Act Now | The Power of Year-End Philanthropy

As the year winds down, it’s natural to reflect on what truly matters, and for many, that includes giving back.

Whether your goal is to support causes close to your heart or make a lasting difference in your community, year-end philanthropy is an opportune time to do good and do it wisely.

Many people give spontaneously – a donation here, a check there. But with a bit of planning, your generosity can go even further. The right strategy can amplify your impact, align with your financial goals, and even provide meaningful tax advantages before December 31st.

Here are four ways to make the most of your charitable giving before the year ends.

1. Donating Appreciated Assets

This is the golden rule of smart giving. If you own stocks, mutual funds, or other non-cash assets (like real estate) that you’ve held for more than one year and have increased in value, you can donate the appreciated assets directly to the charity.

• Benefit 1: You receive an itemized tax deduction for the fair market value of the asset.
• Benefit 2: You bypass the capital gains tax you would have owed if you had sold the asset yourself. This double benefit makes appreciated assets the most tax-efficient gift you can make.

2.  Bunching

For many taxpayers, the standard deduction has become high enough that their charitable giving often doesn’t exceed it, meaning they lose the tax benefit of their gifts. The solution is bunching, which involves consolidating several years’ worth of charitable contributions into a single tax year to exceed the itemized deduction threshold.

3.  Donor-Advised Funds

These charitable giving accounts let you make a contribution now and distribute gifts to charities over time.

• How it works: You contribute a large sum to your donor-advised fund in a high-income year (the “bunched” donation) and receive a tax deduction for the entire amount.
• Flexibility: The money sits invested within the donor-advised fund, continuing to grow tax-free, and you recommend grants to your favorite charities over the next several years, whenever you wish.
• Legacy: A donor-advised fund offers flexibility and allows for the future involvement of family members, instilling philanthropic values in the next generation.

4. Creating a Lasting Legacy with Trusts

For high-net-worth families, complex charitable vehicles offer profound estate and income tax benefits, turning planned giving into legacy building:

• Charitable Remainder Trusts: This irrevocable trust provides you (or another beneficiary) with income for a set period. Once the term ends, the remaining assets pass to the designated charity. CRTs offer a current tax deduction and can help smooth out capital gains taxes on donated appreciated assets.
• Charitable Lead Trusts: Unlike CRTs, a CLT pays a fixed amount to a charity first for a set period. Then, the remaining assets go to your chosen beneficiaries. CLTs are powerful tools for reducing your estate tax burden while supporting a cause you care about.

Remember…

December 31 is the deadline. If any one of these strategies sparks your interest, simply click reply to this email. We’ll schedule a time to review your plan and implement ways to maximize the impact of your generosity.