Toolkit · Wills and Estates

The Charitable Giving and Philanthropic Planning Toolkit

26 U.S.C. § 408

Type
Toolkit
Jurisdiction
National
Date
2024-09-18
Topic
Wills and Estates

This toolkit collects the working documents used to plan, execute, and administer charitable gifts. It contains a donor intake worksheet, an asset selection matrix, a vehicle comparison, a gift agreement outline with model restriction and modification language, a compliant acknowledgment template, a gift acceptance policy outline, an appraiser engagement checklist, a private foundation compliance calendar, a charitable remainder trust worksheet, and donor and charity letter templates. Each item is drafted to be adapted rather than used verbatim. Statutory references point to the controlling federal provisions. A related materials index maps each tool to the guides, articles, and checklists that explain it.

The Charitable Giving and Philanthropic Planning Toolkit

Wills and Estates > Charitable Giving and Philanthropy | Published 18 September 2024 - Updated 10 January 2026 | UpLaw - uplaw.us

Everything here is a starting point. Adapt to the donor, the asset, the charity, and the state.

Tool 1 — Donor Intake Worksheet

Identity and posture

  • Donor name, age, state of residence, filing status
  • Marital status and whether the spouse is a joint donor
  • Adjusted gross income, current and projected three years
  • Itemizing or taking the standard deduction
  • Existing charitable carryforwards by category and year
  • Existing philanthropic vehicles: donor-advised funds, foundations, trusts

Assets available

Asset Fair market value Basis Held since Encumbrance Sale pending? Character

Goals, ranked

  • ☐ Deduction this year ☐ Income stream ☐ Family involvement ☐ Permanence
  • ☐ Named recognition ☐ Anonymity ☐ Specific project ☐ Simplicity

Constraints

  • Liquidity needs, dependents, business succession, health, expected inheritance to family
  • Willingness to accept administrative burden (rate 1–5)
  • Willingness to accept public disclosure (rate 1–5)

Red flags to screen at intake

  • ☐ Binding sale agreement in place → assignment of income
  • ☐ Property mortgaged → bargain sale and possible self-dealing
  • ☐ Short-term holding period → deduction reduced to basis
  • ☐ Self-created work or inventory → ordinary income property
  • ☐ Cryptocurrency → qualified appraisal required
  • ☐ Conservation easement being promoted to the donor → decline

Tool 2 — Asset Selection Matrix

Asset Deduct at Appraisal Gain avoided Notes
Cash amount no n/a least efficient
Long-held public stock fair market value no yes the default best gift
Short-term stock basis no n/a wait for the holding period
Closely held stock fair market value yes yes no binding redemption at gift
S corporation stock fair market value yes partly unrelated business income to donee
LLC or partnership interest fair market value yes yes debt-financed income, capital calls
Real property fair market value yes yes environmental review first
Mortgaged real property reduced yes partial bargain sale
Art, related use fair market value yes yes donee must actually use it
Art, unrelated use basis yes no museum vs. hospital
Cryptocurrency fair market value yes yes no securities exception
Inventory basis varies no enhanced rules for some food
Self-created work basis varies no ordinary income property
Patent or copyright basis initially yes no later deductions from donee income
Life insurance lesser of reserve or basis varies n/a charity must own and benefit
Vehicle gross proceeds varies n/a unless significant use
Retirement account (testamentary) full, no income tax no n/a the best charitable bequest
Retirement account (lifetime QCD) exclusion, not deduction no n/a 26 U.S.C. § 408

Tool 3 — Vehicle Comparison

Direct gift Donor-advised fund Private foundation Remainder trust Lead trust
Setup cost none none to low high moderate–high high
Annual cost none fee on assets accounting, tax, legal trustee, tax trustee, tax
Deduction limit highest highest lower remainder value varies
Appreciated property fair market value fair market value basis (except qualified appreciated stock) fair market value fair market value
Control none advisory only full trustee trustee
Privacy high high none — public return moderate moderate
Payout required n/a none ~5% (§ 4942) 5–50% (§ 664) per instrument
Grants to individuals n/a prohibited with approved procedures (§ 4945) n/a n/a
Insider transactions n/a § 4967 § 4941 § 4947 § 4947
Excise tax on income none none § 4940 none none
Best for most donors most families large assets, program work concentrated low-basis positions low-rate transfer planning

Decision rule. If the donor cannot articulate a reason a donor-advised fund fails, do not form a private foundation.

