Choosing the Charitable Giving Vehicle That’s Right for You

The vast majority of donors engage in “checkbook charity.” A gift of cash is easy to execute and is straight-forward. Even affluent donors with high incomes and high net worth give cash. According to the 2025 Bank of America (BOA)  Study of Philanthropy,  nearly 82% of affluent donor households made gifts directly from their personal assets and income.

However, the remaining 18% utilize some sort of charitable giving vehicle. These savvy donors have blended concerns about control, cost, administrative responsibility, tax deductions, complexity, and legacy to build a charitable plan that suits their needs best.

This article will delve into the variety of giving vehicles available and elaborate on the pluses and minuses of each.

What's the best giving vehicle for you?

Wills

The BOA study indicated that the most used giving vehicle( with 14% of affluent households having one ) is a will with specific charitable provisions. This is straight-forward and pragmatic; you are giving away assets you will no longer need due to your death. However, a donor doesn’t get to see the impact of their generosity and the good that their dollars are helping achieve.

Qualified Charitable Distributions (QCDs) from IRAs

For donors aged 70 ½ years, they are able to transfer funds tax-free from an Individual Retirement Account directly to a charity. The money from the QCD is excluded from the taxable income of the donor.

For those donors who are 73 years of age or older, they must take Required Minimum Distributions (RMDs) from their IRA each year. However, the QCD amount counts toward the RMD. This avenue is not only tax-smart but allows the donor to see the value of their charitable impact.

Endowment Funds

These are funds created at a nonprofit that are intended to provide a permanent, stable and growing source of income to support the charity. The BOA study indicates that nearly 5% of affluent donors use endowment funds.

The core principle of an endowment is that the principal (the original donation amount) is generally preserved and invested in perpetuity (forever).

• The Principal (Corpus): This is the original sum of money and is usually kept intact. It's the long-term investment that is designed to grow over time.

• The Earnings: Only a portion of the investment income (interest, dividends, and capital gains) generated by the principal is paid out annually to fund the organization's operations, scholarships, research, or other designated purposes.

The aim is to have a funding source that is protected from economic downturns and fluctuations in annual fundraising, allowing the organization to plan strategically for the long term. A common approach for annual payouts is to spend a small percentage (often around 3% to 5%) of the fund's average market value, which helps balance current needs with the need for long-term growth.

Donor Advised Funds

Over the last 5+ years, donor advised funds (DAFs) have grown rapidly in popularity, solidifying their growth as one of the fastest-growing charitable vehicles in the US. The amount of charitable assets has grown over 100%, from a $122 billion in 2019 to over $251 billion in 2023. The National Philanthropic Trust estimates that there are over 1.7 million individual DAFs today

DAFs not only provide an immediate tax deduction to the donor, but the assets within the fund can grow tax-free. The donor can recommend grants to charities on a schedule or frequency that suits their interests.

A DAF holder is a person who not only prioritizes charitable giving but, due to the nature of a DAF, has dollars set aside specifically for charitable use. For many charities, recognizing who among their donors are using DAFs can provide insight into targeting the best affluent donors who are always ready to give.

Charitable Trusts

Charitable trusts offer powerful tax advantages, including immediate income tax deductions, deferred capital gains tax, and a reduction in overall estate taxes. These vehicles are primarily differentiated by their payout order: a Charitable Remainder Trust (CRT) provides an income stream to the donor (or their heirs) first, with the remainder going to charity. Conversely, a Charitable Lead Trust (CLT) pays income to the charity first, with the remainder ultimately passing to the donor's heirs. Both structures allow donors to blend philanthropic goals with significant wealth transfer benefits.

Private Foundations

This is a distinct, separate, nonprofit entity that is established by a person or family. Private foundations are fully customizable & provide a maximum degree of control for the foundation creator. They are ideal for creating a multigenerational legacy, with private foundations able to operate in perpetuity if so desired. They provide grant making flexibility as well as income tax deduction on contributed assets.

Private foundations do have significant administrative requirements and costs, as well as annual payout requirements, unlike donor advised funds.

Giving Circles

This is a form of collective giving where a group of individuals with shared values or interests pool their charitable donations together and then collectively decide where to donate the money.

Members agree to contribute a set amount of money regularly (monthly, quarterly, or annually), with individual contributions combined to create a larger collective fund.

The group collaboratively research, discuss, nominate, and vote on what causes will receive the pooled funds. This democratic process gives every member a voice in grant-making and fosters a sense of community among the circle members.

The combined donation is significantly larger than what most individual members could give alone, resulting in a much greater impact on the chosen cause.

Conclusion

With this many choices of giving vehicles, which one is best?  What aspects are most important for the donor? At Generosity Nexus, our deep experience can guide a donor among the many options and help determine what giving path is best.

Don’t hesitate to schedule an appointment to learn more about how we can help you.