The Growing Importance of Charitable Giving

In 2022, Americans donated $499 billion to charitable causes, with 60% of these contributions coming from individuals. Joe and Allison emphasize that taking a strategic approach to charitable giving not only benefits the organizations you support but also enhances your financial planning.

Setting Goals for Charitable Giving

Before diving into specific strategies, it’s important to set clear financial and charitable goals:

• Personal Priorities: Decide whether your assets should primarily benefit family members or charities.
• Retirement Needs: Assess your financial situation to ensure your giving aligns with your long-term goals.
• Tax Benefits: Strategically plan donations to optimize your tax savings while supporting meaningful causes.

Exploring Common Methods of Giving

Many individuals rely on straightforward methods for charitable contributions, such as cash donations or writing checks. However, alternative approaches like donating appreciated stock or tangible assets can provide additional tax benefits while supporting charities effectively.

Advanced Strategies for Charitable Giving

Joe and Allison delve into innovative ways to maximize the impact of your donations:

Bunching Strategy

By consolidating multiple years of donations into a single tax year, donors can exceed the standard deduction threshold of $27,700 and achieve greater tax savings. This approach is particularly beneficial for those with fluctuating incomes or high charitable giving goals.

Donating Appreciated Stock

Rather than donating cash, giving appreciated stocks offers dual benefits:

• Avoiding Capital Gains Tax: Donors receive the full market value as a deduction without triggering taxes on the stock’s gains.
• Portfolio Maintenance: Repurchasing the stock at a higher basis ensures the portfolio remains balanced while being tax-efficient.

Qualified Charitable Distributions (QCDs)

For individuals aged 70½ or older, QCDs offer a unique way to give:

• IRA Contributions: Donate directly from an IRA to a charity, bypassing the IRS and keeping the income off your tax return.
• Additional Benefits: Lower taxable income can help avoid higher Medicare premiums and phase-outs.

Donor-Advised Funds

A donor-advised fund allows for a large, upfront donation that can be distributed to charities over time:

• Immediate Deduction: Receive an immediate tax benefit in high-income years.
• Long-Term Impact: Disburse funds strategically to charities over multiple years.

Charitable Remainder Trusts (CRTs)

For larger donations, CRTs provide flexibility and long-term benefits:

• Lifetime Payments: Donors receive a stream of income while avoiding immediate capital gains tax.
• Charity Benefits: The remainder of the trust goes to the charity after the donor’s lifetime.

Planning and Vetting Charities

Choosing the right organizations is key to ensuring your contributions make a meaningful impact:

• Research Tools: Use platforms like Charity Navigator and GuideStar to vet charities.
• Strategic Timing: Consider the timing and structure of your donations to maximize their impact and your tax benefits.

Conclusion

Charitable giving can be both impactful and strategic when aligned with your financial goals. Whether you’re exploring advanced strategies like QCDs and donor-advised funds or simply planning cash contributions, taking a thoughtful approach ensures that your generosity benefits both your chosen causes and your financial future. Start planning your charitable giving strategy today and make a difference that lasts.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

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