The Benefits of the Charitable Profit Arrangement
The donor always maintains ownership of his/her money, while receiving a return on the investment and also receiving the tax deduction.
Nonprofit organizations generate greater funds, per donor, versus an annual giving scenario and now nonprofits can effectively combat the number one donor objection; the donors' lack of discretionary funds on hand.
Valuable time and resources that are allocated to fundraising can now be shifted towards the mission goal. Charitable Sharing Accounts allows for consistent cash flow to the nonprofit with the guarantee that 100% of the donors' contribution reaches its intended organization. Nonprofits can use the "shared" profits for any and all disclosed purposes related to their cause.
Mr. and Mrs. Chen have a portfolio of $175,000 and are considering donating some money to help their favorite charity. Let's assume the Chens will earn an annual return of 7% and are willing to give 2% of that 7% for the next 10 years. As the account grows so does their tax deduction and contribution. Over the next 10 years the Chens will continue to grow their portfolio and save $13,540 on their taxes, all while donating $48,358 to the nonprofit. A win-win situation for all.