Berkshire Hathaway Chairman Warren Buffett's multibillion-dollar pledge to the Bill and Melinda Gates Foundation in 2006 refocused attention on philanthropy in the United States. Americans are among the most charitable people in the world, ranging from huge gifts from corporate executives like Larry Ellison of Oracle and Nike's Phil Knight to dropping spare change in a bowl at a local school fundraiser.

For small gifts, cash is king. When you're making a gift of $50 or $100, it doesn't usually make sense to jump through hoops. Once you reach the ranks of millionaires, however, you can afford to make more significant gifts -- with the tax deductions that come with them. And if you do want to make a larger gift, it makes sense to consider alternatives that may give you additional benefit. Here are just a few of them.

Giving stock
If big gains in stocks like Dell or are what got you to millionaire status, you may be sitting on a tax time bomb. But by giving away those shares directly to charity, you can avoid paying capital gains tax and get a charitable deduction at the same time.

How do you actually give stock to charity? Usually, the best thing to do is to call your broker and find out what information they need to transfer shares. Because stock gifts have become popular, your charity probably has a broker who can accept your transfer. Once you know what information your broker needs to make the transfer, a phone call to your charity should get you that information.

Getting something back
Another way to make a gift is through a charitable gift annuity. This gives you not only a valuable tax deduction but also an income stream for yourself or your family.

A charitable gift annuity is an agreement between you and your charity. You agree to give the charity a certain amount of money (or stock). In return, the charity agrees to make regular payments back to you or anyone you choose. You have some flexibility in deciding when you'll start receiving annuity payments, and the choices you make determine the tax deduction you'll receive.

Because charitable gift annuities involve a long-term commitment by your charity to you and your family, not all charities have the infrastructure in place to offer them. So if your charity has a fundraising coordinator or planned-gift advisor, you should talk to that person to find out whether the charity offers gift annuities. Even if that charity doesn't, it may sometimes be possible to work with a local community foundation to structure a gift that will benefit your chosen charity.

Charitable trusts
One way to maintain more control over both your gift and the way in which it benefits you is to establish a charitable trust. Like a charitable gift annuity, a charitable trust allows you to make a gift while getting something back from the charity. Yet a charitable trust lets you be more explicit about what you want back.

With a charitable gift annuity, many charities have only enough capacity to offer a one-size-fits-all product that meets most people's needs. But if you create a charitable trust, you can change essential characteristics, including how much income you receive.

Another advantage of charitable trusts is that you can manage trust assets yourself. This can be extremely useful if you are especially familiar with the assets that you plan to donate to the trust, such as stock in a private company, real estate, or other relatively illiquid assets. Keep in mind, however, that just because you are the donor and one of the beneficiaries of the trust, that doesn't mean that you can invest in whatever you want. As trustee, you have a fiduciary duty to the charity to make sure your investments are sound and prudent. While some charities are reluctant to pursue donors in situations where the trust's investments go sour, there are at least a few charities that are notorious for litigating cases involving a breach of fiduciary duty. To protect yourself from such claims, you may need to diversify your investments in a manner different from the way you invest for your personal account.

Private foundations
For donors who want a more active role in philanthropy, even the control offered by charitable trusts is sometimes insufficient. Creating a private foundation can provide most of the tax benefits available for charitable gifts while also letting the donor keep a large amount of power in determining how the money will be used.

Setting up a private foundation requires a considerable amount of work. The donor must find people willing to serve on a board of directors, and then do considerable legal work to form and get IRS approval for the foundation. The foundation must make ongoing reports to the IRS. In addition, some states have substantial reporting requirements of their own. Because some people abuse private foundations as a convenient tax dodge, government agencies require all foundations to follow somewhat stringent guidelines.

But the benefits of a private foundation can justify all that work. By offering assistance to a variety of worthy causes throughout the community, a private foundation can obtain high visibility both for itself and for its founders. A family foundation can not only establish its initial donors as leaders in the community but also introduce the children and grandchildren of those donors to the world of philanthropy. For wealthy donors who are concerned that their descendants may not understand the value of charity, using a private foundation to get their families directly involved in the operations of various charitable organizations can make an abstract concept much more concrete and practical.

There will always be a need for people who are willing to sacrifice for the benefit of others. By thinking about the best way to give, you can do your part for your community while also helping yourself and your family.

This article was originally published July 7, 2006. It has been updated.

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Fool contributor Dan Caplinger has been chasing $1 million for a long, long time. Both he and The Motley Fool own shares of Berkshire Hathaway. Berkshire Hathaway and Dell are both Inside Value and Stock Advisor recommendations. is a Rule Breakers selection, and Microsoft is an Inside Value recommendation. The Fool's disclosure policy is worth $1 million.