Let Giving be About You, Not the Holiday Rush
/by Carolyn Rogers, CFRE, SVP, Wealth Services, Sanibel Captiva Trust Co.
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. When was the last time you bought a car at the end of the month for example?
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 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.
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 3 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, 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. 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 ½, 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.
Start thinking now about your year-end giving for the most impact and join us on Friday, July 26 for a webinar geared for donors on Year-End Giving in July. Click here to register.
LEGAL, INVESTMENT AND TAX NOTICE: This information is not intended to be and should not be treated as legal advice, investment advice or tax advice. Readers, including professionals, should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal or tax advice from their own counsel. Not FDIC Insured | No Guarantee | May Lose Value
The Sanibel Captiva Trust Company is an independent trust company with $4.4 billion in assets under management that provides Family Office and Wealth Management Services, including investment management, trust administration and financial counsel to high-net-worth individuals, families, businesses, foundations and endowments. Founded in 2001 as a state-chartered independent trust company, the firm is focused on wealth management services that are absolute-return oriented and performance driven. The Naples Trust Company and The Tampa Bay Trust Company are divisions of The Sanibel Captiva Trust Company. Offices in Sanibel-Captiva, Fort Myers, Naples, Marco Island, Tampa, Belleair Bluffs and Tarpon Springs. www.sancaptrustco.com