"Charitable Giving Account": Do I Need One?

Making a Difference: The Power of a Charitable Giving Account

Giving to charity is a great way to make a positive difference and leave a "lasting legacy".   

What is a "Charitable Giving Account"?

A "Charitable Giving Account" is an account established as part of a donor-advised fund, or DAF.  It is an irrevocable, tax-deductible contribution to a qualified charitable organization. 

You want your charitable donations to be as effective as possible when you give. Donor-advised funds are the fastest-growing charitable giving vehicle in the United States because they are one of the easiest and most tax-advantageous ways to give to charity. 

A Charitable Giving Account is an easy and convenient way to make regular donations to your favorite qualified charitable organization.   

You can make regular donations from your investment income or retirement savings without having to write a check, Venmo or Pay Pal, or setting up an online transfer. 

You can donate to multiple Qualified Charitable Organizations at once, allowing you to spread your donations out across a variety of causes. Additionally, many Charitable Giving Accounts have automatic withdrawal options, so you can set up a regular donation schedule. You can also set up the account to donate a certain amount each month, or you can adjust the amount of your donation at any time.

Donor Advised Fund (Charitable Giving Account) and Tax Deduction

When you contribute cash, securities, or other assets to a donor-advised fund, you may be able to take an immediate tax deduction. Funds in your "Charitable Giving Account", can be invested for tax-free growth, and you can recommend grants to any eligible IRS-qualified public charity. (Source: Fidelity Charitable)

With a charitable giving account (DAF), individuals are able to make donations with pre-tax dollars, allowing them to deduct the amount of their donation from their taxable income in that tax year. 

Individuals can also choose to make donations with after-tax dollars, which can be deducted in the same year, resulting in an even greater tax advantage. 

The donation made through a charitable giving account can be spread out over multiple years, allowing individuals to maximize their tax savings and still make a meaningful contribution to their chosen charity. 

Benefits

- Receive a current-year income tax deduction for any assets you contribute to your fund

- Donate appreciated assets without incurring capital gains taxes

- Make grant recommendations now or in the future

- Involve your family and build a tradition of family charitable giving

- Choose from multiple investment objectives

- Manage your charitable giving via an online portal or with your financial advisor

(Source: Bank of America)


How do I set up a "Charitable Giving Account" (DAF)?

Consult with your tax and financial advisors.  A "Charitable Giving Account" is easily established by your financial advisor, brokerage or your local bank.  

"Give"

"Establish a Giving Account and then donate cash, stocks, or non-publicly traded assets such as private business interests, cryptocurrency, and private company stock to be eligible for an immediate tax deduction. A contribution to a donor-advised fund is an irrevocable commitment to charity; the funds cannot be returned to the donor or any other individual or used for any purpose other than grantmaking to charities."  (Source: Fidelity Charitable)

"Grow"

Grow your donation in your "Charitable Giving Account", "Tax-Free".  Your donation can potentially grow, making available even more money for giving.  (Source: Fidelity Charitable)

"Support"

"You can support virtually any IRS-qualified public charity with grant recommendations from the donor-advised fund—from your local homeless shelter to your alma mater or religious institution."

Your financial institution will conduct due diligence to ensure the funds granted go to an IRS-qualified public charity and are used for charitable purposes.

(Source: Fidelity Charitable)

Gifting Assets

Many gifts are done in "cash".  When "gifting assets, rather than selling them and donating the after-tax assets, can maximize your gift and provide a larger charitable deduction."  (Source: Fidelity)

Call to Action: Manage your Donations More Efficiently

With a charitable giving account, you can manage their donations more efficiently, review your donations, plan for future donations, have a record of and track giving history. This makes it easier to stay organized and ensure that their donations are going to the causes you care about. 

Charitable Giving Accounts are a great way to make a positive difference in the world without having to worry about making regular donations. They are convenient, easy-to-use, and can be a great way to help your favorite causes.

