When people focus on helping others, they receive a multitude of benefits. A study from the University of Buffalo recently found a link between helping others and the potential for a longer lifespan. An online survey by United Healthcare revealed that those who volunteer have less trouble sleeping, lower anxiety, increased confidence and empowerment, improved friendships and a sense of control over chronic conditions.
When it comes to donating our financial resources there are a vast array of mechanisms to donate from the very basic to more complex strategies listed below..
Write a check. This is one of the easiest ways to gift, especially for those who give sporadically to a limited number of charities.
Gift highly appreciated securities. Doing so means you’ll receive an immediate tax deduction and can help you avoid paying capital gains tax on the appreciated portion of their value. Gifts also have the potential to reduce future estate taxes.
Donor-advised funds (DAFs). Think of this as a charitable checking account. DAFs combine the ease of direct giving with the benefits of a private foundation – with less work and time commitment. Because the funds are sponsored by a charitable organization, donors avoid the cost and upkeep of creating a foundation, but still have a hand in the grant-making decisions and can even name the fund itself. To get started, you make an irrevocable contribution (e.g., cash or marketable securities) to the fund. You take an immediate tax deduction, subject to income limitations; the fund sells and reinvests the assets, and you help direct when and how the proceeds are used, often with a few simple clicks online.
Volunteering. Donating your time can give you an insider’s view of the organization, its people and practices. Plus, it feels good to give back.
Charitable remainder trusts. A significant step up for serious donors, this popular, irrevocable trust allows you to donate an asset, which the trustee will sell and reinvest the proceeds in an income-producing portfolio. You then receive the tax deduction, as well as a percentage or fixed amount of income. When you pass away, the remaining funds go to the designated charity.
Charitable lead trusts. As with the CRT, you gift an asset which then funds a portfolio, but the CLT reverses the payout order. The charity receives the annual (or lead interest) income for a set number of years; afterward, the remainder passes back to you or other designated beneficiaries.
Gifting life insurance. If you have a policy that is no longer needed for its original purpose, you can use it to maximize a charitable gift and minimize exposure to estate taxes by transferring ownership to a charitable organization or naming the organization as beneficiary. There are other strategies as well. As a CERTIFIED FINANCIAL PLANNER™, I have assisted our clients over the years with their charitable endeavors to make a lasting difference in the lives of others with their gifts. This has been fulfilling to see over time how prudent wealth management can have the ability to lead to the generous giving of our clients and can result in a lasting impact for individuals, organizations and the world at large…
Charitable gift annuity. This is a simple contract between a donor and a qualified charity. The donor contributes cash or assets and is entitled to a charitable tax deduction (subject to income limitations) for a portion of the donation. The charity agrees to pay a fixed sum to designated recipients annually. Any remainder reverts to the charity.
Sources: greatergood.berkeley.edu, psychologytoday.com
You should discuss any tax or legal matters with the appropriate professional. Raymond James advisors do not render advice on tax or legal matters. Please be aware that there may be substantial fees, charges and costs associated with establishing a charitable remainder trust.The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Tom Fleishel and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice.