Charitable Trust
A charitable trust is a legal arrangement where assets are held and managed by a trustee for the benefit of a charitable organization, providing tax benefits to the donor.
A charitable trust is an irrevocable legal arrangement in which a donor transfers assets to a trust, with some or all of the benefits directed to one or more charitable organizations. The two most common types are charitable remainder trusts (which pay income to the donor first, then the remainder to charity) and charitable lead trusts (which pay income to charity first, then the remainder to the donor's heirs).
Why It Matters for Fundraising
Charitable trusts are sophisticated planned giving tools that appeal to high-net-worth donors seeking tax advantages while supporting causes they care about. For nonprofits, understanding these vehicles helps you have informed conversations with major donors and their financial advisors, positioning your organization as a worthy beneficiary of substantial planned gifts.
Types of Charitable Trusts
Charitable remainder trusts (CRTs) provide income to the donor during their lifetime, with the remainder going to charity. Charitable lead trusts (CLTs) provide income to charity for a set period, with the remainder going to the donor's heirs. Each has distinct tax benefits and appeals to donors in different financial situations.