The Five Major Charitable Giving Vehicles

Donor Advised Fund (DAF)

A DAF gives donors full control over when and to which charities funds are distributed, while taking an immediate tax deduction at the time of contribution. You can keep assets invested with your custodian/advisor while maintaining control over the timing and amount of grants. A DAF is the simplest vehicle to establish (set up by a custodian) and allows additional contributions over time. Income is flexible.

Best for: Donors who want to bunch charitable deductions in high-income years, or who want to separate the timing of their tax deduction from actual distributions to charities.

Charitable Lead Trust (CLT)

A CLT pays a stream of income to a charity for a defined period, with the remainder eventually passing to your heirs. A charitable lead annuity trust (CLAT) pays a fixed amount; a charitable lead unitrust (CLUT) pays a fixed percentage of assets (valued annually). CLTs can remove assets from your taxable estate while preserving or growing value for heirs (for nongrantor trusts). Requires an attorney to establish.

Best for: Donors with estate planning concerns who want to benefit charities now and heirs later.

Charitable Remainder Trust (CRT)

A CRT pays an income stream to you or another noncharitable beneficiary for a term of years or lifetime, with the remainder going to charity. CRATs pay a fixed amount; CRUTs pay a fixed percentage of assets (revalued annually). CRTs offer more privacy and control over trust management than PIFs. Funded with cash, appreciated securities, or QCDs (subject to limitations).

Best for: Donors who want to convert appreciated assets into income while making a lasting charitable gift.

Pooled Income Fund (PIF)

A PIF pools multiple donors’ assets and pays each donor a proportionate share of the fund’s income for life. The remainder passes to the sponsoring charity. PIFs allow younger income beneficiaries and may generate higher (though less predictable) income. Set up and managed by a nonprofit organization or custodian.

Best for: Donors who want charitable income but don’t need control over the underlying investments.

Charitable Gift Annuity (CGA)

A CGA is a contract between a donor and a charity in which the donor makes a gift in exchange for a fixed income stream for life. Payout is determined actuarially and may be suitable for donors in good health who want predictability. Can be funded with QCDs (subject to limitations). Income is partially taxable.

Best for: Donors who want guaranteed lifetime income and a simple structure.

Key Comparison Points

• Who receives the income? DAF/CLT: the charity. CRT/PIF/CGA: the donor, family, or heirs.
• Who receives the death benefit? DAF/CRT/PIF/CGA: the charity. CLT: the donor’s heirs.
• Can be funded with a QCD? CRT and CGA: yes (subject to limitations). DAF, CLT, PIF: no.
• Investment control? DAF, CLT (CLUT), CRT (CRUT): yes. PIF and CGA: no.
• Additional contributions allowed? DAF: yes. CLT (CLUT/PIF): yes. CGA: no.
• Income type: DAF: flexible. CLAT/CRAT: fixed. CLUT/CRUT: variable. PIF: variable. CGA: fixed.