Charitable lead trusts. These are excellent if you don't need current income and want to pass your wealth onto the next generation with reduced estate taxes. Assets are placed in the trust and income is paid out of the trust to the charity of your choice. The amount paid out can either be a set amount or a fixed percentage of the trust's assets. The income is paid out either for a fixed number of years or until the death of the donor. ( The donor usually pays income tax on the payout, but also receives an income tax charitable deduction.)

Charitable remainder trusts. This is the opposite of the charitable lead trust. Income is paid out to the donor during the donor's lifetime or for a certain number of years, and then the trust's assets pass to the charity free of gift and estate taxes. As with the charitable lead trust, the payout may be either a fixed amount or a fixed percentage of assets, and the amount of income tax deduction will depend on the amount of payout, the expected lifetime of the donor or the number of years the trust exists, and other factors.

Charitable gift annuities. You donate cash or assets to your charity. It, in turn, pays you a guaranteed return on those assets. As with an annuity issued by an insurance company, you ca start receiving income right away or you can defer income until later years. The longer you delay the income, usually the larger the tax deduction for your gift (a portion of the income, once it starts, is taxable). Capital gains taxes on donated appreciated gifts is spread out over the donor's lifetime.

Charitable gift fund. This is essentially a public charity in the form of a mutual fund (Fidelity is the only mutual fund to have an IRS-approved fund). You receive an immediate income tax deduction for your contribution and remove the assets from your estate. The fund invests your donation, but you designate which charities will receive the money, how much and when you want it contributed. The nice feature about this is that you can change charitable beneficiaries and your money can grow-assuming, of course, the mutual fund makes money-so that you have more to give later on.

Pooled income funds. This is similar to donating to a charitable trust, except that your contributions-you can't donate tax-exempt securities-are pooled with other donors by the charity and invested by the charity much like a mutual fund does. The amount of income you receive from the fund over your lifetime depends on the fund's performance (you may have a choice of funds). Tax benefits will depend on your age and the fund's last three years of earnings. At your death, your portion of the assets in the fund go to the charity.

Community foundations. These are established either by a specific charity or a geographic region. They are collections of funds contributed by individuals, corporations or public agencies (often private foundations are folded into them). You can either let the foundation decide what to do with your gift or you may be able to direct your gifts to specific charities, a specific project, or an area of interest.

Private foundations. Because of their complexity and administrative expenses, private foundations generally are used only by wealthy donors. Their great advantage is that they afford maximum control and impact for the donor because they retain the grant making decisions.

Some of these alternatives can involve complex income-, gift- and estate-tax issues, along with more general financial planning issues, so be certain to consult a qualified expert before making your planned gifting decisions.

July -30-1998