The 5.42* Reasons Why Financial Advisors Need the Universal Charitable Deduction

The 5.42* Reasons Why Financial Advisors Need the Universal Charitable Deduction

Representative Mark Walker of North Carolina has proposed the Universal Charitable Deduction which would allow non-itemizers to deduct their gifts in addition to taking the standard deduction.  The bill caps the deduction at one-third of the standard deduction. The charitable community likes the universal concept, but many are wondering if the cap is needed as it can impact gifts from donors who don’t use the itemized deduction. Financial advisors often speak with their clients about charitable giving and, currently, many of those clients itemize their deductions.  However, if as proposed in the “Big Six” in the Senate’s 9-page plan, the standard deduction would double and the itemized deduction for state and local taxes would not.  If tax reform results in changes that affect the standard deduction, here are the reasons why financial advisors should support the Universal Charitable Deduction: The “Big Six” Plan Reduces Itemizers by almost 85% —This is estimated to reduce the percentage of taxpayers using the itemized deductions from 33% to 5%. Simply put, there could be significantly fewer clients itemizing their deductions without the Universal Charitable Deduction. Nothing Beats Appreciated Securities for Charitable Giving — Charitable giving is still one of the most tax efficient ways of working with large capital gains. These benefits are amplified with use of a donor-advised fund to help the client manage their grants to their favorite non-profits. Charitable Giving Builds Client Relationships — Clients can express the values and causes that are most important to their lives through their charitable giving. In many instances, how people donate their wealth will better explain their deeply valued desires than how they...
On Capital Hill: Talking About the Fate of the Charitable Deduction

On Capital Hill: Talking About the Fate of the Charitable Deduction

On May 30, 1985, I skipped high school.  No, it was not senior skip day, nor did I really desire a break from school.  I wanted to travel from Appleton to Oshkosh to see President Reagan speak.  He had just introduced his plan on what would eventually become the Tax Reform Act of 1986 and first went to Wisconsin to sell it to the American people.  Contrary to my parents wishes, I did hear the speech in person and watched the ensuing process that produced the new tax code.  It was something that sparked my interest in learning about taxes and how (and why) they work the way they do. In law school, my intellectual curiosity about taxes turned towards the charitable deduction and was one of the major factors that drove me to pursue a career in charitable gift planning.  I fell in love with the fact that our country effectively allowed citizens to choose where their tax dollars could make a difference.  Over the years, my admiration has grown into awe as I have participated in conversations about the deduction that sparked amazing charitable gifts changing the course, and even saving, countless lives. My awe of and now concern about the charitable deduction led me to go to Capital Hill on February 16th where I joined nearly 200 nonprofit leaders in a whirlwind day of meetings hosted by the Charitable Giving Coalition (@ProtectGiving). We visited 130 House of Representatives and Senate offices, including 23 members of the Senate Finance Committee and 26 members of the House Ways and Means Committee. The goal of these meetings was to...
A Window of Opportunity: Donor Advised Fund before December 31?

A Window of Opportunity: Donor Advised Fund before December 31?

On December 9th, the markets hit their 13th record close since the November elections. Accompanying the records in the market, we have also seen what feels like a record number of opinions of what the change in administrations will mean for taxes.  Some of these opinions have focused on the potential tax changes and their effects on the charities and the charitable deduction.  Fidelity Charitable offered what I consider a measured and reasonable framework for the possibilities. It is safe to conclude that there is at least a good likelihood that the benefits of giving in 2016 may be more tax wise than in future years. If you believe that to be true, these next few days may be ideal for starting a donor advised fund.  Here’s why: Tax Benefits in 2016, Grant in 2017 and Beyond:  Right now, this simple and unique benefit of a donor advised fund could be its biggest.  Donors can take a deduction in 2016 and reserve the right to recommend grants in future years.  If you can use a tax deduction this year, you can get it and “lock-in” its’ benefits. You do not have to decide where you want its support to go at this time, you can choose the charity at a later date. You Don’t Need to be Bill Gates:  If you have been following donor advised funds for several years, you may remember the gift minimums to be $25,000 and above.  These minimums have come down over the years.  In fact, The Advise Us Fund‘s gift minimum is $2,500.  With the lower minimums, it may be feasible to “pre-pay”...
Why Giving Tuesday Should Be Part of Your Giving Plan

Why Giving Tuesday Should Be Part of Your Giving Plan

Giving Tuesday was started in 2012 in a partnership by the 92nd Street Y and the United Nations Foundation to create an international day of giving during the busy holiday shopping season. Since 2012, Giving Tuesday (#GivingTuesday) has become a powerful movement supporting giving and creating a culture of philanthropy.   Since its inception, charities have seen large increases in both donor participation and dollars given per-donation. In 2015, charities saw a 155% increase in donations over 2014, bringing in over $117 million dollars. While that represents only a fraction of annual giving to charities, it does represent the largest single day of online giving. Giving Tuesday is helping charities increase the number of donors and reach the increasingly important millennial generation. The social nature of giving on Giving Tuesday makes it a great way to introduce charitable giving to children and teens.   So, this coming Giving Tuesday, November 29, 2016, take a moment to give to your favorite charities. If you have the money to spare, start up a donor-advised fund. It makes giving easy, it makes doing your taxes easier without the need to keep track of various tax receipt letters, and it forces you to think about how much you want to give in total, rather than to any given recipient. The Advise Us Fund is itself a 501(c)3 non-profit and you can donate to us here or contact our...