If you've been thinking about making a sizeable donation to charity, you could make a one-time donation that will impact your taxable income this year. Or, it might make more sense to make a deferred donation that will benefit both your charity and you for years to come.

Deferred donations, often called deferred giving plans, usually allow you to retain the benefit of the donated funds while providing a gift to charity at a later date. You receive an immediate income tax deduction for the value of your gift, and you avoid paying capital gains tax on a gift of appreciated property. There are several options you should consider:

Pooled Income Fund

Pooled income funds provide you with the simplest, and perhaps most common form of deferred charitable giving. These funds entitle you to an income tax deduction in the year that you make your contribution and to a stream of income for life for you and/or your spouse. And, if your donation includes appreciated property, such as stock, no capital gains tax will be imposed on you or the pooled income fund. The downside? Since the value of your income depends on the investment return of the pooled income fund, your income amount will vary.

Charitable Remainder Trusts

Similar to a pooled income fund, a charitable remainder trust (CRT) entitles you to income for a fixed period of time following your donation and eventually pays the principal to the charity. However, CRTs provide more options for the payment of the income than pooled income funds: you can choose to receive either a fixed annuity payment or a "unitrust" payment, which increases with the appreciation of the trust asset's value. The catch? To counter the costs of a CRT, your donation should equal at least $200,000.

Charitable Gift Annuity

This option offers you the greatest security. You provide a gift and receive, in return, a lifetime annuity and a charitable income tax deduction. Because the annuity payment is an obligation of the issuing institution, you are guaranteed a fixed amount of income.

Please note the information above is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of the information provided below should not be acted upon without specific professional guidance. Please call us if you have any questions.