Maximizing Your Charitable Giving: 5 Expert Tips
Make a difference through charitable giving.
Charitable giving, a cherished tradition for countless households, holds the potential for transformational impact. It's more than just goodwill; it's about strategically harnessing the power of giving. Join us on a journey to explore the art of charitable contributions, where thoughtful planning and timing merge to create maximum impact and financial efficiency. In this guide, we'll unveil the secrets of aligning your philanthropic aspirations with smart strategies. Charitable giving isn't just an act of kindness; it's a cornerstone of our comprehensive approach to managing wealth, and we're here to show you how to make it count.
1. Opt for Appreciated Assets Instead of Cash
Donating a charitable gift of appreciated assets instead of cash in charitable giving can be a highly effective and rewarding strategy for both donors and the charities they support. One key advantage lies in the potential for significant tax benefits. When you contribute appreciated assets within the United States like stocks, real estate, or other investments that have grown in value, you can often avoid capital gains tax. This means you can donate a more substantial amount to your chosen charity tax free while minimizing your tax liability. Additionally, by gifting appreciated assets, you're able to make a more significant impact on the organizations you care about without depleting your cash reserves. It's a win-win situation, allowing you to support your favorite charities while maximizing your financial resources and reducing your tax burden.
2. Strategize Multi-Year Charitable Giving
Contribute to a variety of charitable organizations through a single donation with a Donor Advised Fund.
In retirement, a common situation is opting for the standard deduction because the criteria for itemized deductions have become more restrictive. To navigate this, it's worth thinking about spreading out your charitable giving over multiple years. One strategy is to concentrate your donations into a Donor Advised Fund within a single tax year. This approach lets you take advantage of itemized deductions for that year, securing a charitable deduction, and then you can disburse the funds gradually over time as you see fit. This method allows you to optimize your tax benefits while continuing to support your chosen causes over an extended period. To learn more about maximizing your tax benefits through donor advised funds, see “Charitable Giving: The Donor Advised Option.”
3. Embrace the Power of Qualified Charitable Distributions
Unlock the potential of Qualified Charitable Distributions (QCDs) if you're aged 70.5 or older. This remarkable strategy enables you to directly contribute funds from your retirement account to donate to charity, all while lowering your adjusted gross income. When choosing a QCD for your charitable giving, it's advisable to consult with your CPA to ensure precise record-keeping. Some financial institutions may not differentiate between regular and charitable distributions, so working with a professional ensures your generosity is both impactful and you receive full income tax benefits. Embrace the power of QCDs to make your charitable contributions even more meaningful and tax-savvy.
4. Dive Deep into Charities' Effectiveness
Knowing your charitable giving objectives and the impact you wish to have is paramount. Allocate some time to outline what resonates with you and to use reputable resources, such as the Federal Trade Commission, to research charitable organizations; see Before Giving to A Charity. Whether you have a passion for animals or rainforests, once your vision is clear, it becomes simpler to identify charities that support it. Periodically reviewing these organizations ensures that when you donate to charity, your contributions are making the significant, lasting difference you envision.
5. Engage the Next Generation in Charitable Giving
Instilling the spirit of giving in future generations secures a lasting legacy. We facilitate family discussions on vetting charities that align with shared values. By understanding family-driven charitable goals, you can foster giving in younger family members. Platforms like Schwab and Fidelity even allow for the transition of grant-making capabilities to other family members, ensuring a continued legacy of impact.
Our commitment is to guide our clients towards aligning their investments with their core values and charitable giving aspirations. We emphasize transparency, trust, and thought leadership. Knowing your objectives forms the foundation for a tax-efficient giving and legacy planning tailored just for you. Should you have any questions or need guidance on charitable giving, please visit our website to learn more about our charitable giving options.
Charitable giving is one of the most common goals for households with wealth, both pre- and post-retirement. A thoughtful charitable giving strategy pairs charitable giving desires with a plan around giving that takes into account tax efficiencies, the timing of donations, and the impact of these contributions.
To help you plan better in fulfilling your charitable giving desires, we are here to discuss your priorities to help achieve these goals. Please also note that charitable giving is one of the three components of our integrated approach to wealth management. Dive deeper into our wealth management services and fee schedule on our website.
