Angela Alvig, CPA

Gratitude and Planning Your Giving Strategy

Published November 20205 minute readInsights from Angela Alvig

Because Thanksgiving ushers in the “season of giving”, we wanted to take time to write about gratitude and philanthropy and share some important things to consider as you think about charitable giving, especially at year-end.

As we get ready to close the books on a challenging year filled with unexpected stresses and challenges, we would be remiss not to also reflect on the year’s unexpected blessings. Many of us enjoyed more time with loved ones as we worked from home or participated in distance learning. Others may have a new sense of gratitude for health and a renewed intention to build and maintain healthy habits.

Giving is a natural expression of our gratitude. However, when it comes to your family’s charitable giving, it can be hard to know where to give or how to go about it. Here are some helpful ideas for your family to keep in mind as you determine your giving strategy:

    • Utilize “bunching” of charitable gifts to maximize tax benefits. The standard deduction has increased in recent years, causing many people to no longer achieve the itemized deduction level.By consolidating gifts that you would have otherwise made over a few years into one year, you can itemize your deductions in the “bunching” year and achieve more benefit from the standard deduction in the other years.
    • Save on capital gains tax by giving appreciated stock instead of cash.
    • Use your IRA. While the CARES (Coronavirus and Relief Economic Security) Act waives the 2020 required minimum distribution (RMD), you can still choose to take a distribution and transfer it directly to charity. You may also consider naming a charity (or several charities) as a beneficiary of your IRA after your death.Leaving your IRA to a charity and other types of assets to your family can be a tax efficient way to achieve your goals but should be carefully considered as part of your overall plan.
    • Give up to 100% of your adjusted gross income (AGI) in 2020, for cash gifts. The normal limit for cash gifts to public charities is 60% of AGI, but this percentage was raised for 2020.
    • Set up a Donor Advised Fund to receive your charitable gifts.This allows you to decide at a later which charities you would like to benefit with your gift. If you have greater wealth, you may want to set up a Family Foundation.
    • Get the whole family involved. Discussions around distribution of Donor Advised Fund or Family Foundation assets to charity are a great reason to have family meetings and begin educating children about financial matters. However, you don’t have to have a formal meeting to encourage family involvement.Simply ask your children where they think your family could make a difference or who they would like to help. When children grow up in a family that talks about generosity and charitable giving, they grow up empowered, knowing that they can make a difference in their communities and in the world.

If you’d like to discuss your year-end charitable giving, we would be happy to set up a time to talk. Connect with us here.  Send us your questions via email and we will get back to you or call us at 612-203-2718.