In this blog, one of our major goals is to create a space to hear people’s stories of living simply in order to give more generously. So I was excited to randomly find this video, in which a small group shares their experiences of a Lazarus at the Gate study. I really appreciate the way they took the time to share their testimonies and reflections.
What is a Charitable Gift Fund (CGF)?
A CGF, also known as a Donor-Advised Fund, is basically a holding tank for you to finance charitable donations. Instead of making your donation directly to a charity, you first put money into your CGF, and then recommend grants from the fund to your charity of choice. It’s called “recommend” but in reality it’s directing the money to any US-registered 501(c)(3) nonprofit. You take a tax deduction at the time you fund the CGF, not when you recommend the followup grants.
Why would I want to donate indirectly through a CGF?
- Simplicity. If you track your charitable giving for tax purposes, it’s a headache to keep and organize all of the receipts. I was audited in 2005, and witnessed a friend audited in 2008, both times to verify our charitable giving. Fortunately we had all of our receipts, but it takes work to respond to an IRS audit. I believe you are less likely to be audited if you donate only to a single organization (your CGF), as it’s simpler to track the total amount and less likely you’ll make accounting mistakes.
- Privacy. It’s unfortunate, but many charities share mailing lists. When you donate, your name and mailing address become very valuable and are sold to other organizations. This results in a flood of junk mail from worthy-sounding organizations with urgent cries for help. It can be overwhelming to sift through all of these requests, and your reward for responding is yet even more junk mail. I prefer to search for charitable organizations on my own, rather than respond to those who send the most advertising/fundraising mail. When you donate indirectly through a CGF, your address is not revealed, so it can’t be sold or distributed. Less junk mail means less wasted time, and it’s better for the environment.
- Budgeting. If you budget your giving on a monthly or yearly basis, it can be difficult to find charities to fund in sync with your giving. A CGF enables you to store money ahead of time and decide on grants later.
Are there any disadvantages to a CGF?
Since donations are all done through the CGF organization writing a check to your recommended charities, you cannot do instant credit-card donations in response to say, a friend raising money through a walk or pledge drive. There may be a lower limit to each donation you recommend, something like $100. Also, there is usually a small annual fee, like any investment fund. We keep our CGF at Schwab, which charges 0.6%, with a minimum fee of $100/year.
How do I start a CGF?
Simply Google “Charitable Gift Fund“, and you’ll find a number of banks that will set one up for you. We chose Schwab because we already had other accounts there, and we’ve been happy with how easy it is to recommend grants through their website.
Two weeks ago, a friend of mine told me how she saves water while showering. She turns on the water, steps into the shower, gets wet, and then turns the shower off. Then she shampoos her hair and lathers up. When she’s ready to rinse, she turns the shower back on. She learned to do this when she was a young girl and lived in a South American country where water was more expensive. She does it now to consume less of the world’s water and to reduce her water bill. Right now, I’m trying to do that with every other shower I take. I try to give God thanks for hot water, to help my heart be thankful and not begrudging. Perhaps in a little while, I’ll be ready to save water in the shower six out of seven times a week, joyfully.