End of Year Giving Strategies for 2020
- Giving gifts of cash. This is a good starting point. Remember this year, through the Cares Act, you can donate up to 100% of your adjusted gross income (AGI). Individuals who plan on taking the standard deduction can donate up to $300 and receive an above the line deduction. These changes are only for cash gifts to qualified charities and do not include contributions to private foundations, donor advised funds, or gift accounts.
- IRA Charitable Rollover. Qualified Charitable Distributions (QCDs) are still available in 2020 even though Required Minimum Distributions (RMDs) are not required this year. You do not have to wait until you are 72; the new RMD age signed into law with the Secure Act. If you are 70 ½ and older you can transfer up to $100,000 annually from your IRA to benefit most types of charitable funds, except for donor advised funds and gift accounts.
- Gifts of Appreciated Stock. One of the easiest and most cost-effective ways to give. By donating a stock gift directly to the Community Foundation you avoid paying capital gains and take a higher charitable deduction.
- Gifts of Grain. Transferring ownership of grain to the Community Foundation enables you to give without incurring taxable income on the sale of the commodity. You may even be able to deduct the expense of producing the crop.
- Contributions to a Donor Advised Fund (DAF) and Bunching. This is a giving vehicle in which you can take an immediate tax deduction for a gift and make grant recommendations to your favorite charities over time. You can also utilize a DAF by bunching contributions typically made over two to three years into a single year so that you can reach the threshold to itemize and qualify for a maximum deduction.
- Pledges. Many nonprofits conduct capital campaigns to seek major gifts by offering a “pay as you go” structure. You can select the giving level, make an initial gift, and then pay the remaining amount at intervals, often over three years. It allows you to make a larger gift by budgeting it along with your regular expenses. Speak to your favorite charity about making a pledge gift to satisfy your giving wishes.
There are many ways to make charitable contributions. Please consult your professional advisors to choose the most appropriate tax strategy for you, as this is another way you can add value to making the most of your donations.