December 6, 2019. By Courtney Summa:

With the end of the year approaching, about a third of the year’s annual giving takes place. It’s wonderful to see so many people supporting worthy charitable organizations to help make a difference. Whether you support our veterans, the environment, animals, cancer research, or our fellow man, there are many charities that can use the help. When individuals consider donating to a cause, many typically think about writing a check. This fulfills the need, but leaves many donors chasing after receipts, letters, and voided checks come tax time to organize their much-deserved deductions. Investors, however, should be aware of the many options available to them which can not only make an impact, but also provide tax benefits. Earlier this year, we had the pleasure of hosting Neal Myerburg as he presented “The New Tax Laws: Partnering with Charity to Reduce Taxes and Increase Income” to discuss these options.

Neal spoke about many philanthropic strategies including the use of charitable gift annuities and testamentary planning. He placed special emphasis on how these can best be used considering the new tax laws. His presentation was very interesting, and we thank the folks at Ben Gurion University for sponsoring this event. Click Here to view the slides from this presentation.

In addition to those mentioned above, charitable efforts can also be maximized by utilizing a donor-advised fund (DAF).

What is a Donor Advised Fund? Think of it as an investment account used solely to support the charitable organizations that are most important to you. When a contribution to the account is made, you are eligible for a tax deduction in that same year. While the contribution is sitting in the account waiting to be sent to a qualified public charity, the funds can be invested and grow tax-free. Donor-advised funds are currently one of the easiest and most tax-advantageous ways to give in the United States. Additionally, by using a DAF, you can contribute assets other than cash. Generally accepted assets include:

  • Cash equivalents
  • Publicly traded securities
  • Certain restricted stock
  • Mutual fund shares
  • Cryptocurrencies
  • Private equity and hedge fund interests
  • Real estate
  • Complex assets such as C and S-corp shares

Since the account holder is eligible for the tax deduction for the year that the contribution is madei, this is a great planning tool, especially in years of high income, taxable gains, or windfall events when you may which to take advantage of bunching donations for greater impact and deductions. The DAF allows the funds to potentially grow based on your investment strategy while you decide where to make your donation, potentially maximizing your impact without rushing into a decision. It is recommended to work with a financial advisor to ensure that the funds are invested prudently for your charitable goals, and who can coordinate with your CPA to ensure that the contributions align with your tax strategy.

iPlease note that we recommend DAF’s for 2019 be established by December 13th to allow for the completion of all operational items prior to year-end.