How Do You Give? Strategies for Mindful Giving

If you’re passionate about making a positive difference in the world, you’re in good company. Many people feel a strong pull toward giving back to their communities and supporting causes close to their hearts. This sense of purpose is at the core of developing a philanthropic mindset. According to the National Philanthropic Trust, Americans gave $557 billion in 2023, with the largest source of charitable giving coming from individuals and families who gave $374 billion, representing 67% of total giving. The top reason for giving was personal values and beliefs (69.5%).¹

While financial donations are a common form of giving, a philanthropic mindset encompasses more than just money. It’s also about offering time, energy, and resources to create a positive impact. Approximately 63 million Americans, 25% of the adult population, volunteer their time, talents, and energy to make a difference.²Most people volunteer through a nonprofit organization (61%), but others volunteer through helping someone directly (29%), a religious organization (24%), civic organizations (22%), the workplace (10%), or a school where they’re enrolled (9%).³When families engage in philanthropy together, they become part of a larger community striving to improve the world.

Fostering a Philanthropic Mindset in Your Family

Creating a family tradition of giving builds bonds and instills lasting values. Whether volunteering at a local food bank, supporting a charity, or participating in community events, families working toward a shared purpose often find a deeper connection. Teaching children the value of giving lays the foundation for a legacy of generosity that can last for generations.

Our prior blog, “Your Family’s Philanthropic Mindset,” looked at ways to start small—through volunteering, assisting neighbors, or supporting local initiatives; showing young family members that giving back doesn’t always require money, but it does make a difference. Leading by example during the year, not just during the holiday season, can foster a philanthropic spirit woven into your family’s everyday life.

Philanthropic Investment Vehicles

As families embrace a philanthropic mindset, there are also strategic ways to incorporate giving into financial plans. Gifting appreciated stock directly to a charity can be a simple yet highly effective strategy. By donating appreciated stock instead of selling it, you can avoid capital gains taxes while still receiving a charitable tax deduction for the fair market value of the stock. This allows you to maximize the value of your gift and the potential impact on your chosen cause.

We discussed a more structured approach to incorporating philanthropic goals into financial planning in our blog, “You Get What You Give: Investment Vehicles for Charitable Giving.” Structured giving vehicles like Donor Advised Funds, Charitable Remainder Trusts, and Private Foundations offer options to make an impact while potentially providing tax benefits. We provide a brief recap below.

Donor Advised Funds (DAFs)

A Donor Advised Fund (DAF) is a charitable giving account created for the sole purpose of supporting philanthropic causes. DAFs are simple to set up and provide tax advantages, but once established, they are irrevocable. Donating to a DAF means you receive an immediate tax deduction, and the assets you contribute—whether cash, stocks, or other investments—grow tax-free over time. Although the assets are no longer yours, you retain advisory privileges over their investment and distribution to IRS-qualified charities.⁴

DAFs offer flexibility by allowing contributions of various assets, including highly appreciated assets, cryptocurrency, or even private company stock. This vehicle can be a valuable tax-saving strategy if you plan to donate as the assets grow tax-free, enhancing your giving potential over time.

Charitable Remainder Trusts (CRTs)

A Charitable Remainder Trust (CRT) provides a stream of income to the donor or other beneficiaries, with the remainder going to a designated charity. CRTs are also irrevocable, offering both philanthropic and financial benefits. A CRT allows for a partially tax-deductible donation of various assets, including cash, stocks, or real estate. After the donor establishes the trust, they select a beneficiary (which can be themselves) who receives income for up to 20 years for a specified period. After that, the remainder goes to charity. There are two main types of CRTs:

Charitable Remainder Annuity Trusts (CRATs) provide a fixed dollar amount each year, and no additional contributions are allowed after the initial setup.
Charitable Remainder Unitrusts (CRUTs): Pays a fixed percentage of the trust’s assets, which can vary annually based on investment performance and allow for additional contributions.⁵

CRTs help donors fulfill charitable goals while generating income for future needs. They also offer tax incentives, particularly when using appreciated assets, as they avoid capital gains taxes and provide an immediate tax deduction.

Private Foundations

A private foundation is a 501(c)(3) organization typically funded and controlled by an individual or family. Foundations can be operating (directly involved in projects) or non-operating (primarily making grants to other charities). Once established, a board of directors manages the foundation, overseeing contributions, investments, and grants.⁵Operating a foundation involves meeting tax filing and administrative reporting requirements, often requiring the assistance of a CPA or attorney.

Private foundations offer significant control over charitable giving, allowing donors to build or expand a legacy. They provide tax advantages, including capital gains, tax elimination on appreciated securities, and the ability to accept various assets, such as real estate or private equity.

Creating a Lasting Impact

At Treehouse, we view a philanthropic mindset as a path to personal growth and essential to a thriving community. Integrating philanthropy into your financial plan can benefit you and future generations, whether through a DAF, CRT, or foundation. Learn more about how Treehouse Wealth Advisors can help guide you in choosing the right investment vehicle to meet personal goals, strengthen your community, and inspire others.

Sources:

1,3 Charitable Giving Statistics. National Philanthropic Trust. https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/

2 Comstock, C. The State of Charitable Giving in the U.S. Ren Inc. https://www.reninc.com/charitable-giving-statistics/

4 What is a Donor-Advised Fund? National Philanthropic Trust. https://www.nptrust.org/what-is-a-donor-advised-fund/

5 Charitable Remainder Trusts. Internal Revenue Service. https://www.irs.gov/charities-non-profits/charitable-remainder-trusts

6 What is a Private Foundation? Foundation Source. https://foundationsource.com/what-is-a-private-foundation/

Written By

Treehouse Wealth Advisors Team

Treehouse Wealth Advisors is a women-led firm based in Walnut Creek, CA, dedicated to crafting tailored financial solutions for individuals and families. With a focus on long-term, relationship-driven approaches, we empower clients to invest their time and assets purposefully. Our team is passionate about challenging the status quo and embracing change to find better solutions.

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