Tool 4 — Gift Agreement Outline

Sections, in order:

  1. Parties and recitals — donor, institution, the general purpose in one sentence
  2. The gift — amount or property described precisely; payment schedule if pledged
  3. Whether the pledge is binding — say so expressly, in either direction
  4. Purpose — stated at the right level of generality
  5. Endowment status — endowed or expendable; whether principal may be invaded
  6. Spending — reference to the institution's spending policy, not a fixed percentage
  7. Administrative fee — disclosed as a percentage and as a dollar illustration
  8. Impracticability — the clause below
  9. Modification procedure — board action with notice, coordinated with state law
  10. Naming — what is named, for how long, and what ends it
  11. Reporting — to whom, how often, containing what
  12. Enforcement standing — reserved or not, expressly
  13. Recognition and publicity — including the donor's right to remain anonymous
  14. Successors — merger, dissolution, transfer of the fund
  15. Signatures — including the officer with authority under the gift acceptance policy

Model impracticability clause.

If, in the reasonable judgment of the Institution's governing board, the Purpose stated above becomes unlawful, impracticable, impossible to achieve, or wasteful, the Institution may apply the Fund to a purpose as near as reasonably possible to the Donor's stated charitable intent, giving priority in the following order: (a) [first alternative]; (b) [second alternative]; (c) the general purposes of the [named school, department, or program]; and (d) the general purposes of the Institution. The Institution shall give the Donor, or the Donor's designated representative under Section [Reporting], written notice at least sixty days before any such application and shall consider in good faith any written response received.

Model naming clause.

The Fund shall be known as the [Name] Fund in perpetuity. If the Institution ceases to use the name, or if the named facility is demolished, materially renovated, or repurposed, the Institution shall confer with the Donor's representative regarding comparable recognition. The Institution may remove the name only upon a determination by its governing board, after written notice to the Donor's representative, that continued use would materially damage the Institution's reputation.

Model reporting clause.

On or before [date] of each year, the Institution shall deliver to the Donor's Representative a written report stating the Fund's market value, the amount appropriated for expenditure, the uses to which it was applied, and, where applicable, the names of recipients who have consented to disclosure.

Tool 5 — Compliant Acknowledgment Template

Charities: build the bracketed choice into the system so it cannot be omitted. Donors: read it the day it arrives.

[Charity Letterhead]

[Date]

Dear [Donor]:

Thank you for your contribution to [Charity], a nonprofit organization exempt from federal income tax under 26 U.S.C. § 501(c)(3). Our taxpayer identification number is [EIN].

Contribution received: [$ amount] received on [date] — or — Property received: [description of the property, without a statement of value] received on [date]

[CHOOSE ONE — REQUIRED]

☐ No goods or services were provided to you in consideration for this contribution.

☐ In consideration for this contribution you received the following goods or services: [description]. Our good faith estimate of their value is [$ amount]. Under 26 U.S.C. § 170, the deductible portion of your contribution is limited to the amount contributed in excess of that value.

☐ The only benefit you received was an intangible religious benefit.

Please retain this letter with your tax records. It is your contemporaneous written acknowledgment for purposes of 26 U.S.C. § 170(f)(8). We do not provide tax advice and do not value donated property; please consult your own advisor.

With gratitude, [Officer]

⚠ Charities: never state a value for donated property in the acknowledgment. Describe it. Valuation is the donor's obligation and the appraiser's job, and a charity that supplies a number invites blame for a disallowed deduction.

⚠ Quid pro quo over the statutory threshold: a separate disclosure is required by 26 U.S.C. § 6115. The controlling standards are set by United States v. American Bar Endowment, 477 U.S. 105, and Hernandez v. Commissioner, 490 U.S. 680.

Tool 6 — Gift Acceptance Policy Outline

Purpose. To give the development office a graceful way to say no, and the board a documented standard.

Tier 1 — accepted by staff, no review. Cash, checks, credit cards, publicly traded securities (liquidated on receipt), and grants from donor-advised funds and foundations.

Tier 2 — gift acceptance committee review required. Real property, closely held business interests, partnership and limited liability company interests, cryptocurrency, tangible personal property above a threshold, life insurance, intellectual property, retained life estates, and any restricted gift creating an ongoing obligation.

Tier 3 — declined categories. Property with known environmental contamination, interests carrying capital call obligations, gifts conditioned on employment or admission, gifts requiring the charity to act outside its exempt purpose, and any arrangement marketed as a tax shelter.

Mandatory review elements for Tier 2.

  • ☐ Written appraisal or valuation obtained by the donor
  • ☐ Environmental site assessment for real property
  • ☐ Title, survey, lien, and tax status
  • ☐ Carrying cost and liquidation plan with a named responsible officer
  • ☐ Governing document review for transfer restrictions
  • ☐ Unrelated business income and debt-financed income analysis
  • ☐ For foundations, excess business holdings screen under 26 U.S.C. § 4943
  • ☐ Insider relationship screen under 26 U.S.C. § 4958

Standing rules. Marketable securities are sold on receipt. The charity does not sign appraisals as a valuation endorsement. The charity does not serve as trustee of a donor's split-interest trust without separate counsel. The charity does not provide tax advice.

