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Trends in Fashion & Finance 11.10.2016

"Charitable donations are a terrific addition to your own financial plan. They will make you feel good while they also qualify you for tax deductions come April 15."

A How-To for Philanthropic Giving

Donating your time to a charity about which you are passionate is a wonderful and fulfilling activity that can change your life. Financial donations, however, are the lifeblood of charities. They are also a terrific addition to your own financial plan as they will qualify you for tax deductions that will reduce your liability come April 15.

Thinking about giving? Start here:

Consider what kind of charity you are most interested in donating money to and then do your research. You want to make sure that your charity is a tax-exempt 501c3. Also, give your money to financially responsible charities. These charities will focus your cash on their cause, not their internal fundraising and administration fees. A 35%/65% administration to charity ratio (or better!) is usually an acceptable guideline.

Then, consider what “tax year” you want your charitable donation to count towards. You will want to make the donation and receive a receipt within the appropriate calendar year. You can donate via your credit card, (a great way to earn miles!)

Check with your employer since some employers will match donations. It’s nice to double your contribution and make a greater impact.

You can give cash, but also consider giving securities. You can receive a tax deduction on the full market value of a donation — real estate or stocks. And income tax will be waived all together if the asset is sold by the charity. Certain rules apply based on the asset. Please review your ideas with your tax professional.

Finally, you can consider a Donor Advised Fund. That is a fund that has been developed to collect donations and allocate them to a list of charities that work under their umbrella. You can gift cash or securities and the Fund will allocate your donations accordingly.

As we head into the season of giving, you will have fun knowing how much you helped both the charity AND your own bottom line, too!


This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
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