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Three Phase Philanthropic Planning Framework℠

“We make a living by what we get. We make a life by what we give.”

–     Winston Churchill

While growing wealth changes a family’s life, gifting wealth changes the lives of others and at the same time enhances the lives of those doing the gifting. In our work helping clients create a Family Mission Statement, philanthropy is regularly included. We’re proud of being able to,support these efforts. In so doing, a lot of effort goes into creating a fully contextualized charitable plan. Our role, through our Three Phase Philanthropic Planning FrameworkSM, is to get goals, objectives and feelings focused so that a plan can be actualized. We help our clients determine WHY they want to help, WHO or WHAT will receive the help, and HOW to implement it across three distinct phases:

  1. Pre-planning: defining the purpose and desired outcomes of the strategy
  2. Structure: what is the best structure or vehicle to use for the defined strategy
  3. Implementation: executing on the strategy, operationally and logistically

This white paper explores the process of defining your values, our Three Phase Philanthropic Planning FrameworkSM, and the contextual information we gather at each point. While intended to be a comprehensive overview, all situations are unique, and we are available should you have any questions or need clarification. We have seen first-hand that donating wealth can change the world for the better, and we are proud to support our clients in their charitable endeavors.

Phase 1: Pre-planning: Defining Purpose and Outcomes
Deciding what issues to support is a deeply personal decision. Many clients have causes close to their hearts like a hospital that helped care for a loved one, or their alma mater. In other cases,
we collaborate with families to think through their values and motivations for philanthropy and identify causes they want to support. Some key questions to address are:


  1. What issues are important to you?
  2. What values does the family wish to express through its philanthropy?
  3. What legacy do you want to leave?
  4. What do you want to achieve with your philanthropic activities?
  5.  What philanthropic endeavors has the family been involved in historically?


  1. What family members will be involved in developing the philanthropic strategy for the family?
  2. Do you wish to leave a legacy of giving for your children or others to continue?
  3. How will the philanthropic effort be governed?


  1.  How many and what type of organizations would you like to support?
  2.  Do you want to be involved as a donor only or do you want to have direct involvement in the organizations or causes you support?
  3. How many and what type of organizations would you like to support?
  4.  How much of your time do you want to devote to administering the
  5.  grant requests that fund your giving?
  6.  Do you want your philanthropic involvement to be in perpetuity or do you anticipate a defined period of time for your giving?
  7.  Do you wish to leave assets directly to charities at death?
  8.  How will you measure the effectiveness of your giving, track progress, and evaluate outcomes?

Phase 2:  Selecting a Structure for Giving

Once a family agrees on the charitable causes they wish to support, the next question is: How to make the gifts in a way that fits into their personal goals?  Should they create their own private foundation, use a donor advised fund, or just make gifts directly to charitable causes? What follows is a brief discussion of some of the considerations.

1) Gifts Directly to Charity: This is the simplest approach, but not always the most appropriate. Charitable deductions are taken in the year the donation is made, but all the funds go to the charity in that year and the donor no longer has control over any of the funds.

2) Donor Advised Fund (DAF) is a giving account established at a public charity. It allows donors to make a charitable contribution, receive an immediate tax deduction and then recommend grants from the fund over time.  Some advantages of a DAF are that it could be used for any gifts where the family preferred to remain anonymous, and it does NOT require an annual distribution. One significant drawback is that the DAF administering the fund gains full control over the contribution once made, granting the donor advisory status. As such, the foundation is not legally bound to the donor.

3) Private Foundation is an independent legal entity set up solely for charitable purposes.

Unlike a public charity, which relies on public fundraising to support its activities, the funding for a private foundation typically comes from a single individual, a family, or a corporation. Advantages of private foundations include that the Foundation could last in perpetuity to carry on the family legacy and could have its own employees, including family members.  Because of the cost associated with establishing a private foundation, we normally see them created with $1 million or more in investable assets.   Private Foundations require an average annual distribution of 5% of market value. If there are not sufficient charitable causes, distributions could be made to the DAF.   Private Foundations pay a nominal tax of 1.39% on their net investment income.

4) Charitable Trusts are more complex strategies that require engaging an attorney.   A Charitable remainder trust (CRT) is an irrevocable giving vehicle funded with a gift. Income beneficiaries receive payments from the trust for a term of years or life and a public charity receives the remaining assets at the end of the term. The donor may claim a charitable deduction, in the year the trust is funded, and the deduction amount is typically based on the present value of the assets that will eventually go to the named charity. A Charitable Lead Trust (CLT) is an irrevocable giving vehicle funded with a gift that provides a public charity with an income stream from the trust for a term of years. Benefits to the individual who funds the trust will vary depending on the trust structure. After the income stream period ends, the trust’s remaining assets are distributed to an individual or multiple people.