Authority. Name the officer who may sign gift agreements, and the dollar threshold above which board approval is required.

Tool 7 — Appraiser Engagement Checklist

☐ The donor engages the appraiser — not the charity, not the advisor ☐ Appraiser holds a recognized credential or meets minimum education and experience for the property type ☐ Appraiser regularly performs appraisals for compensation ☐ Appraiser is not the donor, the donee, a party to the acquisition, or a related person ☐ Fee is not contingent on the appraised value ☐ Appraisal is prepared no earlier than sixty days before the contribution and no later than the return due date ☐ Report states it was prepared for income tax purposes under 26 U.S.C. § 170 ☐ Report includes description, condition, contribution date, valuation date, method, and basis for the valuation ☐ Report discloses any agreement restricting the donee's use or disposition ☐ Appraisal summary signed by both appraiser and donee before filing ☐ Full appraisal attached for gifts over $500,000 ☐ Appraiser advised of penalty exposure under 26 U.S.C. § 6695A ☐ For promoted arrangements, promoter penalty exposure under 26 U.S.C. § 6700 evaluated before proceeding ☐ Valuation methodology consistent with transfer tax principles under 26 U.S.C. § 2031 if the estate will also report the asset

Tool 8 — Private Foundation Compliance Calendar

When Task Authority
Each transaction Screen counterparties against the disqualified person list § 4946
Each transaction Self-dealing screen — fairness is not a defense § 4941
Each grant Public charity status verified, or expenditure responsibility undertaken § 4945
Before individual grants Advance approval of grantmaking procedures § 4945
Quarterly Investment review against the jeopardizing standard § 4944
Quarterly Estimated excise tax on net investment income § 4940
Annually Compute and satisfy the minimum distribution § 4942
Annually Business holdings percentage test § 4943
Annually Information return, prepared as a public document § 6033
Annually Compensation reasonableness documented § 4958
Annually State charitable trust and solicitation registrations
On any misstep Correct first, pay the first-tier tax, then argue 26 C.F.R. part 53
On conversion or wind-down Termination planning § 507
On formation Notice and classification § 508, § 509
On adverse determination Declaratory judgment § 7428

Tool 9 — Charitable Remainder Trust Worksheet

Inputs

  • Property contributed, fair market value, basis: ________
  • Trust form: ☐ annuity trust (fixed dollar, no additions) ☐ unitrust (percentage, additions allowed)
  • Payout rate: ______ % (must be ≥ 5% and ≤ 50%)
  • Term: ☐ life or lives of ______ ☐ term of years ______ (≤ 20)
  • Prescribed valuation rate used: ______

Tests that must pass at funding

  • ☐ Payout within the 5–50% range
  • ☐ Present value of the remainder ≥ 10% of the value contributed
  • ☐ For annuity trusts, probability-of-exhaustion test satisfied
  • ☐ Governing instrument contains the required prohibitions under 26 U.S.C. § 4947
  • ☐ No S corporation stock, no mortgaged property, no binding sale agreement
  • ☐ Trustee independent of any transaction with a disqualified person

Outputs to document

  • Deduction claimed for the remainder value, and the applicable percentage limit
  • Projected first-year payment
  • Tier-system characterization of distributions
  • Annual valuation date for a unitrust
  • Filing calendar for the trust's own annual return

Comparison to show the client

Sell outright Fund a 6% unitrust
Value at start $1,000,000 $1,000,000
Tax paid on sale ~$214,000 $0 inside the trust
Amount reinvested ~$786,000 $1,000,000
First-year income on ~$786,000 ~$60,000
Current deduction none present value of the remainder
To heirs the whole account the account, less what funded the trust
To charity nothing the remainder

Say the last two rows out loud. The technique redirects a tax payment to charity; it does not create money.

Tool 10 — Letter Templates

A. Broker instruction for a securities gift (donor to broker)

Please transfer [number] shares of [security, CUSIP] from account [number] to [Charity], DTC [number], account [number], attention [contact]. Deliver the specific tax lots acquired on [dates] — these are my lowest-basis long-held shares. Do not sell the shares. Please confirm the settlement date to me in writing. This transfer must settle on or before December 31, [year]; if that is not achievable, notify me immediately.

B. Qualified charitable distribution instruction (donor to IRA custodian)

Please make a distribution of $[amount] from IRA account [number] payable directly to [Charity, EIN], and mail it to [address] with my name and address shown as the donor. This is intended to be a qualified charitable distribution under 26 U.S.C. § 408. Do not make the check payable to me or deposit it to my account. Please confirm the distribution date in writing.

