Let giving be about you, not holiday rush
Earlier this summer, Charitable Foundation of the Islands (CFI) Executive Director Dolly Farrell asked me and my colleagues to present a seminar to island nonprofits, as well as a webinar to donors of CFI and our trust company clients, to help them prepare and develop a year-end giving plan.
The idea was to get ahead of the rush because I don’t know about you, but every time I feel pressure, I don’t make the best decisions. Or maybe I do but the pressure of making the decision leaves me in doubt second guessing myself and experiencing maybe a little buyer’s remorse.
We’ve worked hard for our money and spending it, or giving it away, is no small matter.
– It reflects our own personal desires and needs.
– It expresses our values and in philanthropy it’s much more than a transaction.
– Sometimes it creates a commitment to an organization that will grow to rely on this annual support for sustainability.
Effective and meaningful giving need not be a fourth quarter activity, but alas, here we are. We suggest preparing a strategic plan to not only help the cause but make giving the most meaningful and efficient for the donor. This is not a rush job, and you still have time!
You’re not alone if you haven’t given or planned your giving yet this year. As evidence, 26-50% of funds raised for nonprofit organizations take place in the last quarter of the year. Half of nonprofits receive most of their annual donations during the last three months of the year with 31% of that in December. And shockingly, the most money is given in the last three days of the year. What!?
Let’s not forget the urgency of need and the immediate impact we can have by being nimble in our giving strategy. Many nonprofits operate year-round addressing pressing issues such as hunger, homelessness, and disaster relief. Timely support can put your contribution to work right away and make an immediate difference in people’s lives.
Then why do we put off the act of giving? Or rather put off the decision of what to give and to which organizations? Is it just habit? Here are some possible reasons:
– Many investors who are philanthropically inclined say they like to let their money grow in their accounts, hoping for the year-end rally so they can give more. Makes sense and this year has been no exception to large capital gains, whether or not realized, by many … but knowing where to give long before the pressure of year-end is most prudent, leaving the amount of the donation the only variable.
– Others express that they don’t have the time and prefer to wait until year-end. Donors are human after all.
– Some have discovered “bunching.” If you’re teetering between the standard deduction and a higher itemized limit, or if you’re already exceeding the standard deduction, it’s worth considering donation “bunching,” a popular tactic since the 2017 Tax Act. The goal is to time your charitable contributions strategically (and possibly your property tax payments), making sure that in a given year, your combined donations/deductions surpass the standard deduction. This might mean skipping donations one year and doubling them the next, resulting in a higher tax benefit. How much you can deduct may have some limitations but worth finding out if it applies to you. For more information, visit https://www.irs.gov/credits-and-deductions-for-individuals. (Note: When bunching, giving through a Donor Advised Fund is an effective way to take the tax deduction in that year, but spread your giving out evenly over two years — also eliminating the pressure of giving before Dec. 31.)
– Many use their RMD: If over 70 1/2, donors can give up to $105,000 from their RMD as a qualified charitable distribution (QCD) and not incur any taxes as long it is given directly to the nonprofit. A QCD can be particularly beneficial for donors who do not itemize and instead file the standard deduction.
– QCDs can also be made directly to one or more qualifying charities, or to a charitable remainder trust or charitable gift annuity for a one-time distribution of up to $53,000.
All in all, giving should be about the donor and their interests and philanthropic concerns, not just inspired by a year-end appeal or the pressure of year-end campaigns.
Time’s up! You need to act now to look for the charity or charities that will make your year-end giving pack the biggest punch in alignment with your values.
You can view the webinar, as well as the seminar slides, online at https://www.charitablefoundationoftheislands.org/give.
Carolyn Rogers is senior vice president and wealth services advisor for The Sanibel Captiva Trust Company.