Better Ways to Give to Charity

By: Abby Bennett, CFP®

It seems to me that every year the holiday season begins a little earlier. I heard this year’s first (and second, and third) rendition of “Jingle Bells” on the radio on November 1st. While I do wish the festive music would wait until after Thanksgiving – Turkey Day deserves its time to shine – I appreciate the effort to spark cheerful generosity as early as possible. Others do, too, it seems; nearly one-third of annual charitable giving occurs in December.

If you, too, plan to make substantial charitable gifts in the coming weeks, or even in future years, the seemingly easiest way to give – using cash or writing a check out of your bank account – may not be your best, most tax-efficient option. There are other ways to give that can not only further reduce taxes, but can also be a powerful tool to use for many years of gift-making. Some of these strategies include:

• Gifting appreciated securities (stocks, mutual funds)
• Directing part or all of your Required Minimum IRA Distribution (RMD) to charity (called a Qualified Charitable Distribution, or QCD) upon reaching age 70 ½
• Bunching charitable deductions using a Donor Advised Fund (DAF)
• Gifting business interests or real estate*

*Gifting business interests or real estate is complex and should be thoughtfully integrated into your overall financial plan. This type of giving, in particular, should be done with the expert guidance of your CPA and attorney.

Each of these methods can be very powerful. A dollar saved in taxes could be another dollar given to charity. As you think through your giving plans, consider what additional causes you could support by being more intentional in your strategy. Every little bit counts!

Abby Bennett, CFP® is a financial planner in Charlotte, NC. She provides financial advice to families and business owners, and specializes in financial planning for engineers and tech professionals. Click here to learn more about Abby.

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