Curious what options exist for philanthropic giving that will get you the greatest tax benefits? We were too, so we asked a few CoEd donors to share their creative solutions for giving more and saving more—it’s a win-win! See their tips below and talk with your tax advisor to determine what’s best for you.
1) Donating Stock
Our financial advisor recommended we give gifts of stock so we can bypass the capital gains tax if our stock appreciates. This makes us happy because ultimately, it means that we can be even more generous to our favorite charities like CoEd. We appreciate the work CoEd does to advance the people of Guatemala. It is a beautiful country full of beautiful, loving people.
The benefit: By making your end-of-year charitable donations with stock (instead of cash, bullion, Aztec gold, or whatever else you were planning to use), you can avoid the capital gains tax on your investments. And your donation is still eligible for a tax deduction. (Source: Investopedia)
How to do it: Check out our instructions here to donate stock electronically or by mail.
2) Donating through an IRA
By using my required minimum distribution, we reduce our annual income (and taxes) and therefore have more funds available for gifts to our favorite causes.
The benefit: As of the 2020 SECURE Act, when you turn 72 years old the IRS sets up a nice little toll booth and requires you to start taking minimum required distributions from your IRA. This adds to your income, which can add to your taxes. But never fear, you can now donate up to $100k from your IRA straight to charity, and bypass the tax troll at that toll (what a tongue twister).
How to do it: Talk to your IRA administrator, and give them the name, address, phone, tax ID, and incorporation year of the charities you would like to donate to. CoEd’s info can be found here.
3) Donating through a Donor Advised Fund (DAF)
Using a DAF helps me and my wife to organize our giving in one place. We can track our historical contributions, update our strategies, and conveniently support the causes we love – like CoEd!
The benefit: Did you know that you can receive the tax benefits of charitable contributions before you actually make them? This is one of the key benefits of a DAF, which allows you to make a charitable contribution to your fund, receive an immediate tax deduction, and then award grants from your fund to your favorite charities over time. You may even be able to donate stock into your DAF for double tax benefits. (Source: Fidelity Charitable)
How to do it: You can establish a DAF at your local community foundation, or at a brokerage such as Schwab, BNY Mellon, or Vanguard. Then all you need to donate are the names, contact info, and tax ID numbers of the charities you love. CoEd’s info is here.
Talk to Your Tax Adviser
We aren’t tax professionals, so please contact your trusted tax adviser before pursuing any of the options listed above. Don’t know who to call? Not to worry! A generous CoEd donor like you is ready to help. This volunteer CPA is well versed in charitable giving and tax scenarios, and he has offered to talk with CoEd donors (free of charge and free of gimmicks) as a service to the kids in Guatemala. Email firstname.lastname@example.org to get in contact.