Charitable giving: the rules of the road

Since the inception of the United States, a hallmark of the American identity has been private philanthropy. The United States is one of the most philanthropic countries in the world.¹ This private philanthropy has funded many of the strongest charitable institutions in the world and has had a transformative effect on every aspect of American life.

Unlike many other developed countries, the United States has used its tax code to encourage charitable giving for more than 100 years by way of the income, gift and estate tax charitable deductions. During that time, the tax rules around charitable giving have evolved into a complex body of laws, restricting how and to which entities deductible charitable gifts can be made. Not following the rules can lead to the reduction or denial of the charitable deduction, along with possible tax penalties and interest.

As such, it is good to understand the basic rules of the road. That is the purpose of this piece. It provides a general overview of the tax rules around charitable giving, along with a description of the permissible vehicles available to accomplish the donor’s philanthropic goals. Given the scope of the charitable planning field, this guide is meant to provide the big picture. If the reader is interested in delving deeper on a particular topic, your UBS Financial Advisor can provide additional whitepapers and information upon request.

¹ This Charities Aid Foundation, World Giving Index 2022.