Charitable Giving
November’s special emphasis is generosity and giving. In this spirit, and approaching the end of the tax year, we’d like to offer some advice and considerations about charitable giving, from both practical and personal perspectives.
In this newsletter:
- Donor-Advised Funds and Charitable-Giving Tax Rules
- Giving from the Heart
- On Giving and Receiving
Donor-Advised Funds
One option for charitable giving is a donor-advised fund, where funds are invested for tax-free growth and are designated exclusively for recognized public charities. The advantage is that the funds can be transferred during any tax year and allocated as a gift/deduction, but the charitable selection can wait. The write-off will depend on your own earned income, and has a maximum of up to 50% of the value in a given year.
For more rules and guidance:
https://www.fidelitycharitable.org/guidance/philanthropy/what-is-a-donor-advised-fund
Other tax benefits that apply for 2021
if you are feeling charitable:
Non-itemizers can write off up to $300 in charitable cash contributions as an above-the-line deduction on their 2021 Form 1040. This means filers can take the standard deduction and a deduction for up to $300 of cash donations paid to 501(c)(3) organizations. The ceiling is $600 for couples who file a joint return.
The 60% of AGI limit on charitable gifts of cash by individuals is suspended. Gifts to donor-advised funds and private nonoperating foundations are excluded. This relief applies to charitable cash contributions that you make this year and elect to deduct on Schedule A of the 1040. Carryovers of excess donations from prior years don’t get the break. This easing also applied to 2020 returns.
The taxable income limit on charitable gifts of cash by C corps is 25%. Normally, the maximum allowable deduction is limited to 10% of taxable income.
Businesses donating food inventory also have enhanced deductions.
The Heart of Charitable Giving
The essence of giving starts from the inside:
- Where do you find your spirit of generosity? From where are you giving?
- If you are confident in your financial security, we invite you to consider the difference between giving while you’re alive, versus leaving your assets in a will. We are wired for joy and generosity. When we give, we feel better. Waiting to give until after death means that you don’t get to experience the joy and satisfaction of giving. It also creates more to manage for the executor of your estate.
- If you’re struggling to find a charity, start with thinking about what you value. What are the areas of life that stand out to you as most meaningful. Where you want to make a difference? The planet? Women’s rights? Children? Education? Spiritual organization?
- Recently Elon Musk got attention for asking about where to donate money that really makes a difference. Finding a charity where your dollar is optimized is a valid concern. We thought these resources from Consumer Reports might be helpful as a start for research:
https://www.consumerreports.org/charities/best-charities-for-your-donations
https://www.consumerreports.org/charities/best-alternative-charities-for-your-donations - Rather than money, donating your time and energy is another satisfying approach. We came across this resource listing opportunities for volunteering in retirement years:
https://sixtyandme.com/senior-volunteering/
From the archives but still fresh,
a 2013 contemplation from Gayle:
On Giving and Receiving
Are you better at giving or receiving?
I recently read a newsletter that offered Brené Brown’s quote below, along with the author’s observations on our culture’s ability to give and receive. Her findings suggest we are better givers than receivers; in general, I agree with the statement. This gift-giving season, we have an opportunity to develop our capacities to give, receive or both. In practice toward embodiment of generosity, we come to see that ultimately the gift, the giver and the receiver are all the same.
What are your giving/receiving abilities? Have you set a powerful intention to expand your capacity to give and receive in all forms?
“Until we can receive with an open heart, we’re never really giving with an open heart.
When we attach judgment to receiving help, we knowingly or unknowingly, attach judgment to giving help.”
Brené Brown
