Why do you give? Hopefully, you’ve actually posed that question to yourself, and, more importantly, mulled over your reasons. The groups you choose to fund paint a picture of your philanthropic passions. Yet is the vision for your giving — also known as your donor intent — evident enough to allow future generations to carry out your legacy?
Imagining a donor’s wishes after his or her death is fraught with peril, particularly when the decision-makers were disengaged from the donor’s original thought process.
The good news is you can take steps to protect your charitable legacy. Spend time in your estate planning not just defining what your donor intent is, but also the how and to whom. In other words, what means will you use for your legacy giving, and who will ultimately oversee how those funds are doled out?
Here are three key elements to securing your donor intent:
1. Bind it in writing
Work with your attorney or financial advisor to put your charitable intent in writing. Share appropriate documents with relevant parties, be they heirs, trusted friends or charitable beneficiaries. At a minimum, ensure the right people know that you have outlined your intent and expect it to be followed.
2. Drive the right vehicle
You have choices in the vehicle driving your charitable legacy. These include a private foundation, a donor-advised account, charitable lead trusts, charitable remainder trusts or a simple bequest. Each has its own advantages, drawbacks and tax implications. It is important to remember, too, that you may need multiple vehicles to fully protect your intent.
3. Shut it down
This may be the most important step to head off an eventual drift away from your donor intent: Limit the life of the charitable vehicle you establish. Leaving instructions that ensure that your charitable capital is spent within 25 years of your death diminishes the chance your money will support causes with which you disagree. It also means your money will make a more immediate impact with the causes you hold dear.
You don’t want future generations guessing at how to fulfill your wishes as times change. Leave those decisions to people you trust or to institutions that have the necessary guardrails in place to keep from straying far from your plans.
Reprinted with permission from DonorsTrust, the community foundation committed to the principles of limited government, personal responsibility and free enterprise. For a full, step-by-step process for protecting your charitable legacy, download the 8 Steps to Securing Your Donor Intent, at www.donorstrust.org/mackinac.