Make the Greatest Impact with Year-End Charitable Giving

holiday

Guest Contribution by Richard Archer, CFA, CFP, MBA

The right charitable giving strategy can mean giving even more to the causes you care about.

During the holiday season, many people look for ways to combine their desire to help the causes they believe in—including COVID-19 pandemic relief efforts—with their desire to save on taxes.

Generally, if you itemize your deductions, making charitable contributions can decrease your tax bill, and since highincome earners generally pay tax at higher rates, they may enjoy a particularly large tax benefit from charitable contributions.

There are no limits to who can be involved in philanthropy and what charitable giving can do. In fact, anyone can be a philanthropist, and some of the most impactful donors are those who give strategically over time, helping maximize the impact of their gifts.

As a financial adviser, I take great joy in helping my clients fulfill their values by giving back to the causes closest to their hearts.

I see the personal satisfaction that comes with charitable giving, both in the short and the long term. And I’ve seen first-hand how my clients enjoy emotional and financial value from using the right giving strategies.

The truth is, you can give even more to charity—and potentially realize even more tax benefits—by giving in the right way and using the right vehicle for giving. Plus, you can have greater control over how your gifts are used by the causes you support.

It’s also important to remember that, with the recent changes in tax laws, getting the tax benefits of charitable giving is not as simple as itemizing the deduction. The right strategy can help you optimize your gift for taxes and increase the impact it has on the causes you care about.

Strategy ideas to consider:

  • Give long-term appreciated securities rather than cash.
  • Consider a bunching strategy from year to year. That means concentrating deductions in a single year, then skipping one or two years. 
  • Establish a donor advised fund.  A donor advised fund is like a personal endowment fund.  It allows you to receive an immediate tax deduction for multiple years of future giving. 
  • Consider using a charitable donation to offset the tax costs of converting a traditional IRA to a Roth IRA.
  • Think about donating complex and illiquid assets like private company stock, restricted stock, real estate, alternative investments, bitcoin, or other long-term appreciated property directly to the YMCA.
  • Over 72? Maybe a qualified charitable distribution (QCD) is for you.  Donating directly to the YMCA from your IRA can fulfill your charitable intent and satisfy your required minimum distributions (RMDs) without any tax consequences.

Once you’ve identified the giving strategy that works best for you, please sit down and give some thought to the questions posed here:

7 Questions to Help Maximize the Impact of Your Philanthropy

  1. How does giving support your values?
  2. How can you give during your life and after you’re gone?
  3. Which causes are closest to your heart?
  4. What represents success in that cause?
  5. What will it take to achieve success?
  6. What gift can you give that will have the greatest impact on the road to success?
  7. How can you incorporate philanthropy into your financial strategies to help maximize impact?

To give with meaningful impact, it all starts with having the right strategy and the right plan.

If you’re considering a donation, please give Kyle Carroll, YMCA of Austin Development Director, a call at 512-322-9622 x103 or email her at Kyle.Carroll@AustinYMCA.org She’d love to hear about your goals and motivations and to help you create a personal giving strategy for maximum impact and optimal financial wellness.

Richard Archer, CFA, CFP, MBA is the founder of Archer Investment Management, an Austin, Texas-based firm that specializes in financial planning for Austin technology professionals, and a member of the YMCA of Austin Metropolitan Board of Directors. The firm was founded in 2008 and is a member of NAPFA, the Austin Financial Planning Association, and the CFA Institute. Archer is a Certified Financial Planner (CFP) and a Chartered Financial Analyst (CFA). He earned his bachelor’s in economics with honors from The Wharton School and his MBA from the University of Texas at Austin.

 

All opinions expressed here are those of their authors and/or contributors and not of their employer. Any questions or concerns regarding the content found here may be sent to info@austinymca.org

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