Develop a Charitable Giving Strategy

Charity hands with moneyA frequent conversation I have with my clients revolves around their charitable giving. People want to be more intentional with their giving and want to make sure that their charitable dollars are going as far as possible. Many people feel they are not giving enough to charity.


How much can you give?

The first step is to figure out how much you want to give or can afford to give while still planning for your own goals. For some, this means the traditional tithe- 10% of your income. For others, it means you need to figure out how much you have available to give. Regardless of the approach you prefer to take, you will arrive at a number. This number is the beginning of the giving process.


Best assets to give

Next, look at your assets. In your non-retirement accounts do you have any large capital gains? With the help of your tax advisor, consider gifting appreciated assets instead of cash from your checking account. You could potentially avoid the capital gains tax on the sale of this asset as well as potentially receiving a tax deduction.

Should you use a donor advised fund?

You have options other than gifting directly to the charity. You can use a donor advised fund either through an investment firm or through a community foundation. Community foundations have the added advantage of helping to direct you to local charities by vetting them. They also offer education programs to keep you informed of where the needs are in your local community. Donor advised funds, regardless of where they reside, also allow you to donate to a charity anonymously. This means that your favorite charities potentially spend less money on mailing you and more money on their programs. Donor advised funds also allow you to make a large contribution in one year and spread the actual giving out over multiple years. They do have downsides. When you give an asset or cash to a donor advised fund, you can’t ask for it back at a later date. Also, donor advised funds tend to be a bit more expensive than the traditional mutual fund. You’ll want to weigh out the advantages and disadvantages. Be sure to consult with your tax advisor to make sure you structure this contribution in the way that is to your biggest advantage.


Consider using your Required Minimum Distributions

If you are over the age of seventy and a half, you may also want to consider giving to charities directly out of your IRA. This will help you to cover your required minimum distributions as well as potentially offer some additional tax benefits. Just be sure that you make the check directly out to the charity and that they are a qualified charity. Your tax advisor, once again, can help you through this process.


Figure out how much you can give, give the most tax advantaged assets, consider a donor advised fund and use your Required Minimum Distributions wisely and you’ll be on your way to the charitable giving strategy you desire.


Cecilia Brown is a Registered Representative offering securities and advisory services through Lincoln Financial Securities Corporation, Member SIPC.  Branch Office:  Clock Tower Place, 1410 Forest Drive, Suite 28, Annapolis, MD 21403.  Lincoln Financial Securities and its representatives do not offer tax or legal advice.  Individuals should consult their tax or legal professionals regarding their specific circumstances.  LFS-1962491-120417