Proper ways to donate anonymously

[FedRetired50]

I did some searching and I didn't see a thread covering this, so here goes. What are some valid (IRS-accepted) ways to donate to people and charities anonymously, without too much hassle? Not just requesting that a charity or individual keep your name quiet, but a transaction where they don't even know where the $ came from.

The only way I've heard of in the past, is to submit the gift to a lawyer and have them submit the donation for you. Creating a paper trail from the receiver, to lawyer, to you so you get the deduction (if you are giving to a charity of course). This seems like the easiest option and probably cheapest.

A Forbes article mentioned setting up an offshore foundation, but this is hardly an option for the average Joe and it eliminates any tax deduction. And an onshore foundation eliminates the anonymity apparently. The same article mentions setting up a LLC, with a lawyer listed as the manager of record (not sure why this couldn't also be true for a foundation?), or setting up a grantor revocable trust.

Another website mentioned some charities like United Way will act as middlemen for gifts to other charities, sometimes without any transaction fee, and you can request that they not share your name. But this wouldn't work for a gift to an individual.

If you do give directly to a charity you can require them to strike your name from their publicly-available 990 tax form, which the IRS allows. But, the charity still knows who you are.

Has anyone used any of these options, or others?

 

[thod]

Would donating to a Charitable Donar Advised Fund you can setup with a number of companies satisfy your needs?

The charity receiving it would not know who gave it, just which DAF. The name of which you would get to choose.

 

[Dash man]

I believe donor advised funds have an anonymity option. I use Schwab’s DAF and they can withhold your info I believe. You can call and ask to be certain.

 

[braumeister]

Yes, almost all of our donations from our Fidelity DAF are anonymous. They make it very easy. You can choose what the charity sees as the donor, from your real name and address to Anonymous, or anything in between.

 

[audreyh1]

Donor advised fund is a great way to do this. You’ve already made the donation and related IRS tax filing. Then it’s just a matter of anonymous grants.

Donating highly appreciated securities to a DAF is also very convenient when it’s linked to your brokerage.

 

[Lewis Clark]

Send the charity a bank check or a money order. These won't have your name on them.

 

[MBAustin]

Another vote for a donor advised fund. We give to a number of places that we wouldn't support if they had our contact info to be solicited for more donations.

Or if it's a one-off, the bank check/money order mentioned above is also OK.

 

[OldShooter]

One of the ways we give is through a fund we have established at a Community Foundation (https://cof.org/page/community-foundation-locator). We give via QCDs, so the fund is not legally a DAF but the foundation staff (all three of them!) know our preference for anonymity and follow it.

FWIW, to be deductible a gift has to be to a charity. Giving to "people" is not deductible. I don't know the details but the foundation keeps itself clean on this point.

FWIW #2, just directly sending a bank check or money order is not enough for a deductible gift either. The recipient needs to provide you with a letter stating that no goods or services were provided to you as a result of the payment. So without going through a DAF or a foundation fund I'm 99% sure you will have to identify your self to the recipient. (https://www.irs.gov/charities-non-p...ritable-contributions-written-acknowledgments)

Note: IANACPA, just SGOTI

 

[FedRetired50]

I believe donor advised funds have an anonymity option.

Yes, almost all of our donations from our Fidelity DAF are anonymous.

Donor advised fund is a great way to do this.

Would donating to a Charitable Donar Advised Fund you can setup with a number of companies satisfy your needs?

Another vote for a donor advised fund.

I thought I read that you can only suggest where your funds go, with this option. There isn't a guarantee. Basically, it is legally out of your hands what is done with your money.

 

[OldShooter]

Remember, too, you can't fund a DAF with QCDs. This could be a factor for some, like us.

 

[FedRetired50]

Send the charity a bank check or a money order. These won't have your name on them.

Or if it's a one-off, the bank check/money order mentioned above is also OK.

I don't see how this proves the money went to an actual charity so an IRS audit would leave you with a problem. There wouldn't be a complete paper trail like there would be using a lawyer. I could see using this option to give to an individual, where a tax deduction isn't an issue.

 

[braumeister]

I thought I read that you can only suggest where your funds go, with this option. There isn't a guarantee. Basically, it is legally out of your hands what is done with your money.

If the designated charity isn't a legal recipient, the DAF will tell you and not make the donation.

If they didn't follow your wishes, there would be such an uproar that they would be out of business in no time flat. I've never heard of any designation not being followed.

 

[FedRetired50]

One of the ways we give is through a fund we have established at a Community Foundation (https://cof.org/page/community-foundation-locator). We give via QCDs, so the fund is not legally a DAF but the foundation staff (all three of them!) know our preference for anonymity and follow it.

FWIW, to be deductible a gift has to be to a charity. Giving to "people" is not deductible. I don't know the details but the foundation keeps itself clean on this point.

