For a long time, many of our clients have been involved with philanthropy. They support a variety of organisations, communities and causes. However, planning for philanthropy can be challenging.
Fear — they want to be generous but don't want to run out of money themselves, so they give money away in their will. This means they miss the pleasure of seeing the money help their cause while they are alive, and they miss the opportunity of a government tax credit on their donation.
Uncertainty — they know they have more money than they need. They don't just want to enrich their heirs, but they don't know which cause or organisation to give the money to yet.
Publicity — they want to give money away, but they don't like the chance that they might be hassled for contributions on an ongoing basis.
Impact - they want to give money to support a cause, but they aren't sure of the most effective and efficient way to go about it.
Expense — they want to create a legacy of giving but aren't interested in the time and expense of setting up their own charitable trust.
Overseas there are solutions to these issues, called 'donor advised funds'. These funds are themselves charities. They hold the money in trust, allowing you to invest it how you choose (within limits), giving you an immediate tax credit and allowing the money to grow tax free while you take the time you need to decide who to give to.
The best way to describe donor advised funds is as an investment account for your charitable giving. When you are ready to give some (or all) of the money to a cause, you let the donor advised fund know. They undertake the necessary due diligence and process the donation. It's easy.
Donor advised funds can also consult with you about how to make the big impact with your giving that you want. And, best of all, they can make the donation anonymously if you prefer to do it this way.
All these reasons contributed to $23 billion being donated worldwide into donor advised funds in 2016.
They are a wonderful solution and, up until recently, haven't really been available in New Zealand.
We are proud to announce that we are now able to offer a donor advised fund to our clients, called The Gift Trust.
If you're looking to donate in a structured way, there are definite advantages to using a donor advised fund like The Gift Trust. This includes the option to grow your dollars tax free in a portfolio, allowing you to ultimately give even more. You can separate the desire to give from the secondary question of knowing exactly where to give, and how best to do it. You can give anonymously. And, for people looking to donate on a larger scale, using a donor advised fund offers far less hassle and cost than creating your own charitable trust.
The Gift Trust offers expert philanthropic support to help you shape your giving intentions, and focuses on helping donors do more than just send a cheque to their
favourite charity once a year.
If you've thought about giving but have encountered some of the issues we've discussed in this article, let us know if you'd like to find out more.
2 Depending on the level of support required, The Gift Trust may charge an extra fee for this service.
Rob and Mary