Overview

Giving While Living means using your income, investments, business resources, and time to support charitable causes now — not only through bequests after death. Families use this approach to pursue impact, model values for younger generations, and retain control over when and how gifts are used. Practical tools range from simple annual cash gifts to donor-advised funds (DAFs), private foundations, charitable trusts, and scholarships.

This guide is based on best practices, IRS guidance on charitable contributions, and more than 15 years of advising families on wealth transition and purpose-driven planning. It aims to be educational and is not a substitute for personalized legal or tax advice (see Professional Disclaimer at the end).

(Authoritative sources: IRS — Charitable Contributions; National Philanthropic Trust — Giving While Living.)

Why families choose to give while living

  • See impact and adjust strategy in real time. Donors can visit nonprofits, ask for reports, and direct resources to what works.
  • Engage and train heirs. Joint giving helps pass on values and philanthropic skills to children and grandchildren.
  • Tax planning opportunities. Lifetime gifts can be structured for tax benefits and to reduce future estate taxes when aligned with an overall plan (see Tax Considerations below).
  • Operational involvement. Many families want hands-on involvement (program design, site visits, evaluation) that’s only possible while alive.

Common vehicles and how families use them

  • Direct gifts: Giving cash, appreciated securities, or in-kind donations straight to charities. Simple and immediate; requires substantiation for tax purposes (written acknowledgement for gifts of $250 or more is required by the IRS).

  • Donor-Advised Funds (DAFs): A DAF lets a donor contribute assets to a sponsoring organization, claim an immediate tax deduction, and recommend grants over time. DAFs are popular for family giving because they simplify administration and support multigenerational involvement. For practical DAF guidance, see our internal resource: Donor-Advised Fund Best Practices for Family Giving and Donor-Advised Funds: A Practical Guide.

  • Private foundations: Provide control and legacy features (named grants, scholarship programs), but require more administration, annual tax filings (Form 990-PF), and minimum payout rules. Foundations are suitable for families seeking institutional permanence and direct grantmaking oversight.

  • Charitable trusts (CRUTs, CRATs): These split income between the donor (or heirs) and charity, often used to convert highly appreciated assets into diversified, tax-efficient income while leaving remainder to charity.

  • Donor-advised scholarships, community foundations, giving circles, and corporate giving programs: These are flexible ways to match family interests with community needs.

Tax considerations (high-level, check with your advisors)

  • Deductibility: Gifts to qualified public charities and many sponsoring organizations are generally deductible; limits are based on the nature of the gift and the donor’s adjusted gross income (AGI). The IRS publishes guidance on charitable contribution rules and required substantiation (see IRS — Charitable Contributions).

  • Appreciated assets: Donating long-term appreciated securities or closely held stock to a public charity or DAF often yields a deduction for fair market value and avoids capital gains tax — a favorable outcome compared with selling first.

  • Substantiation and recordkeeping: For cash gifts of $250 or more, get a contemporaneous written acknowledgment from the charity. For non-cash gifts, additional forms and appraisals may be required (e.g., Form 8283 for certain property donated). See IRS guidance for details.

  • Qualified charitable distributions (QCDs): QCDs from IRAs to charities can be an efficient method for some donors who qualify. QCD rules and eligibility can change; confirm current rules with a tax advisor and IRS publications.

  • Estate-tax and income-tax interplay: Lifetime giving reduces taxable estate and can be part of broader estate and income tax planning.

(Authoritative tax source: Internal Revenue Service — Charitable Contributions.)

Family governance and multigenerational engagement

Successful family philanthropy combines clear governance with intentional involvement:

  • Create a family giving policy. Document mission, geographic focus, grantmaking criteria, decision-making procedures, and succession rules.
  • Use annual or quarterly family philanthropy meetings. Rotate facilitation among family members to cultivate leadership and ownership.
  • Offer structured roles for younger generations (research, site visits, grant recommendations) to build skills gradually.
  • Set a budget and expectations. A family can allocate a percentage of income or corporate profits, a fixed annual dollar amount, or a mix of unrestricted and designated funds.
  • Evaluate and celebrate impact. Use outcome metrics and beneficiary stories to keep the family motivated and aligned.

In my practice, families that codify expectations and steward responsibilities see higher long-term engagement and fewer conflicts when leadership changes.

Practical planning steps (a checklist)

  1. Clarify purpose: What problems do you want to solve? Is the focus local, national, or global?
  2. Set a budget: Decide on an annual giving level or a formula (e.g., percentage of income/profit or rolling 3-year average).
  3. Choose a vehicle: Match needs for control, tax benefits, administrative capacity, and family involvement to the right structure (DAF, foundation, trust, direct giving).
  4. Engage advisors: Work with a financial planner, tax advisor, and estate attorney to align gifts with tax and estate objectives.
  5. Document governance: Write a family giving policy and succession plan for philanthropic leadership.
  6. Design participation: Create roles and learning opportunities for the next generation (internships, committee seats, site visits).
  7. Measure impact: Set simple, measurable indicators and collect short-term and long-term feedback from grantees.

Common mistakes to avoid

  • Starting without a mission or criteria: Gifts scatter when there is no shared purpose.
  • Underusing tax-efficient vehicles: Donating appreciated assets or using DAFs can improve tax outcomes but are often overlooked.
  • Poor documentation: Failing to document intent, grant decisions, and legal instruments creates confusion.
  • Excluding heirs: Not engaging younger family members can produce disengagement or conflict later.

Real-world examples (anonymized)

  • Scholarship program: A family I advised seeded a scholarship fund with $250,000, combined mentoring and ceremonial award events, and required scholarship recipients to meet with family volunteers. Within five years, many recipients attributed job choices and community involvement to the program.

  • Business-tied giving: A family business set a policy to donate 5–10% of pre-tax profits to local workforce training programs and created an annual hands-on volunteer week. This strengthened employee retention and family pride in community impact.

Measuring success and adjusting course

Track both quantitative outputs (dollars granted, number of beneficiaries) and qualitative outcomes (beneficiary stories, program changes). Use short review cycles to pivot when programs aren’t delivering. Good governance means being willing to sunset unsuccessful efforts and to scale successful ones.

Additional resources

Frequently asked questions (brief answers)

Q: Can smaller donors use Giving While Living strategies?
A: Yes — lifetime philanthropy isn’t limited to the wealthy. Time, expertise, and micro-grants can deliver significant local impact.

Q: Is a private foundation always better than a DAF?
A: No. Foundations offer control and institutional permanence but carry higher administrative costs, public reporting, and complexity. DAFs are simpler and often better for families seeking flexibility.

Q: How do we keep the family engaged over decades?
A: Combine documented governance with meaningful roles for different ages, clear measures of success, and opportunities for hands-on involvement.

Professional disclaimer

This article is educational and reflects general practice-level guidance. It is not personalized legal, tax, or investment advice. Consult a qualified CPA, tax attorney, or estate planner before implementing giving strategies.

(Authoritative references: IRS publications on charitable contributions and substantiation; National Philanthropic Trust research on giving while living.)