Contributed by: Melissa Joy, CFP® , CDFA®
Giving Tuesday is NOVEMBER 28 this year.
We resume our annual tradition of 10 inspirational considerations for your charitable endeavors updated from years' past.
- With tax legislation pending, keep the future in mind. Current tax proposals could significantly reduce the percentage of Americans who are able to itemize deductions. If the tax legislation passes with days to spare prior to year-end, you may want to increase your charitable gifts for this calendar year. You can do that with a donor advised fund (described below) or gifts directly to organizations. Work in coordination with your financial planner and tax professional can help to guide you for gift maximization.
- Qualified Charitable Distribution for the win. Qualified Charitable Distributions (QCD) might still feel new, as they have only been permanent for a couple years. If you are over age 70.5 and subject to Required Minimum Distributions (RMD), you can replace your gifts out of cash with a gift of your distribution directly to a charitable organization. The results? This income is not reportable as taxable income like a normal RMD. Make sure to keep track of your records, make your gift in accordance with QCD rules, and report your qualified gift to your tax professional.
- Get on a first name basis with organizations that matter to you. Charities appreciate your gifts and dollars. They also enjoy hearing from you about what the organization means to you and the impact that you hope your gifts will have. Getting involved and building relationships is valuable for the organization and can also be rewarding to you.
- Spread the word or give in groups. Giving Tuesday is a social phenomenon for good. Sharing your own charitable endeavors can create communication and encourage generous behavior within your network. So hashtag away! #GivingTuesday
- Take advantage of your corporate match. If you work for a company who provides a match to donations, your time for making it count this calendar year is fleeting. Decide how you would like your match to be utilized and make sure to dot your i's and cross your t's with the appropriate paperwork or process to get the money into the right hands.
- Gift appreciated stock for a double-tax plus. What's better than a charitable gift that multiplies its power with a current tax deduction and reduced future tax liability? If you gift appreciated assets like stocks in taxable accounts that have grown over time, you're doing just that. You would potentially get a charitable deduction and take away future tax liability on realized capital gains. Not sure how to make this happen? We would be happy to coordinate with you and the organization you want to help to take care of the details at your instruction.
- Define your philanthropy in a document. If you want to dig deeper into the scope and meaning of your gifts, we have a workbook to assist. Download a Philanthropic Values Statement to get started. https://static1.squarespace.com/static/54341a03e4b08690c01bc8de/t/56607eade4b07de43e2ccb23/1449164461431/philanthropic_values_statement_worksheet.pdf
- Establish or add to a Donor Advised Fund. A donor advised fund allows you to combine the opportunity for gifts of appreciated stock (see #6 above) as well as taking an immediate deduction and spreading out your gift over time if you prefer. This may become more relevant if new tax legislation is passed this year. Also, in peak earning years with presumed lower earnings in the future (read, near retirement), you can preload future gifting in a year that may be very impactful for your finances. Looking for more details, reach out to us or read here. http://www.centerfinplan.com/money-centered/2014/10/30/are-donor-advised-funds-right-for-you.html?rq=Donor%20advised%20fund
- Make your donations generational. Shared philanthropy projects can help to introduce younger children to important money topics or provide governance practice for adult children. You can see how family dynamics work and teach about money with less self-interest. Plus, donating time, effort, and money just plain feels good. Call it family bonding.
- Cost of living adjustment. Inflation is real, and it might be growing over the coming years. If you've kept your gifts static, it might be time to review things and give them a boost so they keep up with the value of today's dollar.
Philanthropy and charitable giving are deeply personal. #GivingTuesday is a great opportunity to review and upgrade your game plan. Looking for the optimal financial results? Coordinate with your trusted advisors to plan and execute for maximum impact for you and the organizations that matter to you and your family.
Melissa Joy, CFP®, CDFA® is Partner and Director of Investments at Center for Financial Planning, Inc.® In 2013, Melissa was honored by Financial Advisor magazine in the Research All Star List for the third consecutive year. In addition to her contributions to Money Centered blogs, she writes investment updates at The Center and is regularly quoted in national media publications including The Chicago Tribune, Investment News, and Morningstar Advisor.
Financial Advisor magazine's inaugural Research All Star List is based on job function of the person evaluated, fund selections and evaluation process used, study of rejected fund examples, and evaluation of challenges faced in the job and actions taken to overcome those challenges. Evaluations are independently conducted by Financial Advisor Magazine.
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