In the aftermath of tax season, many families are evaluating what they could have done differently to maximize tax efficiencies and support the causes they care about in a more meaningful way. Having a plan in place can help individuals and families stay on track with retirement and other goals including charitable giving strategies.
Charitable giving throughout one’s lifetime can be part of an overall strategic wealth management plan, allowing donors to optimize their financial resources while supporting causes they care about. For example, charitable income tax deductions for donations may reduce taxable income and lower the annual tax bill. Plus, donating appreciated assets, such as publicly-traded stock held for more than one year, can help avoid capital gains taxes. In addition, dollars flowing to charities following death can help minimize the burden of estate taxes.
Formalizing charitable intentions can bring a deep sense of purpose. By incorporating charitable giving into estate plans, values and philanthropic commitments can continue beyond one’s lifetime. However, according to plannedgiving.com, more than 72 percent of Americans lack a valid will.
It is never too late (or too early) to include charitable giving in estate and financial plans. The Community Foundation of North Central Florida is happy to work with donors and their legal, tax, and wealth advisors to set up charitable giving structures and processes that align with their intentions to support favorite charities and causes, as well as reinforce the tax and estate planning objectives.
As one considers whether the time might be right to formalize their charitable giving, here are a few tips to consider:
Evaluate the Type of Gift: Cash versus Other Assets. When it comes to giving, the type of gift can significantly impact both the charity and one’s tax
situation. Cash donations are straight-forward and allow for an immediate deduction, but donating appreciated assets can provide additional benefits.
Consider the amount and the timing. “Bunching” charitable gifts has become a popular method to exceed the standard deduction threshold and itemize deductions, maximizing tax benefits. For example, if a donor typically gives a charity $5,000 annually, they may consider “bunching” their annual donation and give $15,000 every three years.
Timing is another critical factor. While most donations are given at the end of the year helping donors achieve immediate deductions, donors may want to spread donation over multiple years for more consistent tax relief.
Give to what is known and loved. Most people experience the greatest joy from giving to causes that are personally familiar. Personal experience makes it easier to understand how the charity is using donated dollars. So, for example, if a donor had experience with helping foster children, they are likely to understand how the organization is using their donation to support training for foster parents.
Likewise, donations to charities that are aligned with one’s own passions make them feel the best and ultimately make the most difference because they are likely to continue giving. The Foundation team is here to help bring community dreams to life through the power of philanthropy. And that feels great!
Give local. Even with the increasing number of community challenges across the country, oftentimes the greatest needs are right here at home. The team at the Community Foundation monitors all local needs and can help identify opportunities to support local charities by gathering informa-
tion about how a particular charity addresses those needs.
The Community Foundation is honored to serve as the philanthropic hub for our community and to work with donors to develop their personalized philanthropy plans. To learn more, please visit our website at www.cfncf.org.
Barzella Papa is the president and CEO of the Community Foundation of North Central Florida
Editor’s note: This is the latest in a series of philanthropy columns sponsored by Community Foundation of North Central Florida.