Twelve Tips for Year-End Giving
Year-end is a great time for giving. When you make a donation by December 31 to The Community Foundation, you aren’t just giving money. You’re perpetuating your own values and maintaining or enhancing the quality of life for future generations of the region.
1. Talk to your advisor. Before making any significant gift to charity, you should have your CPA, attorney, or other advisor help you to understand the impact of your gift on your income tax return and estate.
2. Consider your income. Take the time to do some planning while you still have the opportunity to make a year-end gift. Try to get a handle on your tax liability for the year. Did your unearned income increase? Did you sell any appreciated assets? Will you owe more taxes? If you take the time now to assess these important issues, it may motivate you to increase your giving before December 31.
3. Review your stocks. Look at the stocks you have held for more than one year. Which ones have appreciated the most? If you’re inclined to make a charitable gift anyway, it may be prudent for you to make your year-end gift using one of more of these stocks. Here’s why: If you sell the stock, you will incur capital gains tax on the appreciation. However, if you gift the stock you get a charitable deduction for the current market value of the stock, just as you would if your gift was made with cash. If you can’t use all of the income tax charitable deduction resulting from the gift, you can carry it forward for up to an additional five years. Such gifts are deductible up to 30% of your adjusted gross income. If you’re holding a stock that’s substantially lost value, consider selling the stock and donating the proceeds. You can deduct the loss in value and derive an income tax charitable deduction for the current market value.
4. Do your giving early and complete your gift before the end of the year. A gift by check is complete when mailed (postmarked) to the charitable recipient, even if it isn’t cashed until the following year. Gifts by credit card are complete when your credit card account is charged, allowing you to make a gift before year-end, but pay for it in January. Gifts of stock are more complex, but are generally complete when you or your agents relinquish control and the asset is recognized in the Foundation’s account. If you plan to make a gift of non-cash assets (stock, real estate, etc.), don’t wait until late December. The Foundation, in concert with your advisor, may not be able to make the necessary arrangements in time. This also applies to life-income gifts.
5. Know the meaning of “deductible.” Remember that only donations to qualified 501(c)(3) organizations are deductible. There are many worthy causes out there that do not qualify for a charitable contribution deduction. The Community Foundation documents the status of all organizations prior to making a gift on your behalf and can help you to identify organizations that are serving your charitable intent and are qualified to receive your gift. Only taxpayers who itemize their deductions on Schedule A can claim a deduction for charitable contributions.
6. Consider a life-income gift. Would you like to donate your appreciated assets to charity, but know that you will continue to need the income from those assets? The Community Foundation offers a variety of life-income plans to fit your needs. You can make a gift now, obtain tax benefits, and receive income for the rest of your life. Contact The Community Foundation for more information.
7. Do you have more than enough? Consider utilizing retirement plan assets, life insurance policies, or annuities to make a gift to charity. If you’re receiving unneeded taxable income from these vehicles, there are a number of highly tax-advantaged ways to make these assets work for both you and the causes you support. The Charitable IRA Rollover Act of 2006 was to expire at the end of 2007. However, The Emergency Economic Stabilization Act of 2008 extended the Tax-Free distribution from IRAs for charitable purposes through December 31, 2009. This popular charitable contribution option allows donors age 70 ½ or older to donate up to $100,000 from their IRA without counting the distribution as income. Check with your tax advisor to assess the impact on your state income taxes.
8. Explore employer gift matching programs. Many companies have gift matching programs that can help you leverage your generous gift into a gift of up to twice the original amount of your donation.
9. Consider both acute need and pervasive need. There is a difference between acute need (e.g., natural disasters, holiday fund drives) and pervasive need (e.g., homelessness, domestic violence, child abuse, hunger, disease prevention, economic development, education) when you are planning your yearly giving. You should include both in your “personal giving plan.”
10. Give now, decide later. If you are planning for a charitable tax deduction in 2008, but are undecided about which nonprofits to support, consider opening a donor-advised fund at The Community Foundation for the Ohio Valley. You can claim a deduction for contributions to your fund now even though distributions from the fund might be made in future years. A donor-advised fund can be set up in one meeting.
11. Be a proactive giver. Instead of responding to direct solicitations, donors can make a significant difference to their charities of choice by being more organized givers. Giving vehicles such as those available through The Community Foundation provide simple ways to turn reactive contributions into effective giving over time, while maximizing tax advantages.
12. Let The Community Foundation do the “legwork” for you. We possess extensive knowledge regarding the local non-profit community and the broad charitable needs of the region. We can provide you with timely information so that you know to whom you are giving, why you are giving, and what impact your giving will have over the short- and long-term.