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Finance

What Is a Charitable Gift Fund?

Geri Terzo
By Geri Terzo
Updated Feb 27, 2024
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Donors give to a charitable gift fund in order that money might be used in an effective manner. There are different types of philanthropic funds, and each has distinct benefits tied to it. Assets in a charitable gift fund might be earmarked for a specific purpose, such as eliminating poverty in a poor, rural region. The design of the fund might be more flexible and allow donors to suggest nonprofit organizations that a charitable gift fund could support.

Although no two charitable gift funds may be exactly alike, the ultimate goal of these portfolios is to make a positive difference in a region, demographic, or cause. Assets from various donors are pooled together into an individual charitable gift fund. Donors can give money to the fund and let the managers or board of trustees decide how that money is used.

Also, donors can become more involved in the process and have a say in the way that assets in the charitable portfolio are invested so that the value of the fund grows. To take a more active role, a donor might have a specific nonprofit organization in mind that the charitable fund could support and may recommend that money be directed in this manner. Donors' funds alone can go toward a nonprofit organization in the form of a grant, and the donor may be named or remain anonymous.

Charitable gift fund donations could be received by individuals, families, or corporations. For a company that is dedicated to supporting philanthropic efforts, selecting a charitable gift fund could streamline the giving process. Donations can be made online, and because the donor can recommend different uses for the fund assets, there may little reason to invest in other charities.

Among the benefits for donating to a charitable fund are potential tax advantages. Upon donating, the overseers of the charitable gift fund should provide donors with the necessary paperwork. This may include a conformation of the donated amount, financial statements about the fund, and tax forms so that the donor can take advantage of benefits.

A charitable gift fund may require a minimum investment amount. The size of the first investment will likely vary based on whether the donor is an individual or a corporation. Also, fees are likely be assessed for the administration of and the investment in the charitable fund. Some funds offer incentives, such as fewer fees, for larger donation amounts.

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Discussion Comments

By nefret — On Aug 08, 2011

@cloudel - I think more and more now, people want to know where their charitable contributions are going and how exactly its being spent. We've all heard those scandal stories about how a large portion of the charitable trust would be spent on "administration", with only a small remainder reaching the people in need.

Do you think the Red Cross and other major charities are more open or transparent about their operations today? Or are people still looking for more accountability regarding their spending?

By fingered — On Aug 07, 2011

@wavy58 - That's a really nice gesture on the part of the company, and also a great way to raise goodwill among the community members and its employees!

Has anyone heard of another charity fund called Operation: Christmas Child? It's a great way to get kids involved in thoughtful charitable contributions without having to directly give money. A classroom, a group of students or even just a family pack a shoe box with small essentials (toiletries, stationery etc) that can help an impoverished kid in another country. The boxes are sent to the charity and the charity then distributes them to kids in need. Are there other items that you think might be nice to include?

By afterall — On Aug 07, 2011

@wavy58- I like that idea too. It also gives the suggestion that the company sort of "takes care of their own". Because employees go to that church, and care about it, the business cares about its future too- thus seeing how it could help your husband and other employees, which in turn helps them again.

By wavy58 — On Aug 06, 2011

My husband works for a corporation that values charitable giving. They have a system set up that rewards organizations in need that their employees choose to donate their time to help.

He found out that if he donates six hours of his time each week to cleaning, doing yard work, and doing maintenance on our church building, then his company will give our church a certain amount of money.

I think this is very nice. It’s not too often you see big corporations eager to help small causes. They usually just donate to a general charity. This system helps little organizations and churches in need that most people may never think to help.

By cloudel — On Aug 06, 2011

When a few tornados devastated parts of my home state, I wanted to donate some money to help the victims. I lived pretty far away from the affected areas, so going there to help clean up wasn’t an option. I felt like giving money would be more helpful, anyway.

I knew that Red Cross was taking a major role in providing supplies and assistance to the victims. However, I wanted to make sure that my donation would go directly to them and not to other operations conducted by Red Cross.

On their website, they had a charitable giving fund set up specifically for the tornado victims. Apparently, a lot of people wanted their money to go exclusively to these people.

By OeKc05 — On Aug 05, 2011

I just found out two years ago that my weekly donations to my church were tax deductible. I started keeping my carbon copies of the checks that I wrote each week so that I could add them up around tax time. I figured I might need them as proof of my gifts.

Once I started doing my taxes, I added all the checks. However, the tax software I was using told me that it might be best to take the standard deduction for charitable giving. That deduction was $1,000, which was close to what I had given in a year anyway.

By orangey03 — On Aug 05, 2011

I work at a large vet’s office with about forty full-time employees. All of us have opted to have a certain amount taken out of our checks each week to go toward our charitable gift fund.

When the fund was set up, everyone agreed that fifty percent of the money present in the fund at the end of each month would go to the ASPCA, and the other fifty percent would go to our local humane society. They are always in need of money to take care of all the abandoned animals.

We had considered other charities, but we all agreed that since we felt so strongly about helping animals, that should be our purpose with the fund. Though some of us have more taken out of our checks than others, everyone participates, and that helps so much.

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