Guide to Charity and Donations

Charitable Giving Options Estate Planning Estate Planning for Gay Couples March 16, 2018 Author: Woody Derricks
charity, charitable giving strategies, estate planning

You may dream of someday donating to charities and meaningful causes such as homeless animals, libraries, orphaned children, or disabled adults. These aspirations are commendable, but ensuring that they are achieved requires more than just wishful thinking. By creating a personalized financial plan based on your philanthropic goals, you may not only maximize your charitable donations today; you may maximize your contributions twenty years from now – securing a brighter future for your nearest and dearest causes.


The Benefits of Giving

Numerous studies have found that there is a psychological benefit to charitable giving. According to a growing body of research, altruism may also be associated with improved physical health. The release of endorphins that often accompanies giving can even lead to a decrease in pain.


Easy, Tax-Friendly Ways to Give

Many Americans wish to donate retirement assets to charities on a tax-free basis. If you are donating some or all of your required minimum distribution, are at least age 70 ½, and your Qualified Charitable Distribution (QCD) meets certain requirements, the amount you contribute can be tax-free. It may be beneficial, however, to name the charity as a designated beneficiary in some situations.


One way to leave a legacy is by donating an Individual Retirement Account (IRA) to charity upon death. When done correctly, charitable donations of retirement assets can minimize the amount of income taxes imposed on individual heirs and your estate. You can name the charity as a beneficiary of your tax-deferred plans; allowing the money to pass tax-free to a charitable organization in the event of the account owner’s death.


Many people choose to donate cash when supporting a charity. Cash donations can be suitable for small, medium, or large donations, monthly donations, and immediate gifts to a charity who is registered with the IRS. In addition, helping to raise funds for a specific charity of your choice can be a rewarding option.


Additional ways to give include donating appreciated assets, donor-advised funds, estate gifts, or advanced strategies such as Charitable Remainder Trusts (CRT), Charitable Lead Trust (CLT), or other strategies you can use to make the most of your money.


Learn more about additional ways to give.


Tips for Giving

Planning for giving doesn’t need to be complicated. With a little bit of thought and preparation, you can make the most of your donations both personally and philanthropically.


  • Review your portfolio. Make sure you are comfortable and secure with your nest egg’s ability to last throughout a long retirement. You don’t want to donate more than you can handle and end up cutting yourself short.


  • Consider a gift of time. If charitable donations are unaffordable, you can make a difference by volunteering your time at your favorite charity. Whether the support you offer is money or volunteer time, it is essential to find the right charity and the right way of giving for you.


  • Check up on the charity’s effectiveness: Check out websites such as “Charity Navigator” that gives you a glimpse into a charity’s efficiency, showing percentages of revenues and where they go.


  • Understand the rules about deductibility: You may be able to earn a tax deduction on a gift,depending on the situation. Limits apply and deductions as well.


Giving Can Be Rewarding

Regardless of how you chose to give, planning for and making charitable donations in your later years can be a gratifying experience. Keep in mind, though, that a charitable deduction that is much higher than the average American taxpayer claims could create an audit risk. By choosing the right method for your situation, you could be on your way to a successful and purposeful contribution.


The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual. This information is not intended to be a substitute for individualized tax, legal, or investment advice. We suggest that you discuss your particular situation with a qualified tax, legal, or financial advisor.