Looking for ideas to maximize your end of year giving? Follow along with us as we cover 12 tips for giving this Christmas season.
Day 1: Donate Appreciated Assets
Donating appreciated assets to charity is an excellent way to support the causes you care about. A donation of appreciated assets (stocks, bonds, mutual funds and complex assets) may offer you tax savings. It also allows you to make a larger impact since you can donate assets that have increased in value since you acquired them. For example, if you bought stocks or mutual funds at a low cost and they have since grown in value, donating the appreciated assets to charity could provide a higher tax deduction than if you had simply donated cash. Furthermore, by donating these assets, you may be able to avoid capital gains taxes, which will help you keep more of your hard-earned money.
Some organizations are not able to accept all kinds of appreciated assets. See tip on Day 2 to see how a Donor Advised Fund can be a great solution for those who want to donate complex assets and support many different organizations.
Day 2: Utilize a Donor-Advised Fund
Donor Advised Funds (DAFs) make your charitable giving simple! You make one donation to your DAF and then grant the money to charities over time. Your donation is invested so it can grow tax-free until you decide to grant to the organizations you love. This means you only have one charitable gift receipt come tax time. The Foundation offers a high-tech online infrastructure for making grant requests and we also offer “high-touch” service for those looking for recommendations and resources.
Interested in opening a DAF before the end of 2022? Call us today! Opening a DAF only takes a matter of days in most cases. If you are donating cash or stock, the process is typically very simple.
Day 3: ‘Bunch’ Multiple Years of Contributions
“Bunching” is when you combine multiple years of your “normal” charitable donations into a single year. For example, a person who normally gives $10,000 a year to charity would “bunch” two years’ worth of donations into a single year; meaning they would give $20,000 to charity one year and $0 to charity the next.
Why “Bunch” Your Donations? Bunching your donations means that during the year you donate to charity, your charitable deduction combines with other itemized deductions to increase the likelihood of exceeding the standard deduction.
Bunching & Donor Advised Funds
This giving strategy tends to work best with a Donor Advised Fund. While simply making all your donations in one year will get you the tax benefit, it can cause volatility in the charities you support. They will receive surpluses and shortfalls in bunching and non-bunching years, making it much more difficult for them to accurately budget and fundraise.
The solution for both taxpayers and charities is a Donor Advised Fund. This allows you to receive the full tax benefit of bunching, but also gives you the time and flexibility to advise grants to multiple charities with no time limit instead of giving in one lump sum. A Donor Advised Fund functions like a “charitable checking account.” You receive the tax deduction when you add money to the fund because that money can only ever be granted to nonprofit organizations. Your money grows tax-free in your fund and you don’t have a time limit for when you need to spend the money.
Day 4: Give the Gift of Positive Impact
Need a last-minute gift? Give your loved ones the gift of a positive impact on their community! Donate to a nonprofit on their behalf and let them know that their gift is making a difference in the lives of others. Try to pick an organization or cause that they care about or that is doing work in their local community. This is a great gift for the person who “has everything” and may inspire them to become more charitably inclined!
Stay tuned for more tips in the coming days!