Donating to charity is one of the most rewarding activities you can do in life. You have multiple gifting options to consider before talking to your legal and tax advisers about which strategy will put your donation to work for you and your charity in the most effective way possible.

Pooled income fund

• The donated assets are transferred to a managed fund or fund portfolio.
• The fund is administrated and managed by a qualified not-for-profit organization.
• The fund provides an income stream over beneficiary's lifetime.
• This structure may allow a partial income tax deduction based on beneficiary life expectancy and the fund's historic rate of return.
• This type of fund features smaller investment minimums.
• Donations can be made anonymously.

Donor-advised funds

• The donated assets are transferred to a charitable organization.
• The donor can pick from a list of investment options, typically from a portfolio of funds.
• The donor can recommend gifts to public charities.
• The fund has to approve all donations.
• The fund also handles donation administration, compliance and research.
• Family members can remain involved after the donor's death.
• This structure provides an immediate tax deduction.
• Donations can be made anonymously.

Charitable lead trusts

• The trust is created by a trust document.
• Assets can be anything that produces income, including real estate, and are re-titled in the name of the trust.
• The donor determines investment management when setting up the trust.
• Income is donated to charity for the term of the trust.
• At the end of the term, the asset is transferred to the trust's designated recipients.
• A gift tax is applicable, and there are no income tax deductions for the donor.
• However, the asset can grow tax-free during the trust's term and can also be distributed to the designated recipients tax-free.

Charitable remainder trusts

• The trust is created by a trust document.
• Assets can be anything that produces income, including real estate, and are re-titled in the name of the trust.
• The donor determines investment management when setting up the trust.
• Income is paid to the donor or named individuals at a rate determined by the type of remainder trust.
• Assets are transferred to the charity.
• Tax deductions are immediate and determined, in part, on the trust's payout rate.

Getting started

1. Update your balance sheet. List all of your liabilities and assets, including art, antiques and collectibles.
2. Define your philanthropic aspirations.
3. Talk to your adviser and establish or reassess your estate plan with your charitable gifting wishes.
4. Put your estate plan into action. Retitle assets, change beneficiaries and make donations as needed.
5. Transfer assets to as many people you want. It's tax free if you stay under the gift tax limit. In 2010, each donor was allowed to gift $13,000 to an unlimited number of recipients before triggering the gift tax. Check with your tax or financial adviser to verify the limits for subsequent years.