How to Make the Most of Your Year-End Charitable Giving
Year-end giving does not need to be short term. There are many steps a family can take to create a long-term plan that spans the entire year instead of just the holidays, said Carol Kroch, managing director of charitable trusts for Wilmington Trust.
"Decide on an overall budget for charitable giving and decide how much should go toward the local community, a particular passion, nationally recognized charities and institutions," said Kroch. "Organizing your plan this way allows your family to sit down and make decisions about giving.
She said older generations should not assume younger generations feel the same about where to donate money so these open conversations enable young and adult children to be involved in making decisions from the start. Rather than an outright gift to an operating charity, such as a hospital or university, donors may want to consider creating a long term giving vehicle which can be funded annually, according to Kroch.
Long-term giving can also be accomplished by a restricted gift to a charity for a specific purpose, such as a scholarship at a college, or a fund to support patient care at a hospital.
"Gifts of appreciated stock held more than a year may make more tax-efficient gifts than cash, but be careful giving S Corp or closely held stock, especially to private foundations," said Kroch.
When it comes to donating collectibles, she said gifts of tangible personal property must be used by the charity for its charitable purposes in order for the donor to receive a full fair market value deduction.
And don't forget basic tax planning.
"Gifts over $250 must be acknowledged by the charity or you can lose your deduction. So make sure that your long-term plan works under the annual deductibility limits based on your AGI for each year. Run the numbers," said Kroch.
As to what 2017 might bring, Kroch said lower income tax rates may be coming in 2017. In that event, a deductible gift in 2016 may save those in a higher bracket more.