5) Qualified Charitable Contributions (QCD) allow IRA owners over age 70½ to transfer up to $100,000 to charity tax-free each year. QCDs, offer a great way to easily give to charity and count toward the IRA owner’s required minimum distribution (RMD) for the year. However, it is important to note that QCDs are not deductible as charitable contributions on Schedule A.

6) Bequests:  At your death,  assets can pass directly to a  charity,  or to your  DAF  or Foundation.

We can answer any questions you may have on the most appropriate structure for your objectives.

Phase 3:  Executing on the Strategy

Once you have identified the causes you wish to support, and the structure or vehicle you wish to use, it is then time to decide how you will make the contributions.  You should try to make donations as tax efficiently as possible and there are ways to leverage the gifts you are making. The length of this paper does not permit us to outline every strategy, but here are a few key issues to highlight.

1)   Using low basis stock or funds can be particularly useful as part of a gifting strategy. Some considerations:

  •  A particularly useful strategy to employ if you have a concentrated stock, possibly from a family company that went public.
  •  If you have fund exposure to an asset class that has performed particularly well. For example, a US large-cap growth stock fund held for more than three years may be overweight and have significant capital gains.
  •  Clients using direct indexing as a tax efficient way of gaining index like exposure will have individual stocks that have become overweight because of the significant tax cost of selling th Gifting those low basis stocks can help the portfolio more closely track the selected index.

2)   Consider using a private business interest or restricted stock.

  •  Executives and entrepreneurs may own interests in a C-Corporation, Limited Partnership (LP), or Limited Liability Company (LLC) that could make good gifts. This is especially true if the interests have been held more than one year and have appreciated significantly over time.
  • Executives may own appreciated shares of restricted stock, which cannot be transferred or sold to the public—including by charities—until certain legal and/or regulatory conditions have been met. Once the company’s general counsel removes all restrictions, the stock may be donated to and sold by a charit Donation of restricted stock allows a donor to generally eliminate the long-term capital gains tax on the appreciation and claim a charitable deduction.

3)   Taxpayers with deductions near the standard deduction amount may want to combine multiple years of gifts together so that they itemize deductions in that year but use the standard deduction in other years.

4)   Other topics to consider, including the timing of gifts:

  • Matching Funds:
    • If you work for a company that has a matching gift program, be sure to take advantage of that. Maximizing matching for large gifts may mean spreading them over several years.
    • Philanthropists making large gifts may wish to set up their own incentive system with a charity whereby they pledge to match the first $X of gifts to the organization in order to encourage others to donate.
  • AGI Limits: The Internal Revenue Service (IRS) sets out a complex set of limits on the deductibility of charitable contributions based on type of contribution, type of receiving organization, and your adjusted gross income (AGI).  The ones we find most commonly applicable are:
    • A 30% limit applies to noncash contributions of capital gain property if you calculate your deduction using FMV without reduction for appreciation.
    • A 20% limit applies to noncash contributions of capital gain property to Private Foundations.
  •  Multi-year commitment:  Planning for future commitments can be important when considering assets used, the limits noted above, and the impact on the charitable organization   In the simplified example below, this person makes regular gifts to these three organizations, but is also planning for a major capital campaign from their alma mater planned in the next three years.   This type of chart can help keep track of your intentions and adjust your plan when necessary.
2023 2024 2025 2026 Total
Charity X $100,000 $100,000 $100,000 $100,000 $400,000
University Y $25,000 $25,000 $25,000 $250,000 $325,000
ReligiousOrganization  Z $20,000 $20,000 $20,000 $20,000 $80,000
Total $145,000 $145,000 $145,000 $370,000 $805,000


Charitable giving is a powerful way you can make a positive impact on society while enjoying potential tax benefits. By exploring the three-phased strategy outlined here you can maximize the effectiveness of your charitable giving efforts while leaving a meaningful legacy for future generations. It is crucial to stay informed about evolving tax regulations to make the most of these strategies. We are happy to work with you to create and implement a customized charitable giving strategy.

If you are looking for more details and examples for constructing a charitable giving strategy, please contact us or consult chapter 19, titled Philanthropy, of our Chief Investment Officer’s book, “Advising Ultra-Affluent Clients and Family Offices” by Michael Pompian.

The charts and information, and the sources utilized in the compilation thereof, are subjective in nature and open to interpretation. The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. Sunpointe, LLC (“Sunpointe”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Sunpointe and its representatives are properly licensed or exempt from licensure. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.