For many, this time of year inspires gratitude and generosity. At the Community Foundation of the Holland/Zeeland Area, we are grateful for the community we serve and the many generous individuals who give back with their time, talent and treasure to make this place we call home so special. If your clients are considering how they will make a difference this year, consider these tips to help their charitable dollars go further.
Give Appreciated Assets
If your clients have stock, bonds, or mutual funds they have owned for at least a year and have appreciated in value, it is likely a better asset to donate than cash. If they donate the appreciated asset as a gift to charity, they will avoid paying capital gains tax while getting a tax deduction on the full market value. They may also donate complex, non-publicly traded assets to charity including private company stock, real estate, or other appreciated property.
Open a Donor Advised Fund
As the fastest growing giving vehicle in the nation, Donor Advised Funds (DAFs) are a popular tool to organize an individual’s giving. Your clients can bundle multiple years of giving into one year with a Donor Advised Fund to exceed the standard deduction. They will receive a charitable tax deduction at the time they donate to the fund, and can advise on the funds over several years so the charities they care about receive the sustainable support they depend on. Learn more about DAFs at CFHZ.
Consider a qualified charitable distribution (QCD) from an IRA
If your clients are at least 70 ½ or older and have an Individual Retirement Account (IRA), they can donate as much as $100,000 each year as a Qualified Charitable Distribution (QCD) to charity. A QCD may satisfy all or part of a Required Minimum Distribution (RMDs), which are not required until age 72, effectively lowering their Adjusted Gross Income for that year. Giving early distributions before they are 72 may save taxes when they must start taking distributions. The CARES act temporarily waives RMDs for all types of retirement plans (including IRAs, 401(k)s, 403(b)s, 457(b)s, and inherited IRA plans) for calendar year 2020.
Consider giving more in 2020
The CARES Act increased the adjusted gross income (AGI) limit for cash contributions for individual and corporate donors. For cash contributions made in 2020, individuals can now elect to deduct up to 100 percent of AGI (increased from 60 percent) and corporations can deduct up to 25 percent of taxable income (increased from 10 percent).
Please note: DAFs are not eligible recipients for QCDs or qualify for the increased AGI limits, even though they are public charities. However, any other fund at CFHZ is eligible for either strategy, including establishing a designated fund.
We always suggest that individuals consult with their financial, tax, or legal advisor to discuss the giving strategies that best align with their financial and charitable goals. After that, give the Community Foundation of the Holland/Zeeland Area a call and we will work with you and your clients to employ smart giving strategies and achieve their charitable goals.
Interested in learning more?
Contact Colleen Hill, Vice President of Development & Donor Services, via email or by calling 616–994–8853.