What if you want to make a gift to charity but you do not want anyone – other than the IRS – to know about it?
Someone recently asked me this very question, and it took me a bit of research to find the answer. After some internet sleuthing and a conversation with a trusted accountant, I identified these options:
1. Use an advisor as an intermediary.
As an example, a client could transfer funds to our law firm escrow account, from which we would make a transfer to the charity. The paper trail from donor to charity should be sufficient for the IRS to allow the donor his charitable deduction without the charity or others knowing where the funds came from.
2. Create an Entity.
Establish a LLC or living trust with an anonymous name. Transfer the funds into the entity, and from the entity to the charitable organization. This requires more work than option one, but the entity could be used repeatedly which may decrease the cost and/or hassle of dealing with the escrow process.
3. Set up a private foundation.
The private foundation can then make transfers to public charities. However, be advised that Federal law requires private foundations to report the names of their significant contributors—those who give $5,000 or more during a taxable year—on their annual tax returns. Those names, submitted on Schedule B of Form 990-PF, are a matter of public record.
4. Donate online.
This may offer some privacy. Websites like Network for Good serve as a clearing house for donations and can help keep donations anonymous.
Any other ideas on how to keep your charitable acts private? Would you want to?
Happy giving!
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Elder Law Update 