To get the most out of the experience of charitable giving, and to make your gift as rewarding as possible, you as a donor should understand what philanthropic options are available.

You have four basic avenues to explore:

By answering the questions posed below, you will begin to get a feel for which charitable vehicle or vehicles most suit your needs. However, there are additional issues that you may want to consider, such as tax implications to you, whether you want to create a permanent giving vehicle and if you want to get tax credit in a particular year but would like to make contributions over several years.

1. How much control do you want over where your money goes and how it is used?

Contributing directly or giving through your own private foundation offers the most control; you can select the organizations and programs you wish to support, determine who can join you in decision making, and control investments. At the other extreme, if you donate money to a pass-through organization to fund other organizations, your role in determining the ultimate recipients is generally very limited.

There is an option between these two. A donor-advised fund allows you to recommend specific organizations or issue areas to receive your funds. In some instances, you can also name co-advisors or successor advisors. While the final decision rests with the trustees of the foundation administering your donor-advised fund, generally the wishes of the donor are followed.

2. How much effort will you, as a wealthy individual, expend on your philanthropy?

The more control you want, the more work and oversight will be required.

Since a private foundation is a separate legal entity, it has many requirements, including documentation and government filings. Accountants, consultants and foundation staff can help by doing the tasks the donor doesn't want to - or can't - undertake.

Donor-Advised Funds

The other options require less of your time, with giving directly or giving to pass-through organizations requiring the least. Donor-advised funds strike a middle point, allowing you to be involved in the contributions while the administering organization handles the paperwork and administration.

Many donor-advised administering and pass-through organizations employ professional staff who can help assure that the strongest programs are funded and that investments are managed well.

3. What are the costs?

Direct giving and contributing to pass-through organizations are the least expensive vehicles as they are both ways of making direct contributions.

Operating a private foundation engenders the most cost. Not only are there management and administrative overhead, but in most instances, private foundations pay an annual federal excise tax of about 2% of the value of the assets. Cost-savings can sometimes be realized when a private foundation is managed by a family office or by professional advisors who administer multiple private foundations.

Most donor-advised funds are administered by public charities that are not required to pay excise taxes. In addition, the expenses of administering gifts and investments are shared across many donors so that costs may be lower than operating a private foundation.

4. How do you want to relate to recipient organizations?

Becoming involved with recipient organizations can be a fulfilling part of philanthropy. You might want to visit some of the organizations you fund, keep up with their progress and help them in non-monetary ways.

Giving Through a Private Foundation

Direct giving and funding through a private foundation are best for fostering relationships with organizations. Organization staff is always willing to meet with donors who give directly, provide tours, invite them to events and share materials with them. You can be easily recognized and acknowledged for a gift.

You can also structure a private foundation to have a more professional "feel" than direct giving if you prefer that your giving be perceived that way by recipients, your peers and the community. A foundation can also be used to shield you from unwanted requests.

Other giving vehicles seldom allow the depth of donor involvement with recipient organizations that direct or foundation giving provide. Recipient organizations relate to the intermediary organization not the original donor.

Iris Krieg & Associates, Inc. ika@ikriegassoc.com