Charitable Giving & Investing

What is Charitable Giving & Investing?

Charitable giving & investing giving refers to giving money, time, or goods to an individual or organization. Some of these are deductible, while others are not. According to the IRS, it is technically the money donated by you, in the form of securities, goods, or services to an organization. The market value of these items is deductible on your income tax return, if the organization is qualified under the terms set by the IRS.   

Charitable Giving is a way for people to support a specific cause or organization that they care about. There are many different ways in which this could be done. Private foundations, endowments, charitable remainder trusts, and charitable annuity remainder trusts are a few of the avenues you could take to charitably give.

Setting up a Charity in Northeast Ohio

If you have charitable aspirations, we would be happy discuss your options with you to figure out how best to accomplish your goals; Sometimes, this means setting up a charity via a private foundation. Because of the potential tax benefit of giving to a charity, there are many rules and regulations that could potentially make the process complicated. We can help you with all of the paperwork involved, and we have a network of professionals in place to help you with anything you need that is outside our scope of expertise.

Operating a Private Foundation

The operations of a charity rely heavily upon the desires of the individual setting up the private foundation. You have many options for the operations of the foundation. Here are just a few:

  • Will the charity raise money from outside donors? How will this be done?
  • How often will distributions be made? What is the yearly sum of distributions?
  • To whom will distributions be made to?
  • How will the funds be invested?

Based on your instructions, we can help operate the foundation and use the funds as you have specified them to be used. Another idea to consider is whether or not you want the recipient to know that the gift is coming from you. If desired, you can maintain anonymity as we work as the middle man between you and the recipient.

We will complete the IRS required filings with you and work alongside you to achieve the goals that you have for the charity.

Investing Charitable Dollars in Canton, Ohio

As a way to broaden the impact of money to be given to an organization, funds can be invested to give the money an opportunity for growth. We can invest these funds with your risk profile and time horizon in mind, in order to grow the account so that there can be more money sent to the specified recipient. Further, having uninvested money set aside to be given at some point in the future is generally losing value due to inflation. Investing this money is a more effective way of keeping pace with inflation and gives it the opportunity for growth, beyond the rate of inflation.  


When you give money to a nonprofit organization for a specific purpose, it is considered an endowment. Oftentimes, an endowment fund is constructed in such a way for the principal to remain intact, while the interest earnings are to be used for a stated purpose. In this case, the transfer of money happens immediately.

Charitable Remainder Trusts

There are two similar, but slightly different types of charitable remainder trusts. A charitable remainder trust (CRT) is a gift of cash or property to an irrevocable trust. The gift is usually a highly appreciated asset that would otherwise be subject to heavy capital gains taxes. The asset can be sold inside the trust without the capital gain tax. From this trust, a donor can receive an income stream for a specified number of years, or for life. The named charity then receives whatever remains in the trust at the end of the trust term. The donor also receives an income tax charitable deduction when funding the charitable remainder trust. In summary, a CRT can help you avoid income tax on a highly appreciated asset, convert said asset to current income and receive a current charitable tax deduction. All this while benefiting your favorite charity.  

Required Minimum Distribution to a Charity

Traditional IRA holders over the age of 72 must take a required minimum distribution (RMD) from their account yearly. These withdrawals are taxable in most instances. A key exception to this taxability is if the funds are transferred directly from the IRA to the qualified charity. When funds are transferred in this way, they are considered a qualified charitable distribution (QCD) and do not increase your earned income for the year. Keeping taxable income at a lower level may reduce your exposure to higher taxes in other areas such as social security benefit taxes and the Medicare surtax. 

Benefits of Charitable Giving & Investing in Ohio

Starting and giving to a charity comes with many benefits. It helps those in need, promotes generosity, and allows you to support a cause or organization that you value. In addition to all of these, it even has a positive financial impact for you. If the charity you are donating to meets IRS requirements, you can actually write off your contributions!

There are many guidelines and nuances to charitably giving and investing, and we would love to help you sort out all the details in order to achieve whatever your goal may be.

Talk to us at TTG Financial if you have charitable aspirations and want to find out how we can make this work for you!

Charitable giving & Investing