It is a time of year that for many inspires gratitude and generosity. At the Community Foundation of the Holland/Zeeland Area, we are grateful for the community we serve and the many generous individuals who give back with their time, talent and treasure to make this place we call home so special. If you are considering how you will make a difference this year, consider these tips to make your charitable dollars go further.
Give Appreciated Assets
It’s been another year of strong investment markets. If you have stock, bonds or mutual funds you’ve owned for at least a year and have appreciated in value, it is likely a better asset to donate than cash. If you donate the appreciated asset as a gift to charity you will avoid paying capital gains tax while getting a tax deduction on the full market value.
For example, in 2017 you bought shares of XYZ Corporation for $100 per share. Today, those shares are worth $200 per share. If you sell the share, you’ll pay capital gains tax on the $100 difference between the sale price and purchase price. If you donate the share, you will avoid paying the capital gains tax and may take a tax deduction — if you itemize — for the $200 donation.
Pro tip: You may also donate complex, non-publicly traded assets to charity including private company stock, real estate, or other appreciated property.
Open a Donor Advised Fund
As the fastest growing giving vehicle in the nation, Donor Advised Funds are a popular tool to organize your giving. Perhaps you want to gift an appreciated stock, but you want to support several organizations and don’t want to initiate multiple stock gift transactions. You can make one gift to a Donor Advised Fund, receive one receipt for your gift, and advise on which organizations the fund will support. If you’d like to transfer shares when the value reaches a certain level but want extra time to decide which charities to support, you could give the stock to a Donor Advised Fund. You can take a charitable deduction when you give the shares, but you have time to decide which charities to support.
Pro tip: You can bundle multiple years of giving into one year with a Donor Advised Fund to exceed the standard deduction. You will receive a charitable deduction at the time you donate to the fund, and can advise on the funds over several years so the charities you care about receive the sustainable support they depend on.
Over 70 ½? Consider an IRA QCD
If you are 70 ½ or older and have an Individual Retirement Account (IRA), you are able to donate as much as $100,000 each year as a Qualified Charitable Distribution (QCD) to charity. A QCD may satisfy all or part of your Required Minimum Distribution effectively lowering your Adjusted Gross Income for that year.
Pro tip: An IRA QCD may not be donated to a Donor Advised Fund, however, you may establish a Designated Fund naming one or more charities you wish to support and at what schedule (lump sum or over a period of time).
We suggest that you consult with your financial, tax or legal advisor to discuss the giving strategies that best align with your financial and charitable goals, then give the Community Foundation of the Holland/Zeeland Area a call and we will work with you and your professional advisor(s) to help employ smart giving strategies.
To learn more about how the Community Foundation can help you achieve your charitable goals this giving season, contact Colleen Hill, Vice President of Development and Donor Impact at 616–994–8853 or via email.