The New Tax Law’s Effect on Charitable Giving: Separating Fact from Speculation

The New Tax Law’s Effect on Charitable Giving: Separating Fact from Speculation

The rules of the game are largely unchanged – it’s just that many taxpayers won’t be playing anymore The Tax Cuts and Jobs Act of 2017 is the legislative centerpiece of President Trump’s first year in office.  The law increases the standard deduction, likely reducing taxpayers’ motivation to itemize deductions. While experts differ, most expect this change to have a negative effect on charitable giving.  Donors who care about the mission and futures of the nonprofits they support should pay attention to what’s a fact, and what’s speculation, about the potential effects of this far-reaching act. Speculation:  The act will limit charitable giving. No one knows the answer to this question – in fact, I suggest that no one knows if we’ll ever know!  The effect will not be apparent soon, and when it arrives will very likely be buried amid other economic factors:  a continued strong economy (and sustained donations) may suggest to some that there is no effect, while a troubled economy might exaggerate any interpretation.  Trying to ferret out the law’s effect might be akin to trying to figure out which specific drink caused your hangover. Since a conclusive answer to the overall effect may be hard to come by, maybe the best strategy for scrambling nonprofits is to understand that itemization (and charitable giving) will continue to be a case by case decision for every donor.  There’s nothing new about that – the key, as always, will be to send clear messages and build strong relationships (though perhaps with a bit more urgency than ever before).  The tax law might leave a hole in your...
Smart Charity – 5 Tax Benefits Donor-Advised Funds Contribute

Smart Charity – 5 Tax Benefits Donor-Advised Funds Contribute

Donor-advised funds offer easy and flexible charitable giving with great tax planning benefits. Here are five ways to benefit from donor-advised funds during tax season. Centralize Giving and Records. Stop searching for donation receipts. Donor-advised funds let you focus on one charity for tax purposes. All your donation records come from your fund. You can plan the amount you want to give easier, advise grants to the numerous charities you care most about, and you don’t need to worry about writing and mailing numerous checks (donor-advised fund administrators distribute your donations too). Harvest Gains and Rebalance Your Portfolio. Contributing appreciated assets to charity can offer greater tax-savings than donating cash. Donating appreciated securities, at fair market value if held more than a year, to your donor-advised fund can provide a charitable deduction that helps off-set capital gains taxes. You can also strategically rebalance your portfolio. Donating low basis appreciated securities can increase your portfolio’s overall cost basis. Budget and Schedule Your Giving. How much do you want to give this year? Next year? Donor-advised funds make it easy to see how much you’re giving and to whom because the information is all in one place. Do you give regularly to one or more charities during the busy holidays – or some other time that isn’t convenient to remember and take the time to do it? Schedule your grant advisements in advance, when it’s convenient for you, for the time(s) you want to gift to charity. Your donor-advised fund will take care of it. Separate Donating from Gift Giving. You should donate at the optimal time for you tax-wise and...