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Financially Savvy Charitable Giving

How to support your favorite nonprofits while maximizing tax benefits

“It’s been extremely gratifying to help people support charities they care about while at the same time saving tremendously when it comes to taxes.” Rich Kruithoff is describing the work he’s been very thankful to do over the past five years as founder and owner of Charitable Planning Services, a tax and business consulting firm based in Las Vegas.

Kruithoff says he and his team are experts on a tax strategy called Donor Advised Fund Strategy. This allows a person to make sizable charitable donations that one can immediately claim as a tax deduction. However, this donation is not distributed immediately. It is initially placed into an account [a Donor Advised Fund] and is then distributed out in small chunks over time to nonprofit organizations of an individual’s choosing. The strategy also has a major family legacy component, so clients can also do generational planning.

“The law states you can donate up to 60 percent of your adjusted gross income, but the problem is most people don’t know about it,” said Kruithoff. “In fact, most CPAs don’t know about it because they are just too busy. They don’t have the time to learn and educate their clients about it, so that’s where we come in.”

Kruithoff said his firm works directly with CPAs and financial advisors who refer clients to him. Kruithoff then connects these clients with a 501(c)3 organization called the “Foundation for Advanced Philanthropy,” which facilitates the process of disseminating the funds raised for hundreds of charitable organizations across the country.

So, who would be an ideal client to benefit from a Donor Advised Fund Strategy?  Kruithoff said they fall into three key categories: first, they must have a recognized tax problem. This means they are currently facing a huge tax bill and need to find options to reduce it. Secondly, the ideal client must be charitable-minded and serious about giving back to the community. And third, the person must also want to create a legacy plan.

“There’s a lot of people at the beginning who are kind of charitable-minded, but by the time we are done talking to them about how this works, they become VERY charitable-minded,” said Kruithoff. “That’s because, with this strategy, the money you donate will be reinvested and built up over time to eventually become a significant amount. So, what I usually tell people is rather than getting a plaque with your name on it to be put in a room of a hospital that you have donated to, you will get a wing named after you.”

Kruithoff admits this type of high-level charitable and tax strategy planning is not suitable for everyone, but his firm does represent all types of people and professionals.

“A bulk of our clients are doctors and dentists, and we help a lot of small business owners as well," said Kruithoff. “For example, if someone has a plumbing business with ten trucks on the road, he’s making some decent money. But he is a “small” business owner, probably employing about 20 people. And I am going to tell you this right now: he has a tax problem.”

Kruithoff said anyone interested in working with him should first consider what charitable organizations they want to support. And with this particular tax strategy, people don’t have to pick just one nonprofit. They can give to several, and the types of organizations they want to support can change over time.

“It’s just been a real blessing to show people how they can put their money to work for the charities they care about and can really make a big difference,” said Kruithoff. “We have millions of dollars every year that are going through this type of tax strategy. The nonprofits are getting money every year, and there will be a very large endowment going to them at a future date, making a significant impact on these organizations.

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