The Blue Blaze

It's Hero Time. Thanks, Charitable Gift Fund.

Posted by Frankie Corrado



Image courtesy of via Upsplash


It Isn’t Over Till It’s Over.

Time’s running out to tick off all those new year resolutions.

If being a hero is still on your list (unchecked), there’s a way to make this happen: start a charitable gift fund.

A Charitable Gift Fund (CGF) is exactly what it sounds like: an account you open where your funds are used for a one, very specific purpose -- to make charitable donations to organizations you choose.

Once your account is opened, usually with a custodian (Fidelity and Schwab are two big players in this arena), you donate assets to the account. Many people contribute appreciated stock because there are tax advantages to this strategy, but you can contribute assets from any of your accounts, as long as it doesn’t contradict your long-term financial planning strategy. Assets in your CGF are held in trust, and are only allowed to be distributed directly to qualified 501(c) (3) charities.

A Very Merry Win-Win

There are a host of benefits of doing this. Here are just a few.

  1. You get to be a hero. Charitably inclined? Great! Those of us who are fortunate enough to have the financial ability to improve the condition of our communities, our environment, and life on Earth, should. And there’s no shame in doing good and feeling good about it.

Not all of us can perform life-saving surgery, run into burning building and carry people to safety or invent the perfect energy source that will save the planet. However, many of us have an income that affords us the opportunity to make thoughtful, impactful financial gifts to support a person’s access to better food, housing, safety, education, healthcare, the arts, and kind companionship.

  1. You get a tax deduction. You’re entitled to a deduction for the full value of the assets you donate, and if these include any appreciated assets, you get a double bonus by not having to pay tax on the capital gains of those appreciated assets. This is an important consideration for those  with high income and need some tax arbitrage strategies, or those who have retired early and need financial planning strategies that address how best to manage money locked up in 401(k) accounts or traditional IRAs.

There are dozens of different scenarios for different opportunities, all with their own advantages and caveats. Tax strategies are marvelous and complicated, so best to speak with your advisor to pick the right one for you and your goals.

  1. You improve your chances of passing along your passion to the next generation. I have a pair of clients, Mark and Marie, who have built a “Personal Family Philanthropy Plan”, which includes their young children. Charitable support is very important to them and they have a particular affinity for animal causes. They established a charitable gift fund when their first was born.

Nearly ten years later, their three kids, ages 4, 6, and 9 1/2, participate in family meetings where they discuss the family “animal help account” and make shared decisions on how to help animals by supporting animal charities. This year, their oldest gave a class presentation on the fund, and the family often visits the charities they donate to see exactly how their money is going to good use.

For Mark and Marie, the “animal help account” is an example of reaching goals, saving taxes, and raising the family the way you want.


It’s Go Time.

Bottom line, establishing a charitable gift fund is a tremendously powerful way to have a lasting, positive impact in the world. There are also some very practical benefits for you, too.

And if the rest of your 2018 is already spoken for with holiday celebrations and shopping, no worries. Putting "Be a Hero" at the top of your 2019 resolutions list is a GREAT idea!

Interested in charitable planning in your own life? Contact Blue Blaze - our Financial Life Guides are experts in charitable giving strategies. Your first hour virtual consultation is free -- our gift to get you started on the hero’s path.

Free Virtual Consultation 

Topics: Financial life guidance, Purpose,, Values, Charitable