Planned Giving: Building Generosity Into Your Financial Plan

"Whoever loves money never has money enough; whoever loves wealth is never satisfied." — Ecclesiastes 5:10, NIV

Planned giving is generosity that extends beyond annual tithes and offerings. It's the deliberate integration of charitable giving into your overall financial and estate plan. Rather than ad hoc giving throughout life, planned giving asks: "Over my entire lifetime and through my estate, how can I maximize my kingdom impact while optimizing for tax efficiency and family goals?"

For believers with substantial assets, planned giving is essential stewardship.

Types of Planned Giving

1. Annual Giving Endowment

Rather than giving to the operating budget annually, you establish an endowment—a permanent fund where only investment returns (4-5% typically) are distributed annually while the principal remains intact.

Example: Sarah gives $100,000 to establish an endowment at her church. She specifies it fund youth ministry. The fund is invested conservatively. Annually, the church receives $4,000-5,000 in perpetuity for youth ministry, even after Sarah passes.

Advantage: Creates permanent impact beyond your lifetime.

Tax benefit: Charitable deduction in year of contribution.

Note: Most endowments require minimum gifts of $25,000-100,000 to establish.

2. Donor-Advised Fund (DAF)

You establish a DAF with a financial institution (Fidelity, Schwab, local community foundation). You receive an immediate tax deduction for the full contribution, the money grows tax-free, and you recommend grants to charities over time.

Example: Marcus, age 55, is expecting a large bonus and significant investment gains. Rather than scattered giving, he contributes $100,000 to a DAF. He receives the full deduction this year, but distributes to charities over 10 years. This lets him bunch deductions for tax benefit while giving over time.

Advantages:

• Immediate tax deduction
• Tax-free growth of the fund
• Flexibility in distributing to charities over years
• Can recommend grants to multiple charities

Tax benefit: Large immediate deduction (useful in high-income years).

Ideal for: People with volatile income, lumpy bonuses, or stock appreciation.

3. Charitable Remainder Trust (CRT)

A trust that provides income to you (or other beneficiaries) for a period, then the remainder goes to charity.

Example: Susan, 70, has $500,000 in appreciated stocks (original cost $100,000; gain $400,000). She's been reluctant to sell due to capital gains tax. She establishes a CRT, transfers the appreciated stocks, and receives:

• Income from the trust for life (~5% annually = $25,000/year)
• Immediate charitable deduction (value varies by age/rate)
• Avoidance of capital gains tax on the appreciated stock
• At her death, remaining balance goes to her chosen charity

Advantages:

• Diversifies appreciated assets without capital gains tax
• Provides income stream
• Substantial charitable deduction
• Estate tax savings

Tax benefit: Avoids capital gains tax + charitable deduction + potential estate tax savings.

Ideal for: Owners of appreciated assets (real estate, stock) seeking diversification.

4. Charitable Lead Trust (CLT)

Opposite of a CRT: the charity receives income first, then remaining assets go to heirs.

Example: Richard wants to leave his estate to his children but also benefit charity. He establishes a CLT that pays 5% annually to his favorite charity for 20 years, then the remaining balance passes to his children with reduced estate tax.

Advantages:

• Benefits charity during your lifetime
• Reduces estate tax for heirs
• Allows wealth transfer to family tax-efficiently

Tax benefit: Estate tax reduction; charity benefits from income stream.

Ideal for: Affluent individuals wanting to balance charity and family inheritance.

5. Legacy Giving (Bequests)

You name charities in your will to receive a portion of your estate. Simple, effective, and requires no complex trusts.

Example: A widow updates her will to designate 15% of her estate (estimated $200,000) to kingdom causes upon her death. This requires no management during life but creates substantial impact after death.

Advantages:

• Simple to execute
• Flexible (can be adjusted as circumstances change)
• Creates lasting legacy

Tax benefit: Charitable deduction on your estate (if estate is large enough to trigger estate tax).

Ideal for: Most believers; especially those with modest-to-substantial estates.