                                        Photo: D. McCallister.  Mona Loa, Big Island, Hawaii


RESOURCES THAT MIGHT BE HELFPUL..

What is a donor-advised fund (DAF)? A simple, flexible and tax-advantageous way to give to your favorite charities.  Fidelity Charitable.  What is a Donor-Advised Fund? | Fidelity Charitable

Is a donor-advised fund right for you?  Fidelity Charitable.  Quiz: Is a donor-advised fund right for you? | Fidelity Charitable

Tax Deductible Donations: Rules for Giving to Charity. Tina Orem and Ramona Paden  NerdWallet.  Tax Deductible Donations: Rules for Giving to Charity - NerdWallet

Charitable Contribution Deductions.  Internal Revenue Service.  Charitable Contribution Deductions | Internal Revenue Service (irs.gov)

5 Things to Know About Donor-Advised Funds. These charitable-giving options offer ease and convenience for the right type of donor. Penelope Wang.  5 Things to Know About Donor-Advised Funds - Consumer Reports

Smart charitable tax strategies. Align your charitable giving with smart tax strategies and the result might include an unexpected double win: improving the world, with a potential tax break to boot.  Fidelity Charitable. Smart Charitable Tax Strategies | Fidelity Charitable


SO...What'd we miss??

Your experience with a "Charitable Giving Account"? 



Comments

Post a Comment

We welcome your comments and insights!

Popular posts from this blog

Your Healthcare: Navigating Medicare

Image
When it comes to healthcare, seniors face a unique set of challenges.  The cost of healthcare can easily exceed your budget. With the increasing costs of medical services, it can be difficult for seniors to afford the care they need.  Seniors 65 or older can sign up for Medicare. Medicare beneficiaries must pay a premium for Medicare Part B which covers doctors’ services and Medicare Part D which covers prescription drugs. The premiums paid by Medicare beneficiaries cover about 25% of the program costs for Part B and Part D. The government pays the other 75%. Medicare - Parts A, B, D Medicare can help seniors manage the cost of healthcare. Medicaid eligibility begins at age 65, providing seniors with access to healthcare services and prescription drug coverage. Medicare helps seniors cover the cost of doctor visits, hospital stays, and preventive services. However, Medicare does not cover all medical costs and may require seniors to pay for additional services. "Medicare ...
Read more

Inflation and Retirement: Preserving Your Nest Egg

Image
Is inflation eating into your retirement?  (and what you can do about it) Inflation is highest it has been for many years.  Shopping for eggs, milk, gasoline, a gallon of paint, and more - brings a reminder of the impact that inflation has had on the cost of daily living.   Individually, we cannot control inflation.  However, there are two areas that we can control: reducing expenses and increasing income.  Here are some thoughts on both: TIPS FOR REDUCING EXPENSES For many retirees - taxes, insurance, food and gasoline, home ownership are probably your highest expenses.  TAXES:  Property, income tax, and medical insurance are probably your highest expense.     Some municipalities and counties offer retirees substantial discounts on their property and vehicle tax.  Several municipalities here in Alaska offer senior property discounts - 20% or more!  Tax on first two vehicles are "tax free".  Does your municipality off...
Read more

Avoid Becoming Obsolete: Living in a Rapidly Changing World

Image
Technology is changing at an incredibly rapid pace.  As technology continues to advance, more and more things are becoming obsolete (or will become obsolete soon), replaced by new technology.  Companies must stay on top of the latest developments to remain competitive in an ever-evolving landscape.  Avoid becoming "obsolete"  Are you staying up to date on latest advancements? Embrace Technology The revolutions that will surface in years to come will continue to make profound changes.  Fortunately, new technology is designed to be helpful and easy to use.  Rather than being overwhelmed, embrace technology to discover how it can enhance and become an essential part of your daily life.  (Adapted from: "Technology in Our Life Today". My G-Grandmother, during her life had experienced travel by covered wagon and buck board, steam engine train, automobile, and airplane and the beginnings of the "space age".  Communication by letter, telegraph, ...
Read more