Here are some of the ways you can think about strategic giving to a qualified non-profit.
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Give cash. (Up to 50% of your AGI can be a charitable deduction.)
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Write a check. (Same as cash, but be sure the check is mailed by Dec. 31 for the tax deduction in the same year.)
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Use your credit card for a one-time payment. (Ditto-same as cash, but be sure it is processed by year end for your deduction.)
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Sign up for a monthly automatic electronic funds transfer. (Easy, but it can feel like paying a bill)
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Sign a pledge, then pay it over one year or over multiple years. (Makes it easier to make a larger gift.)
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Donate stocks, bonds, mutual fund shares or other equities. (Check out the tax benefits of avoiding capital gains when giving appreciated assets.)
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Donate a car, boat, plane, collection (art, books, coins) or other tangible personal property. (Nice way to simplify your life and avoid the hassles of selling.)
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Give copyrights, patents, trademarks, or rights like oil, gas, water, or mining rights. (Nice way to give an income stream or illiquid asset.)
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Buy into a pooled income fund. (Usually a very low threshold for an income producing charitable gift)
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Buy a charitable gift annuity. (Be sure you are working with a reputable non-profit.)
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Create a donor-advised fund. (Strategic way to get a deduction immediately, then decide later how to distribute the charitable funds.)
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Set up a charitable remainder trust. (Complex but powerful planning tool for giving a larger gift and retaining a life income for yourself or others.)
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Set up a charitable lead trust. (Sophisticated tool for transferring assets with tax avoidance on appreciation through a charitable gift of the income from an asset for a period of years to a non-profit.)
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Create a retained life estate for your personal residence. (Give the asset, but continue to live there.)
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Give an outright gift of property you own free and clear. (Make a large gift, avoid selling hassles, and get significant tax benefits.)
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Sell a property to a willing non-profit through a “bargain sale.” (The lower than market value pricing creates the charitable gift.)
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Donate financial assets like bank accounts and certificates of deposit through a “pay on death” designation (easy, no immediate impact.)
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Name a charitable organization in your will for a dollar amount of money. (Make sure you actually have a will or the State will decide who gets your money.)
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Name a charitable organization in your will as a beneficiary of an asset or a percentage of an asset (Another way to designate your intentions)
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Name a charitable organization in your will as a beneficiary of a percentage of your estate. (A very effective strategy as it takes into account inflation as well as the possibility of a diminishing estate.)
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Name a charitable organization as a beneficiary of an IRD –Income with Respect to Decedent– asset such as an IRA account or retirement plan (Give what may be the highest taxed dollars first.)
Many of these strategies require some advance planning and may have complex rules attached to them, but don’t let that stop you. Freeing up unused assets, for example, can increase your capacity to give. So can life income gifts and/or giving from your estate.
Once you have figured out what to give, think about the kinds of support you can provide to the organizations that matter to you:
- Funds for current operations of the organization
- Expendable funds for the ongoing programs of the organization
- Special funds for specific programs
- Dedicated funds for starting new programs
- Capital funds for physical plant construction, expansion or modernization
- Endowments to provide unrestricted or restricted income
My advice?
Be values-driven, do your homework, and be generous.
Contact your legal counsel, your accountant, or your favorite non-profit for more information about strategic giving. If you would prefer to seek more information confidentially, send your questions to: [email protected].
Portions of the material above are excerpted from a Making Money Matter column originally published in the Boulder Daily Camera, October 17, 2012.
‘Til next time — Give Well, Give for Good.