Integrating Planned Giving Into Your Plan

Step 1: Assess your financial position

Using an estate planning calculator, determine:

• Net worth (assets minus debts)
• Expected lifetime giving capacity
• Expected estate value at death

Step 2: Define your giving priorities

What organizations, causes, and types of ministry matter most to you? Be specific:

• Church
• Missions/international work
• Education/youth
• Crisis pregnancy center
• Disaster relief

Step 3: Determine your giving strategy

Step 4: Choose vehicles that fit your situation

• Low complexity, modest assets: Annual giving + legacy bequest
• Moderate wealth, appreciated assets: Donor-Advised Fund or Charitable Remainder Trust
• Significant wealth, tax concerns: Combination of endowment, CRT, CLT, and legacy gifts
• All situations: Regular tithe + annual giving

Step 5: Work with professionals

For any planned giving beyond simple annual giving:

• Tax advisor: Understand deductions and tax efficiency
• Estate planning attorney: Structure wills and trusts appropriately
• Financial advisor: Implement strategies within your overall plan
• Charity finance officer: Understand how your gifts will be used

Case Study: The Integrated Approach

James and Patricia, both 58, have built wealth over 30 years. Their situation:

• Net worth: $2.5 million (home $800k, investments $1.2M, business equity $500k)
• Annual income: $180,000
• Annual tithe: $18,000 (10%)
• Expected estate at death: ~$3 million

Their planned giving strategy:

1. Continue annual tithe: $18,000/year during lifetime
2. Establish Donor-Advised Fund: Contribute $200,000 (they receive charitable deduction). Over 20 years, recommend $10,000/year to various charities. This lets them bunch deductions and spread giving.
3. Establish endowment at church: Contribute $100,000. Church receives $4,000-5,000 annually in perpetuity for missions (James's passion).
4. Charitable Remainder Trust for appreciated stock: James has $400,000 in appreciated stock (original cost $80,000). Transfer to CRT. He receives income, avoids capital gains, and charity receives remainder.
5. Legacy gift in will: 25% of remaining estate (estimated $500,000) goes to their top three charitable priorities. Their children receive 75% ($1.5M).
6. Charitable Lead Trust for business: Structure business succession to benefit charity during transition, reducing estate taxes for heirs.

Lifetime giving total: ~$218,000 (tithe) + ~$200,000 (DAF) + ~$100,000 (endowment) + ~$400,000 (appreciated stock to CRT) = $918,000 in charitable transfers

Estate gifts: ~$500,000 plus remaining CRT principal

Total impact: >$1.4 million to kingdom causes over lifetime and estate

Tax benefits: $100,000+ in charitable deductions over lifetime + avoided capital gains + reduced estate taxes

Family inheritance: $1.5+ million to children, tax-efficient

Why Planned Giving Matters

Planned giving isn't just about tax efficiency (though that helps). It's about:

1. Multiplying impact: Your lifetime tithe might be $300,000 (30 years × $10,000/year). Planned giving and legacy gifts might add another $500,000-1,000,000. That's 2-3x the impact.

2. Ensuring legacy alignment: Without planning, your assets go according to intestacy law, not your values. Planned giving ensures your wealth reflects your priorities even after death.

3. Creating permanent impact: An endowment funds a cause in perpetuity. Generational impact far exceeds what annual giving alone produces.

4. Tax efficiency: Smart planned giving reduces taxes, meaning more goes to kingdom causes instead of government.

5. Teaching heirs: When children see intentional charitable planning, they learn that wealth is meant for purposes beyond consumption.

Practical Next Steps

1. Calculate your net worth. Be honest about actual assets and debts.

2. Define your giving priorities. What matters most to you? Where do you see God working?

3. Assess capacity. Can you afford annual giving increases? Do you have appreciated assets suitable for CRTs? Expected estate value?

4. Meet with your financial advisor. Discuss whether planned giving vehicles make sense for your situation.

5. Update your will. At minimum, include charitable bequests if you have an estate.

6. Review annually. As circumstances change (income, assets, priorities), adjust your giving strategy.

Planned giving is stewardship extended over a lifetime and beyond. It's one of the most powerful ways to ensure your resources—accumulated through God's blessing—continue advancing His kingdom long after you're gone.

Sources

• National Christian Foundation. "Planned Giving Guide: Strategic Philanthropy for Families." 2023.
• Köstenberger, Andreas J. & Mask, David C. "The Apostles' Teaching About Money." B&H Publishing, 2021.
• American Council on Gift Annuities. "Charitable Gift Planning Resources." 2024.