No
person was ever honored for what he received. Honor has been
the reward for what he gave. - Calvin Coolidge
Donor-Advised
Funds: A public charity that pools donations with other
donors' gifts and invests them tax-free; the fund makes grants
to the recipients upon recommendation of the donor. Donor-advised
funds provide a means of contributing to qualified charities
of choice. What various mutual funds have begun to offer are
these gift funds that let you donate to your account whenever
you want -- even after your death. You choose a portfolio made
up of mutual funds that matches your style of investing. There
is no worry about maintaining receipts or checks. The programs
send quarterly statements. There are minimum contributions of
$10,000 - $25,000.
The
donor-advised fund allows you to:
- take
immediate tax deductions for your contributions;
- make
grant requests on your own timetable;
- grow
your account over time with money management expertise;
- lower
your current taxes, and makes it easier to keep track of your
charitable activities and tax-filing;
- Deductions
can be up to 50% of personal income for cash gifts and 30%
of personal income for appreciated property at 100% fair market
value.When you donate appreciated securities, you'll avoid
paying capital gains taxes;
- The
contributions you make to your account will be removed from
your estate, and, therefore, will not be subject to estate
taxes;
- Individuals
may donate appreciated property without the risk of triggering
the federal alternative minimum tax (AMT).
As
with any strategy, there are pros and cons. Please contact
us for further evaluation.
Gifting
stock or other appreciated property
As
the tax season approaches, many of our clients look for ways
to better plan for next year's tax bite. For many this involves
considering a charitable gifting strategy. You can achieve tax
benefits as well as aid those less fortunate, contribute to
your alma mater, or show your support for a local organization.
Many
clients use this time of the year to evaluate their finances,
and decide what resources they have available for charitable
giving. I recommend reviewing your estimated income and tax
liability, as well as your assets. I encourage clients to consider
non-cash gifts such as stocks or real estate. The tax code already
provides an incentive to most taxpayers to give to charity,
and this can be maximized with proper planning. Gifts of appreciated
stock or property can be very advantageous to you from a tax
perspective. Gifting appreciated property, such as common stock,
mutual funds, or real estate, is a great strategy to fulfill
charitable goals as well as to ease your tax burden. Most long-term
capital gain property is deductible for the full fair market
value of the property when the donation is made, subject to
certain limitations. In addition, you do not pay any capital
gains taxes on the sale of the property. Because charities are
tax exempt, they do not pay any taxes on the sale either. By
gifting appreciated securities to a charity, you can give a
greater amount than if you sold the securities, paid capital
gains taxes, and gifted the proceeds. This results in a larger
donation to the charity of your choice, and a larger charitable
deduction on your tax return.
Philanthropy
should be and is the primary driving force in charitable giving.
However there are many ways to not only benefit your favorite
charity but to also provide the maximum benefit to you as a
taxpayer.
