A charitable trust is a trust established to benefit a specific person, organization or purpose, usually for the public good. In legal terms, a charitable trust is a fiduciary relationship in which one or more individuals, called trustees, hold legal title to property on behalf of a beneficiary. The beneficiary of a charitable trust is usually an organization or institution that provides some kind of public benefit, such as a hospital or school.
Charitable trusts have been a common legal tool for centuries, allowing donors to make charitable contributions without losing control of the donated funds or assets. Charitable trusts also allow donors to make donations to multiple beneficiaries, give to multiple causes, and receive tax advantages for their charitable donations.
Traditional charitable trusts are still popular, but there’s a new type of charitable trust gaining popularity among donors: the Charitable Impact Trust (CIT). CITs allow donors to invest in a range of socially responsible options to support a range of causes and activities that align with their values. CITs also come with tax advantages, since the donor is making a “qualified charitable gift” and can take a tax deduction for the contribution.
Charitable trusts are important because they allow individuals and organizations to make charitable contributions without sacrificing control. CITs, in particular, give donors the opportunity to invest in causes and activities that are meaningful to them, while at the same time providing financial support to the causes and activities they believe in.