The Season for Charitable Giving
This time of year many of us are motivated to share our good fortune. Apart from knowing that people and organizations are in need, giving just makes us feel good. Sharing can take many forms. Some of us donate money; some give our time, and many do both. There are a variety of ways to give, with added tax benefits for you, the donor. Donations may take the form of:
• Cash
• Securities, either publicly-traded or closely-held
• Accumulated value in Life Insurance policies
• Real estate
• Valuable items of Tangible Personal property, or collections
• Retirement accounts – especially to tax-exempt charities
Giving can be structured to help perpetuate the most important of your values, as well as to establish a family legacy of long-term philanthropy. Your support can be vital in so many areas – education, healthcare, community services, and religious organizations, to name a few.
For structured giving plans with immediate and/or long-term tax benefits, many donors explore these popular options:
• Donor Advised Funds (DAF) – Here, you establish an account with a Community Foundation or other allowed sponsors. Your funds are managed professionally to grow your assets, while you (or your heirs) retain the ability to direct your gifts to the charitable organizations you choose.
• Private Foundations (PF) – Families who wish to plan for long-term, strategic donations may opt to establish a family foundation that may span over future generations. There are costs for both setup and ongoing administration, and minimum annual grant requirements.
• Charitable Remainder Trusts (CRT) – Donors may contribute assets to an irrevocable Charitable Remainder Trust, taking an income payout during lifetime and designating specific charities that will ultimately benefit from what remains. Donating a highly-appreciated asset to a CRT can save significant capital gains tax when the asset is sold by the tax-exempt Trust.
Whatever method you choose, please be mindful of the strict requirements for proper receipts and other documentation to support your tax-deductible contributions.
Many online resources are available that explain types of charitable giving. In California, the Department of Justice, Office of the Attorney General oversees the nonprofit world. Included in their website Resources are services which rate selected nonprofit organizations as being trustworthy stewards of your donations, and a useful “Guide to Charitable Giving for Donors.”
I am available to offer guidance to help you decide on the best way to express your generosity in this holiday season of giving.