It’s time to start thinking about holiday giving, here’s some insights from BKD Wealth Advisors:
This article was adapted from a November 2017 BKD Thoughtware® article written by Gretchen Cliburn.
There are so many worthwhile charities to consider gifting your time and resources to, both during the holidays and throughout the year. When you make charitable donations, it’s because you’re passionate about the causes. How do you determine what charities are worthy of your donations? How do you know your hard-earned money is being spent the way you want? How do you know if the charity is spending those donations the way they say they will? Whether you’re donating your time or your money, you want to make sure your beliefs and values are consistent with the way the charity will use those resources. Here are some things to consider when making charitable contributions:
- What’s most important to you?
What causes are you most passionate about? Do you prefer to help local charities or are there more global causes you prefer to support? There are many resources at your disposal, including the local community foundations, others who are involved in the causes you’re interested in, and of course, the internet. Doing your homework can help you be confident your time and money are well spent.
- What websites are helpful in this type of research?
Once you’ve identified some potential charities, there are several websites that can provide valuable information for you to consider. Two of those are Charity Navigator and GuideStar USA. If you want to receive a tax benefit from the donation, use the Tax Exempt Organization Search tool on the IRS website to verify the organization is eligible to receive tax-deductible charitable contributions. Your local United Way office also is another helpful resource. They spend a great deal of time and energy understanding the goals of various charitable organizations and how they manage their finances. Different types of charity work will have different operating costs. Compare those to similar organizations and see if there are any discrepancies that might be worth investigating.
- Contact Charities Directly.
Ask them to tell you more about their goals, and what specific effects they’ve had on the community. Look at their finances. Reputable charities will have no problem being transparent. You’ll be surprised to hear the amazing stories about how various charities have touched your causes. For instance, call the CoxHealth Foundation and ask about how their funds are used on a day-to-day basis to help patients in need. They have some wonderful stories to tell!
Find out if the charity you’re interested in accepts appreciated securities for a more tax-efficient gift. Many charities also will accept donations identified for specific usage, if desired. This can personalize the gift and make your contributions even more meaningful.
After carefully deliberating about which charity or charities you want to be involved with, consider your gifting options. Work with your CPA and financial advisor to identify how to make your gift. For example, you may volunteer, write a check, use appreciated stock, make a qualified charitable distribution from your IRA—if you’re older than 70½—or even potentially use a donor-advised fund (DAF). A DAF can be a great option if you want to gift to multiple charities and will use appreciated stock. Depending on your tax situation, you may receive a tax benefit in the year you make your gift. Then, you can distribute the principal and/or growth from the DAF over time to as many different qualified charities as you choose.
As you consider charitable gifts during the holidays or any time of year, remember these guidelines so you can be confident your gifts are being used according to your wishes. For more information, or if you have additional questions, please contact the CoxHealth Foundation at 417-269-7109.