After you complete your holiday shopping on Black Friday, I invite you to shift gears and prepare for a lesser-known day next week – GivingTuesday. GivingTuesday was created in 2012 as a way to focus on being generous and helping others during the holiday season. There are many ways to give of your time, talents and kindness. However, I want to focus on monetary giving during a year when so many have suffered financially.
Whether it’s making someone smile, helping a neighbor or stranger out, showing up for an issue or people we care about, or giving some of what we have to those who need our help, every act of generosity counts and everyone has something to give.givingtuesday.org
The timing of GivingTuesday during the holiday season is perfect if you like to do a large amount of your giving at year-end. With the tax changes in the 2017 Tax Cuts and Jobs Act, the benefits of charitable giving have changed for many taxpayers. With the increase in the standard deduction, a much smaller number of people are able to itemize their charitable donations.
Donor Advised Fund
This change encourages you to creatively make your gifts and optimize their tax-efficiency. For example, a Donor Advised Fund permits you to separate a.) When you take a deduction versus b.) When you actually deliver funds to charities. This allows you to take a Charitable Deduction in the year when it is most beneficial to you, but then actually give the money to charities in the years you feel it would be most beneficial. It is like a Charitable Savings Account.
You can bunch multiple years of gifts into your Charitable Savings Account in one year, allowing you to itemize your deductions during that year. In future years, you can make your charitable gifts out of that fund and still take the larger standard deduction on your taxes that year.
Qualified Charitable Deduction
If you are over 70½, you have an even better technique available. This technique is a Qualified Charitable Deduction (QCD). A QCD allows you to make gifts to charities directly out of your IRA. This permits you to avoid the taxes on those IRA distributions. With year-end deadlines approaching, we encourage you to contact us early in December if you are interested in exploring charitable giving strategies that are suitable for your situation.
Great opportunity to teach your children
As a parent, I use GivingTuesday as an opportunity to involve my children in philanthropy. During a season where they are the recipients of so much generosity, this offers a nice opportunity to focus on others and on ways we can give back to our community. In our family, we choose a total amount for GivingTuesday and divide that between family members. Our girls research charities and choose where their share of money is donated. In the past, they have chosen local charities that we have been very involved in as well as global charities filling a critical need. Now that they are teenagers and have some of their own money, we are adding a matching component for gifts they want to make out of their own funds.
I know from experience that non-profits have pivoted during 2020 and have found creative ways to meet their missions on smaller than normal budgets. Imagine the impact on these charities if they could exceed their 2020 fundraising goals because of our generous giving in December. While 2020 has been a challenging year, there is much I am thankful for this Thanksgiving weekend. I encourage you to carry forward the spirit of thankfulness into December and give generously on Tuesday.
As always, we are here for you. Please email or call if you want to set up a Zoom videoconference meeting or talk by phone.
Mary McCraw, CFP®
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