When it comes to charitable giving, there are many roles that people and organizations can play. One of those is as a benefactor, which is an important role, indeed. Let's examine what a benefactor is and their role in giving.
What is it?
What is a benefactor?
In the most technical sense, a benefactor is someone who gives something to someone else -- anything from a sandwich to an entire estate. A benefactor also doesn't have to be just a person; it can be a group or a more formal organization, as long as something is given without the expectation of a reward or any kind of return on the gift.
Who can be one?
Who can become a benefactor?
Although we often think of giant foundations and university endowments when we think of giving, anyone can become a benefactor. Very large foundations can do a lot more than an individual, but that doesn't make the contribution of a smaller benefactor less important.
In fact, many small benefactors support lots of different charities, from your local animal rescue organizations to art museums and charitable organizations. The size of the gift doesn't define a benefactor.
Although most benefactors tend to be older and more financially comfortable, this is simply because they're more often able to give money, time, or resources than younger people. Sometimes, being a benefactor is helpful for estate planning, also largely a concern of older demographics.
Tax benefits
Are there tax benefits for benefactors?
There are a number of tax benefits for benefactors if they're able to itemize their taxes. Many people donate without claiming tax credits, but charitable giving can be a way to reduce an annual tax burden, especially if it's a year with an especially good return on investments.
Benefactors can even donate assets like bonds or stocks that they've held for a long time and deduct the full fair market value. Since they never converted those holdings into cash, they haven't realized profits, making it unlikely they will have to pay capital gains tax on the asset. These same sorts of practices are also important to estate planning since they can be used to eliminate tax burdens for heirs.
Versus philanthropist
Benefactor vs. philanthropist
Both benefactors and philanthropists set out to do good in the world, but their methods are slightly different. Benefactors primarily focus on donations, often in cash or assets but also in time and knowledge, and largely give directly to charities or individuals.
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Philanthropists, on the other hand, also give but with a larger goal in mind. They're focused on improving human welfare on a grander scale rather than just supporting a charity or a cause.
They may be high-net-worth individuals who have taken some of their money to establish private foundations, like Bill Gates, or nonprofit organizations that can reach many with the backing of their benefactors. Both groups are vital for charitable giving to work and for the money and other gifts to go where they're most needed.
