Advisors need smarter giving solutions, not more complicated ones.
For high-net-worth clients, charitable giving isn’t just about generosity—it’s a strategic part of their tax planning and wealth management.
Many advisors turn to private foundations or donor-advised funds to structure client giving. However, these tools do not always meet every client’s needs—particularly when managing Required Minimum Distributions (RMDs) from IRAs.
Advisors frequently recommend Qualified Charitable Distributions (QCDs) from IRAs to satisfy Required Minimum Distributions (RMDs) while reducing taxable income. However, QCDs can’t be contributed to donor-advised funds, private foundations, or supporting organizations—limiting flexibility for structured giving.
That’s where Single-Charity Funds (SCFs) come in.
SCFs function similarly to a DAF, but with one key difference: contributions must be designated for a single nonprofit organization. This structured approach allows clients to invest funds before granting them, optimizing tax benefits and ensuring long-term charitable impact.
So, when should advisors introduce Single-Charity Funds into their practice? Let’s explore with client examples.
Key Scenarios Where Single-Charity Funds Are More Effective
Managing Required Minimum Distributions (RMDs) Through Qualified Charitable Distributions (QCDs)
Clients who hold IRAs and are age 73 or older are required to take RMDs, which can increase taxable income and push them into a higher tax bracket. Qualified Charitable Distributions (QCDs) offer a solution, allowing clients to transfer up to $108,000 annually directly to charity, satisfying the RMD without increasing taxable income.
However, QCDs cannot be directed to a donor-advised fund. This limitation often forces clients to make direct, one-time donations, which may not align with their long-term charitable giving plans.
A Single-Charity Fund, on the other hand, can accept QCD contributions, allowing the client to satisfy their RMD obligations while keeping the funds invested before being granted to their chosen nonprofit. This structure provides a more strategic and tax-efficient approach to philanthropy.
Structuring Long-Term Support for a Single Nonprofit
Some clients prefer to focus their giving on a single charitable organization rather than spreading contributions across multiple causes. While a DAF provides flexibility, a Single-Charity Fund ensures that charitable dollars are committed exclusively to a designated nonprofit while allowing for investment growth before the funds are distributed.
For clients with a strong, ongoing commitment to a particular organization, an SCF can provide a structured, long-term funding strategy, helping both the donor and the nonprofit plan for future contributions more effectively.Contributing assets to a Single-Charity Fund can allow a client to take an immediate charitable deduction while ensuring structured, long-term support for a nonprofit. This can be an effective strategy for clients looking to reduce taxable income in high-earning years while still distributing their charitable gifts over time.
When a Donor-Advised Fund May Be the Better Option
While Single-Charity Funds offer unique advantages, DAFs remain the better choice for clients who prioritize flexibility in their charitable giving. A DAF allows clients to support multiple organizations, distribute funds at their own pace, and adjust their giving strategy over time.
For clients who are not restricted by QCD rules and prefer to keep their philanthropic options open, a DAF may be the more appropriate solution.
How Advisors Can Implement Single-Charity Funds in Their Practice
Advisors looking to integrate Single-Charity Funds into their wealth management strategies should:
- Identify clients who are nearing the age when RMD requirements hit (73) and discuss QCD eligibility.
- Engage clients with strong, long-term commitments to a single nonprofit who may benefit from structured giving.
- Educate clients on how SCFs complement DAFs and other philanthropic vehicles.
Advisors who proactively discuss strategic charitable giving options with their clients can help them optimize tax efficiency, structure long-term philanthropic commitments, and create a more intentional giving strategy.
Bringing It All Together
Single-Charity Funds offer advisors a structured, tax-efficient tool to integrate philanthropy into retirement, estate, and tax planning. Whether clients are facing RMDs, preparing for future tax burdens, or streamlining annual giving, SCFs provide a flexible, investment-friendly alternative to direct charitable donations.
Learn more about Give’s philanthropic platform for SCFs and DAFs.