Do you need to simplify your charitable giving?

Do you need to simplify your charitable giving?

by on June 11, 2014

Whether you are still in the accumulation phase or are in the preservation phase of your retirement years, charitable giving can be a rewarding practice throughout your life. As Winston Churchill said, “We make a living by what we get but we make a life by what we give.” However, charitable giving can get complicated, especially if you give directly to multiple charities or if you have a complex tax profile. One way our clients simplify their charitable giving is to use a donor-advised fund.

Donor-advised funds can be set up quite easily. These funds, also called accounts, are offered by public charities. Charities that our clients use include Schwab Charitable and the National Christian Foundation (NCF), both of which are among the top five largest public charities that offer donor-advised accounts. Here is how it works. You establish a donor-advised account with a public charity. Let’s use NCF in this example. Your account is assigned a unique account number, and to make it more meaningful, you are allowed to give your account a customized name. If your last name is Smith, you might call it the “Smith Family Giving Fund.” Rather than writing multiple checks every month to the many charities, churches, missions, and foundations that you support, you write only one check to NCF and specify on the memo line of the check that it is to be deposited into your donor-advised account. Since your check is payable to a public charity, the gift may be itemized (subject to certain limitations) on your income tax return, and the value of the gift will be removed from your taxable estate. In addition to cash, you may also donate stocks, bonds, mutual funds, and other non-liquid assets. Giving appreciated assets is a great way to avoid paying taxes on the appreciation AND still get the income tax deduction for the full value of the gift.

Now the question is, how do you get the money in the “Smith Family Giving Fund” to the charities you support? The process is very easy. As the donor, you advise NCF how to administer your account. You give them a list of all the charities you want to support. You tell them how much and how often you want to send checks from your account to those charities. NCF does all the work, sending the checks along with customized cover letters, which can be as explicit or anonymous as you desire.

Many people set up donor-advised accounts to create an ongoing legacy of giving for themselves and their family. Additional deposits can be made at any time by anyone in the family. Another advantage is that the funds don’t have to be distributed right away. The donated funds may be invested within the account, and even professionally managed by PlanFIRST, in order to grow the account value for potentially more giving in future years. This invested account balance can become a legacy for giving in the next generation of your family. In order to nurture a life of giving in your children and grandchildren and to prepare them for the legacy you have established, consider hosting an annual family meeting at which everyone can suggest at least one charity to which gifts can be distributed. Remember Churchill’s words, “We make a living by what we get but we make a life by what we give.”

Do you need to simplify your charitable giving?

by on June 11, 2014

Whether you are still in the accumulation phase or are in the preservation phase of your retirement years, charitable giving can be a rewarding practice throughout your life. As Winston Churchill said, “We make a living by what we get but we make a life by what we give.” However, charitable giving can get complicated, especially if you give directly to multiple charities or if you have a complex tax profile. One way our clients simplify their charitable giving is to use a donor-advised fund.

Donor-advised funds can be set up quite easily. These funds, also called accounts, are offered by public charities. Charities that our clients use include Schwab Charitable and the National Christian Foundation (NCF), both of which are among the top five largest public charities that offer donor-advised accounts. Here is how it works. You establish a donor-advised account with a public charity. Let’s use NCF in this example. Your account is assigned a unique account number, and to make it more meaningful, you are allowed to give your account a customized name. If your last name is Smith, you might call it the “Smith Family Giving Fund.” Rather than writing multiple checks every month to the many charities, churches, missions, and foundations that you support, you write only one check to NCF and specify on the memo line of the check that it is to be deposited into your donor-advised account. Since your check is payable to a public charity, the gift may be itemized (subject to certain limitations) on your income tax return, and the value of the gift will be removed from your taxable estate. In addition to cash, you may also donate stocks, bonds, mutual funds, and other non-liquid assets. Giving appreciated assets is a great way to avoid paying taxes on the appreciation AND still get the income tax deduction for the full value of the gift.

Now the question is, how do you get the money in the “Smith Family Giving Fund” to the charities you support? The process is very easy. As the donor, you advise NCF how to administer your account. You give them a list of all the charities you want to support. You tell them how much and how often you want to send checks from your account to those charities. NCF does all the work, sending the checks along with customized cover letters, which can be as explicit or anonymous as you desire.

Many people set up donor-advised accounts to create an ongoing legacy of giving for themselves and their family. Additional deposits can be made at any time by anyone in the family. Another advantage is that the funds don’t have to be distributed right away. The donated funds may be invested within the account, and even professionally managed by PlanFIRST, in order to grow the account value for potentially more giving in future years. This invested account balance can become a legacy for giving in the next generation of your family. In order to nurture a life of giving in your children and grandchildren and to prepare them for the legacy you have established, consider hosting an annual family meeting at which everyone can suggest at least one charity to which gifts can be distributed. Remember Churchill’s words, “We make a living by what we get but we make a life by what we give.”


Do you need to simplify your charitable giving?

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