
As we approach the end of the year, the spirit of philanthropy prompts individuals and families to support the causes they love. Charitable giving during the holidays is not only a wonderful way to lift the community up but also a means to make the most of your end-of-year tax benefits. By developing a strategy before the year ends, you can ensure your charitable contributions not only make a difference but also meet your financial goals.
To maximize your year-end charitable contributions, it is important to take a thoughtful and strategic approach. The following are our tips for a successful giving season.
Plan your donation strategy.
Before making your donations, take the time to develop a strategy that fits in your financial objectives.
1. Talk to a professional advisor about how giving can benefit your tax planning. To start, ask how far you are from the standard deduction and consider “bunching’ charitable gifts in one year to maximize benefits.
2. Identify the causes that matter to you most.
3. Research organizations making an impact in these areas. You can learn about local organizations through the Community Foundation’s Philanthropy Hub at www.thephilanthropyhub.org
4. Decide, with the help of advisors, which assets make sense for you to give.
Give to qualified organizations
Keep in mind your gift will only provide a charitable gift deduction if you give to Qualified Charitable Organizations. A qualified organization must be a 501(c)(3) organization with a charitable purpose specifically designated by the IRS as qualifying for donations.
Utilize donor advised funds
Donor advised funds (DAFs) are charitable vehicles that allow you to make donations, receive immediate tax deductions, and recommend grants to your favorite charities over time. DAFs allow you to take advantage of tax deductions in the current year, even if the fund has not distributed grants to any charities. This can allow you to take advantage of deductions, while still supporting your favorite charities on a schedule that best suits you. To learn more about DAFs, contact the Community Foundation of North Central Florida at 352-367-0060 or visit www.cfncf.org.
Consider types of gifts
While cash is the most common way to give, there are other types of gifts accepted by qualified organizations, like the Community Foundation. Donating alternative assets can potentially maximize your impact and financial benefits. Some of the noncash charitable gift types you may be able to donate include:
· Stocks, bonds, and securities
· IRA distribution
· Coins, jewelry, and art
· Life insurance
· Privately held assets
· Real estate
One of the most important considerations to make with your year-end donations is whether they are within the IRS guidelines for charitable contributions. Keep in mind IRS regulations around charitable giving can be complex and complicated, so make sure you check with your tax advisor and any charitable giving partners.
A few guidelines for what make a donation tax-deductible include:
· Made to a Qualified Charitable Organization
· You have the required documentation for your gift. This means bank statements, receipts, written letters of acknowledgment, or 8283 forms, when applicable.
· Your donation was made by the end of the year (December 31st or earlier), in which you want to deduct it.
Additionally, if you are mailing in a year-end donation, you should ensure your donation is postmarked by December 31st to qualify for a deduction in that year.
Year-end giving is a wonderful way to make an impact where it matters most. By planning your donation strategy, considering alternative gift types and vehicles, and ensuring your gifts satisfy IRS regulations, you can make sure your contributions are meaningful and strategic. The Community Foundation is happy to help!
Editor’s note: This is the latest in a series of philanthropy columns sponsored by Community Foundation of North Central Florida.