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September 25, 2023 / Matt Berger
How you give is as important as what you give

How you give is as important as what you give

When significant assets are involved, did you know that how you give is just as important as what you give? With the right financial approach to your giving objectives, there could be significant tax advantages for you and the charity. This overview may help you understand the most common giving options.

Appreciated Asset Giving

If your 501c (3) charity has an investment or brokerage account available, it might be advantageous for you to donate appreciated assets instead of giving cash. The 501c (3) charity can accept your shares of stock and then sell them. The charity won’t have to pay the normal capital gains taxes that you would’ve had to if you sold them. Tip: Take the equivalent cash you would have gifted to buy new shares at a higher cost basis with reduced capital gains tax liability.

Endowment Effort Giving

Charities with significant investment assets might have endowments established by prior donors. These endowments might offer to support general charity operations, or have specific purposes, such as offering scholarships or other defined objectives. Donating to the organization’s endowment can be an efficient way to provide long-term charitable support.

Estate Plan GivingGraphic of a man and woman looking at large boxes with coins, stars, hearts, and checkmarks coming out of them.

A donor often chooses to benefit local charities through an estate plan, where assets are given through a will when the donor dies. These gifts are a matter of public record but do offer recognition benefits to the family of the deceased.

Minimum Distribution Giving

Donors who are age 70.5 or older can take advantage of Qualified Charitable Distributions that are paid directly from the donor’s IRA to a qualified charity. This strategy allows you to donate your Required Minimum Distributions and still retain a tax benefit for that gift even if you cannot itemize deductions.

Charitable Trust Options

When significant assets are involved, a charitable trust can be a great option to realize an objective – while the donor is still living or at death. These types of trusts can offer significant tax-deductible and capital gains benefits, as well as possible living recognition for the donor.

·         Charitable Remainder Trust – Assets are placed into the trust, and the donor retains income created by the assets during life or for a set period of time.

·         Charitable Lead Trust – Assets are placed into trust, and income generated benefits the charity for a set period. Then the residual amount of the trust is passed on to beneficiaries, with reduced taxable estate impact.

Private Foundations

A private foundation allows the donor maximum control over the granting of gifts and can provide an enduring family legacy into perpetuity. These can be used in conjunction with charitable trusts and estate plan giving.

To help determine which giving options are ideal for your personal situation, contact your financial advisor.

Matt Berger is an Investment & Trust Services regional market manager for F&M Trust.

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