C. Charitable beneficiary designation cover letter

Enclosed is the completed beneficiary designation form for account [number] naming [Charity, EIN] as [primary / contingent] beneficiary of [percentage]%. Please process it and send me written confirmation showing the beneficiary of record. I will not treat this designation as effective until I receive that confirmation.

D. Request for a corrected acknowledgment (donor to charity)

Thank you for your letter of [date] acknowledging my contribution of [amount / property]. The letter does not include the statement required by 26 U.S.C. § 170(f)(8) regarding whether goods or services were provided. I must have a corrected acknowledgment before I file my return. Suggested language: "No goods or services were provided in consideration for this contribution." Please send the corrected letter by [date].

E. Charity's declination letter

We are grateful for your offer of [property], and I want to explain why our board policy requires additional steps before we can accept it. Real property carries environmental and carrying-cost obligations that travel with the deed, so our gift acceptance policy requires a site assessment and a liquidation plan before acceptance. We would be glad to proceed on that basis — or, if you prefer a simpler path, you may sell the property and contribute the proceeds, which produces the same deduction on the same appraisal with none of the delay.

F. Donor-advised fund grant recommendation

I recommend a grant of $[amount] from the [Name] Fund to [Charity, EIN, address] for [purpose or "general operating support"]. I confirm that neither I nor any related person will receive any goods, services, membership, tickets, or other benefit in connection with this grant, and that this grant does not satisfy any pledge or obligation of mine. Please [acknowledge in my name / make this grant anonymously].

G. Foundation correction memorandum (counsel to board)

On [date] the Foundation [describe the transaction]. This constitutes an act of self-dealing under 26 U.S.C. § 4941. Because the second-tier tax is confiscatory if the act is not corrected within the taxable period, we recommend the board authorize correction immediately: [rescind the transaction / restore $____ plus interest to the Foundation], and that the Foundation report and pay the first-tier tax. Correction now costs approximately $[amount]. Failure to correct exposes [person] to a tax equal to a substantial multiple of the amount involved, and the participating managers to separate liability.

Tool 11 — Endowment Spending Policy Elements

☐ Statement of the standard of prudence applicable under the state's uniform endowment statute ☐ The enumerated factors the board considers, recited and actually applied in the minutes ☐ The formula (typically a percentage of a trailing multi-year average market value) ☐ Whether appropriation below historic dollar value is permitted, and the required findings ☐ Underwater fund protocol ☐ Administrative fee, disclosed to donors ☐ Investment policy statement incorporated by reference ☐ Release-or-modification procedure for small and old funds, with the notice the statute requires ☐ Annual board review with documented findings — the minutes are the compliance record

Tool 12 — Related Materials Index

If you need to Read
Understand the whole system the comprehensive guide
See how gifts get structured in practice the article
Work a live gift start to finish the checklist
Fit charity into the estate plan Trusts and Estate Planning · Building and Maintaining an Estate Plan
Handle the transfer tax side Estate, Gift, and Generation-Skipping Tax · Filing an Estate Tax Return
Administer a charitable trust Trust Administration · The Trustee's Year
Get the beneficiary designation right Non-Probate Transfers
Form or run the recipient charity Forming and Operating a Nonprofit · Nonprofit Formation and Governance
Advise the board Corporate Governance and Fiduciary Duties
Respond to an examination Tax Controversy for Individuals
Handle a fight over a fund Estate and Trust Litigation · Bringing or Defending an Estate or Trust Dispute
Administer the donor's estate Administering an Estate · Opening and Administering a Probate Estate
Choose the donor's business entity Business Taxation
Prepare a charitable case for hearing Preparing a Case for Trial

Tool 13 — Authority Quick Reference

Deduction and substantiation: § 170 · § 6115 · § 6113 · 26 C.F.R. part 1 Exemption and classification: § 501 · § 507 · § 508 · § 509 · § 6033 · § 6110 · § 7428 Foundation excise taxes: § 4940 · § 4941 · § 4942 · § 4943 · § 4944 · § 4945 · § 4946 · § 4947 · § 4958 · 26 C.F.R. part 53 Donor-advised funds: § 4966 · § 4967 Vehicles and transfer tax: § 664 · § 642 · § 408 · § 2031 · § 2055 · § 2503 · § 2522 Penalties: § 6695A · § 6700 Cases: Bob Jones University v. United States, 461 U.S. 574 · Hernandez v. Commissioner, 490 U.S. 680 · United States v. American Bar Endowment, 477 U.S. 105 · Regan v. Taxation With Representation, 461 U.S. 540 · Americans for Prosperity Foundation v. Bonta, 141 S. Ct. 2373

Related Documents