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Countdown to Year-End Giving

Countdown to year-end giving
 

Now is the perfect time to review your year-end giving strategy, especially the continuation into 2021 of tax provisions related to the COVID-19 pandemic, provided for in The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act. Spending a few minutes thinking about both your charitable and financial goals can give you an advantage in both. Here are ten ideas to help you think about year-end giving.

10. Increased Deduction Limits

The enhanced charitable deductions provided for in the CARES Act for 2020 are extended to 2021. The Act allows taxpayers who itemize their deductions to deduct 100 percent of your adjusted gross income with gift(s) of cash to a qualified charity (other than donor advised funds or private foundations) for 2021, as allowable in 2020. Keep in mind, the Foundation offers other fund types that do qualify for this 100 percent deduction.

If you are not itemizing your deductions, you may still take a charitable contribution of up to $300, and new for 2021, $600 for married filing jointly filers.

9. Donor Advised Funds

Donor Advised Funds (DAFS) are often the best way to both simplify your giving and amplify your tax benefit, and can be opened with a minimum of $10,000. Want to hear from an enthusiastic Donor Advised Fundholder? Former TCF Chair, Ryan Schwartz, is a fan.

8. Use Appreciated Securities

You can establish/add to any fund using cash, of course—but if you give shares of appreciated public stock or bonds that you’ve had more than a year, you will gain a tax advantage. Instead of triggering the capital gains tax, you will receive a charitable deduction based on the asset’s fair market value today, up to 30% of your adjusted gross income. You can carry the deduction forward for up to an additional five years.

7. Put Your Non-Cash Assets to Work

Do you have appreciated stock, mutual funds, private company or restricted stock, retirement assets or certain tangible personal property? Often, we can use these non-cash assets to fund your charitable giving. The key is to start now; these transactions can take longer to convert.

6. Consider Charitable Contributions Directly from your IRA

The required minimum distribution (RMD) waiver provided for in the CARES Act has expired. Hence, anyone age 72 or older as of December 31, 2021 must take their RMD by year-end to avoid a penalty (unless this is your first RMD, in which case you have until April 1, 2022.). As such, making a qualified charitable distribution from your IRA (for those over 70 ½) may make sense for you. Think about adding to or establishing a designated fund here to support your chosen nonprofit(s), or take the opportunity to support our work by making a gift to our Community Endowment Fund or a particular Field of Interest fund. Note RMDs may not be deposited into Donor Advised Funds.

Keep in mind, additional benefits may be gained when you consider the increased deduction for cash contributions in conjunction with IRA distributions in excess of $100,000, the limit for qualified charitable distributions of IRA assets.

5. Give the Gift of a Designated Agency Endowment Fund

There are many worthy nonprofits that struggle with resources. By establishing a Designated Agency Endowment in their name, you can be assured that The Community Foundation will steward a specific portion of your fund assets to your named agency, along with your instructions, each year in perpetuity.

4. Start a Field of Interest Fund or an Unrestricted Fund

If you’re interested in improving Northeast Florida, but are uncertain about which specific nonprofits to recommend, consider a Field of Interest Fund or an Unrestricted Fund. Both put The Community Foundation’s seasoned grantmakers in charge of decision-making, either from your stated area of interest or using their discretion regarding the greatest needs/opportunities.

3. Update Your Beneficiaries

You can update the beneficiaries on your bank accounts, retirement accounts or insurance policies at any time, but it’s a good idea to review them at least annually. If you choose to, you can use this opportunity to add The Community Foundation or any nonprofit as a beneficiary—it’s the simplest way to leave a planned gift.

2. Think About Estate Planning

As we near the end of another year, it’s often a time of reflection about the arc of our lives. It may be a good time to think about your charitable legacy and talk to your professional advisor about your estate plans. Charitable gifts will be excluded from your taxable estate, and we can work with you and/or your professional advisors to identify what charitable vehicles might be appropriate.

1. Talk with Your Family About Your Philanthropic Values

As Andy Williams sang, “…when loved ones are near, it’s the most wonderful time of the year.” It may also be the perfect time to articulate what you value in your charitable giving. Your loved ones may know that you give generously and to whom, but they may not know why. Enlighten them! If charitable giving is important to you, share your motivation with your family members and the fulfillment that your gifts bring. If you’d like to bring them into your charitable giving process, or help them on their own journey, we have some great suggestions for family philanthropy.

 

The Community Foundation for Northeast Florida is not engaged in providing legal or tax counsel. For advice or assistance in specific cases or whether to make certain a contemplated gift fits well into your overall circumstances and planning, the services of an attorney or other professional advisor should be obtained.

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