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Five examples of charitable giving options

Written by Eric Ebbert CFP®, MBA

On July 11, 2021

Charitable giving is a twofold benefit. First and foremost, it provides support for people or a cause that is close to your heart. Secondly, it can provide tax benefits that can lower your tax liabilities.

If charitable giving is new for you, you might be wondering what kind of options are eligible for tax deductions and go to support causes you care about. While there are many options and we cannot determine what causes you may be most interested in supporting, we can give you an idea of the types of categories that are eligible for charitable giving tax deductions.

Examples of charitable giving options

  1. Cash gifts — Cash contributions are the simplest and most straightforward form of charitable giving. You can claim tax deductions equal to the amount of cash you donated to an eligible 501(c)(3) organization, although you must subtract the value of any goods or services you received in return. Generally, you can deduct up to 50% of your adjusted gross income (AGI), but in 2021 you can deduct up to 100%.
  2. Donor-advised funds — A donor-advised fund is a gift of a nonrefundable amount of either cash or securities to an eligible nonprofit of your choice. Gifts of this nature help support the cause you believe in and may also give you a voice in how your funds are used by the organization.
  3. Real estate gifts — Do you own property you no longer use? Selling the property would likely come with a large tax bill and may raise you to a higher tax bracket. Donating the property to an eligible nonprofit can be a great way to transfer the property while keeping your tax liabilities at a minimum.

    Additionally, you can set up an estate plan to gift your home, or other real estate, once you have passed away. This kind of estate can lower your estate taxes now.
  4. Stocks — Giving stocks as a charitable contribution offers two advantages:
    • First, you are not liable for capital gains taxes on the stock since you are not selling it.
    • Second, if you have held the stock for over a year and its value is greater than its cost at purchase, then you are eligible for tax deduction up to the amount of the current market value of the stock.
  5. Trusts — You can establish a trust for charitable giving. You transfer assets into the trust and donate a stream of income from the trust into a charitable organization each year. Contributions from a charitable trust are eligible for immediate deductions based on the value of the income donated to the charity.

    Leftover funds in the trust can be distributed to beneficiaries or held within the trust for the future. This approach is beneficial to your heirs and also the charity, which receives a constant inflow of cash from you. However, trusts require constant administrative management, which can be more expensive than you may wish to handle, making it a better option for wealthy individuals.

Conversely, you can set up a trust that will pay you income for the rest of your life with the remainder going to the charity.

Talk to a ProVise CFP® professional about your charitable giving options

At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about your charitable giving options? Contact ProVise today to schedule a complimentary consultation.

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