What’s the best way to give money to charity? Now with the year ending, I want to make sizable gifts to one or more of my favorite causes.
michael e. howard, cap, aifa, chief executive officer, youthbridge community foundation
The best way really depends on each person’s unique circumstances. Generally, you are better off making a gift of appreciated property like stocks, bonds or mutual funds rather than making a large cash gift. By making a gift of publicly traded securities when held longer than 1 year, you avoid the capital gains tax, and the full market value of the donated securities may be eligible as a tax deduction.
In past years, some people were able to take advantage of Qualified IRA Charitable Distribution rules and make a gift directly to a charity from their IRA. Although Congress has not passed legislation permitting this in 2015, there’s hope and speculation this technique may be permitted again.
At YouthBridge we work closely with our clients and their financial advisers to determine the best gift planning techniques that fit their own personal circumstances. You should always seek advice from your own financial or tax adviser before making any decisions.
elliot dole, cfp, asset management director, buckingham asset management
Charitable giving allows you to contribute to meaningful causes, ideally in a tax-advantaged way. Identifying and regularly reviewing your goals with your financial adviser will help you arrive at the best strategy for your family. The concept of ‘well-planned charitable giving’ means different things to different people. Some may want to maximize the tax benefits, while others may prioritize giving as much as they can afford. But you should always be aware of how different charitable giving strategies fit into your overall financial and estate plans.
Here are some questions to ask yourself when beginning the process: How important is the timing of your contribution? How will you or your adviser document gifts made for tax purposes? Then assess which of the following is appropriate: outright gifts of cash or property, including appreciated securities; funding gifts via IRA withdrawals or bequests in your will or trust; a donor-advised fund; or charitable gifting trusts.
