Being thankful is often the aspect of Thanksgiving that receives the most focus. While being thankful daily is important, we also want to talk about giving. Americans are generally generous people. Sixty to seventy percent of Americans make charitable contributions each year, while 90% of affluent Americans give regularly to charities each year. While most people give “cash” gifts from their current income, there are other ways to give that you may not have considered before.
Charitable Giving Methods (other than cash!)
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- Gifting of Appreciated Securities
- Legacy Giving
- Donor Advised Funds
- Qualified Charitable Distributions
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Gifting of Appreciated Securities
Research shows that 10% of all US wealth is held in cash, but 80% of all charitable giving is done in cash. The other 90% of wealth is held in non-cash assets, but only 20% of charitable giving is through asset giving.
What is asset giving and how do you give those assets to charity? Asset giving is the gift of a stock, mutual fund or real estate to a charity. This is most often done when you paid a much lower price for the asset than it is currently worth. The gifting of these assets benefits everyone. The giver can deduct on their tax return the full current value of the asset. Because the asset is never sold before it is gifted, the giver does not have to pay income tax on the difference between the purchase price of the asset and its current market value. The charity receives the full current value of the asset, usually sells it immediately, and because they are not subject to income tax, they do not pay taxes on the amount either. Everyone wins!
Legacy Giving
This is giving done from your estate through your wills or trust. This is often the most overlooked and underutilized giving opportunity. Research shows that 90% of affluent Americans are engaged in charitable giving, but only 10% have included charitable beneficiaries in their estate documents. You can name any 501(c)3 charity as a beneficiary of a portion or all of your estate. Legacy giving can be especially useful if you are concerned about leaving too much wealth to the next generation or do not have direct heirs that you wish to inherit some or all of your wealth.
Other Useful Strategies for Gifting
Donor Advised Fund
A Donor Advised Fund is a separate investment account that you set up to benefit charities over a period of time. This strategy can be helpful in a couple of different ways. First, you can gift an amount larger than you would like to distribute in the current tax year and still deduct the entire gifted amount on your current tax return. Secondly, because the IRS now views that donation as a “completed” gift for tax purposes, you have time to distribute the funds in the amounts and intervals that you would like. For example, you could give $100,000 to a Donor Advised Fund in 2023, but leave the money in the account and not make distributions until you have identified where you would like the money to go. There is no time limit on gifting and no “rules” on how much each gift from the Donor Advised Fund can be. A Donor Advised Fund can be funded with both cash and appreciated assets, so two of the above gifting strategies work for funding these!
Qualified Charitable Distributions
If you are age 70 or older and have an IRA, you have likely heard us mention this one! Qualified Charitable Distributions, or QCDs as they are known in the industry, are a very useful tool for both charitable giving and for tax planning. A QCD is when you make a distribution from your IRA directly to a charity. The amount distributed never is reported on your tax return, so the full amount leaves your IRA and no one pays taxes on it. The charity receives the funds just as if the check came directly from your non-retirement assets. QCDs can be especially useful if you do not itemize your taxes because when you do not itemize, you do not receive tax preference on gifting below the standard deduction. As a bonus, QCDs can count toward your required minimum distribution. The one caveat? You cannot make QCDs until the year in which you turn 70 years old. (Learn more about IRAs and QCDs in our Summit Chats video, “IRA or 401k?”)
If you are interested in any of these strategies, we are happy to facilitate your giving strategy!
Summit Giving 2023
In the spirit of Thanksgiving, Summit is giving back in 2023! We asked our clients to vote for their top charities, and we are giving proportionately to each of the 6 following organizations:
Camp Kesem
5 million children are coping with a parent’s cancer diagnosis. That’s 5 million children at risk of experiencing increased anxiety, emotional isolation, loss of social interest, and/or feelings of hopelessness. And that’s why, at Kesem, we are committed to creating a world where every child who has a parent with a cancer diagnosis or has lost a parent to cancer is never alone. We support these children through and beyond their parent’s cancer with free, fun-filled creative programs and a lasting community.
Feed More
Feed More is dedicated to feeding our neighbors who are food insecure across 29 counties and five cities. There is a lot of need in Central Virginia – 1 out of every 9 individuals in our service area is food insecure, meaning that more than 165,000 of our neighbors face hunger. And of that, more than 50,500, or 1 in 6 children, are not eating enough. Where there is need, we are here to help.
LifeCampUSA
LifeCampUSA seeks to mentor middle school aged young men who have lost their father due to US law enforcement or military service. At a critical and formative stage of establishing identity, values, character, and goals, these sons are left to navigate life without the crucial aid of a father. Whether their father was killed in the line of duty, a training accident or suicide, we seek to walk alongside these young men to guide them where they are at now, in life’s toughest moments and beyond.
Richmond SPCA
At all times and in every way, we are advocates for animals. We provide for their safety and comfort, strive to alleviate their suffering and work to place them in homes that provide a responsible lifetime commitment to them. We speak out publicly to promote and defend their interests. We oppose all forms of animal cruelty.
We promote spaying and neutering to achieve and retain a no-kill community. We oppose any taking of the lives of healthy or treatable animals and do not participate in such conduct ourselves. We provide services that promote responsible pet ownership and humane attitudes toward all life.
Samaritans Purse: World Medical Mission
World Medical Mission was established in 1977 to assist general surgeons who wanted to volunteer for short-term mission trips. Today, hundreds of volunteer Christian physicians, dentists, and other medical personnel work in mission hospitals and clinics around the world. We also staff a biomedical department and warehouse that provides critically needed equipment and supplies to these medical facilities.
UP RVA
UP RVA connects students from limited economic resources in the City of Richmond and Independent Schools. Knowing attendance is only the first step, UP RVA provides services that advocate, support and empower students to become successful members of their school community.
