, who typically will face lower taxes. Many different organizations offer information regarding the set-up of these types of trusts. Examples are universities, colleges, and non-profit societies.


Charitable Gift Analysis (CGA)

Contact us and an LMA team member will contact you to talk about your needs and put together a detailed analysis.

Are you a charity?

LMA can be a valuable educational source for your donor base. Let us help you increase your funding pool and identify new benefactors. LMA can offer charitable organizations:

  • One-on-one educational sessions on utilization strategies with PIFs and CRTs.
  • Participate in organizational events, speaking engagements and conferences.
  • Group seminars on how donors can increase their after-tax retirement income sources and enhanced tax saving strategies.

Lara, May & Associates, LLC advisors are not licensed tax professionals. They will work with a donor’s licensed tax professional for tax planning purposes. This communication is for information purposes only and should not be regarded as a donation solicitation. Charitable giving may not be right for everyone. A detailed analysis should be completed based on a donor’s individual need and unique situation to determine if a recommendation is suitable.