Three Year-End Charitable Giving Ideas That Are (Almost) Never Too Late to Consider
Nov. 18, 2022
It’s inevitable. Even with the best of intentions and planning, the end of the year comes with a bit of urgency and anticipation. Some of it is the spirit of philanthropy. Many donors simply enjoy and prefer giving at year-end. Often, however, it is a combination of other factors including tax-planning, family meetings, estate planning, etc.
Whatever the reason and however late in the year the conversation starts, we’re here to say it’s (probably) not too late to consider these or other charitable giving strategies.
1. IRA Charitable Rollover
– Since becoming permanent law in 2015, the IRA Charitable Rollover has been one of the most popular and powerful charitable strategies available. Technically available to any IRA account owner over 70 ½, the case is perhaps strongest for those age 72 and older with a required minimum distribution (RMD). The IRA Charitable Rollover allows an IRA account owner to transfer up to $100,000 per year directly from their IRA to charity without paying ordinary income tax. That distribution can satisfy some or all of that individual’s RMD and can be completely tax-free.
There are exceptions. For example, a donor advised fund is currently not an eligible recipient of the IRA Charitable Rollover. However, many donors to the Community Foundation have found this tool to be useful as a way to contribute to a nonprofit’s endowment or to streamline their giving by making one distribution from the IRA to the Community Foundation, with instructions for us to split the proceeds among the charitable recipients of the donor’s choosing.
To satisfy the RMD requirement, the IRA Charitable Rollover must be issued by the financial institution by December 31st or cleared by the charity’s bank by December 31st if the check is written from an IRA checkbook.
But let’s be honest, sometimes the DAF can be the answer to last-minute planning. Whether from a year-end taxable moment or good old-fashioned procrastination, the DAF allows a donor to make an immediate charitable gift and capture the full tax benefits of the gift now, while extending the discernment process for ultimate support of charitable organizations into the next calendar year and beyond.
A DAF can be opened at the Community Foundation in as little as a few hours. If funded via check, the check must be postmarked or hand-delivered to the Community Foundation by December 31st, and if funded by appreciated securities or other non-cash assets, the asset must be received by the Community Foundation prior to midnight on December 31st.
3. Appreciated Securities – Whether contributing to a fund at the Community Foundation or directly to a nonprofit organization, a gift of appreciated securities provides an opportunity for double tax benefits. By making an in-kind transfer of appreciated stocks, mutual funds or ETFS to a charitable organization, the donor is able to skip the capital gains tax that would otherwise be due and claim a charitable tax deduction for the fair market value of the security on the day of the transfer.
About 30% of all charitable dollars contributed to the Community Foundation each year come in the form of appreciated securities. Already a simple and powerful asset for charitable giving, the Community Foundation makes it even easier by allowing donors to make one gift and ultimately support multiple charitable organizations.
The deadline for contributing appreciated securities to the Community Foundation is midnight on December 31st. To be safe, we recommend starting the transfer no later than 7 to 10 days prior to year-end.
We are always happy to help facilitate charitable conversations. Contact our team
to discuss the ways we can support you and your clients through charitable giving at year-end or any time.