FWIW #2, just directly sending a bank check or money order is not enough for a deductible gift either. The recipient needs to provide you with a letter stating that no goods or services were provided to you as a result of the payment. So without going through a DAF or a foundation fund I'm 99% sure you will have to identify your self to the recipient. (https://www.irs.gov/charities-non-p...ritable-contributions-written-acknowledgments)

Note: IANACPA, just SGOTI

I'll have to look into that. I agree about the charity for the deduction and the problem with a money order (which I posted about above). But the lawyer option would retain the paper trail for the IRS.

 

[audreyh1]

Yes, almost all of our donations from our Fidelity DAF are anonymous.

I thought I read that you can only suggest where your funds go, with this option. There isn't a guarantee. Basically, it is legally out of your hands what is done with your money.

We have complete say as to where our money goes and when it is granted. The charity needs to be a real charity recognized by the IRS. We’ve added several organizations including some small ones and had no trouble adding them via Fidelity Charitable. If you leave your fund dormant for a long time there could be issues as there is some minimal threshold that must be met by the overall DAF custodian over several years, but we donate every year.

 

[jebmke]

Yes, almost all of our donations from our Fidelity DAF are anonymous.

I thought I read that you can only suggest where your funds go, with this option. There isn't a guarantee. Basically, it is legally out of your hands what is done with your money.

Technically, perhaps but if the charity is a legit 501(c)(3) the DAFs will always make the donation to the recommended charity in the grant request.

 

[FedRetired50]

If they didn't follow your wishes, there would be such an uproar that they would be out of business in no time flat. I've never heard of any designation not being followed.

I'm just quoting Forbes:

"The trade-off is that once the money has been donated to the fund, you no longer have absolute control over it. You can recommend grants to charities approved by the IRS, and most often those suggestions will be honored, but you cannot legally require payouts to a particular organization."

 

[RetMD21]

My DAF (Vanguard) only lets you give to IRS registered charities and OP also wanted to donate to "people." Can you do that for a charitable deduction?

 

[OldShooter]

I'll have to look into that. I agree about the charity for the deduction and the problem with a money order (which I posted about above). But the lawyer option would retain the paper trail for the IRS.

So you give the money to the lawyer, he gives it to the charity, he gets the gift letter and gives it to you? I never heard of that but that doesn't mean much. I would try to find clear documentation that the IRS would accept the transaction as deductible. Case law maybe?

 

[mrfeh]

Send the charity a bank check or a money order. These won't have your name on them.

This was my first thought.

 

[The Cosmic Avenger]

If it's a one-off, sure, a money order might be a better choice. But I second the votes for DAFs. We have one at Fidelity, and I like it. I have added small local charities that aren't in their database, and they apparently do research that they're valid 501(3)(c)s, because those take a week or three to get approved, but they always have. Larger ones are already in there and get approved pretty quickly. I don't think there's a minimum to contribute, but the distributions have a $50 minimum, if that matters.

They're useful if you want to bundle donations, like donate $30K to your fund in one year to get above the standard deduction and itemize, but then spread the charitable distributions out over X years before you do it again so your charities get the same amount every year.

I also used it to reset the value of some appreciated stock. Our yearly charitable donation budget was about $10K, and instead of using cash, we started donating $10K of stock with the highest capital gains to the DAF, then buying it back with the cash we had set aside for charitable donations. The cost basis for that $10K was reset, and we had our $10K to distribute.

 

[jebmke]

This was my first thought.

depending on the size of the donation you still need the letter of acknowledgement for tax records.

 

[Lewis Clark]

I don't see how this proves the money went to an actual charity so an IRS audit would leave you with a problem. There wouldn't be a complete paper trail like there would be using a lawyer. I could see using this option to give to an individual, where a tax deduction isn't an issue.

Not every gift to a charity will be tax deductible. If a deduction won't be taken, no paper trail is necessary.

 

[rk911]

I did some searching and I didn't see a thread covering this, so here goes. What are some valid (IRS-accepted) ways to donate to people and charities anonymously, without too much hassle? Not just requesting that a charity or individual keep your name quiet, but a transaction where they don't even know where the $ came from.

we set up a DAF (Donor Advised Fund) at our bank. Any $ put into the DAF are themselves considered a charitable contribution. When we make grants to elegible charities we are offered a number of ways to tell the receiving charity who sent the donation. One of those choices is 'Anonymous'. That means completely anonymous.

 

[FedRetired50]

So you give the money to the lawyer, he gives it to the charity, he gets the gift letter and gives it to you? I never heard of that but that doesn't mean much. I would try to find clear documentation that the IRS would accept the transaction as deductible. Case law maybe?

Forbes mentioned it in an article, so it had to have cleared their lawyers.

 

[clifp]

I thought I read that you can only suggest where your funds go, with this option. There isn't a guarantee. Basically, it is legally out of your hands what is done with your money.

I've never had Schwab not donate to those I told them to donate to at the amount I suggested. Some like the Syrian White Helmets took a while to set up, but DAF exists to make donors happy. Now if you are trying to donate to your daughter's charity which funds your granddaughter's equestrian lesson, you may have an issue. But for virtually any large charity, and tens of thousands of small and medium charities it isn't a problem.

I've used the anonymous contribution several times, for one-time donations.