As the end of the year approaches, many individuals and families begin reviewing their finances and making plans for charitable giving. Whether you're considering a year-end gift, supporting causes you care about through your donor-advised fund, or thinking about your legacy, a little planning can go a long way.
Here are three charitable giving strategies to consider as you prepare for year-end.
1. Consider "Bunching" Charitable Gifts
Many donors make charitable contributions every year. If you typically give a similar amount annually, you may want to explore a strategy known as bunching.
Rather than spreading charitable gifts evenly over several years, bunching involves combining multiple years of planned giving into one tax year. By making a larger charitable contribution in a single year, some donors may be able to increase their itemized deductions and potentially realize greater tax benefits.
A donor-advised fund can be an excellent tool for this strategy.
For example, if you typically donate $15,000 annually, you might contribute three years' worth of giving, or $45,000, to your donor-advised fund this year. You receive the charitable deduction when the contribution is made, while still recommending grants to your favorite nonprofits over the next several years.
The result? Your favorite organizations continue receiving support, while you gain flexibility in your charitable planning.
2. Give Appreciated Stock Instead of Cash
If you own stocks or mutual funds that have increased significantly in value, donating those assets directly to a charitable fund or nonprofit may provide additional advantages.
In many cases, donors who contribute long-term appreciated securities can:
- Receive a charitable deduction based on the current fair market value of the asset.
- Avoid paying capital gains tax on appreciation.
- Preserve cash for other financial priorities.
This strategy often allows donors to make a larger charitable impact than they could by selling the assets first and donating the proceeds.
3. Explore Qualified Charitable Distributions (QCDs)
If you are age 70½ or older and have an IRA, a Qualified Charitable Distribution may be worth discussing with your financial advisor.
A QCD allows you to make a direct gift from your IRA to a qualified charity. Because the distribution is excluded from taxable income, it can be an effective way to support charitable causes while potentially reducing your overall tax burden.
For some donors, this strategy may also help manage Medicare premiums and reduce the taxation of Social Security benefits.
Below is a list of OCF funds that are eligible to receive Qualified Charitable Distributions (QCD's) gifts. For a discription ot each funds purpose, click here.
- Community Fund
- Disaster Response Fund
- T.A.C.K.L.E. Fund
- U.A.W. Educators' Fund
- Conservation Fund
- Veteran's Day Celebration Fund
- Youth Fund
- Arts and Culture Fund
- Stephanie J. and Brian L. Quaal Mental Health Fund
- Nancy K. Deerfield Fur Kids Fund
Start Planning Now
Year-end giving doesn't have to wait until December. Starting the conversation early gives you time to explore your options, consult with your professional advisors, and make the charitable decisions that are right for you and your family.
The Otsego Community Foundation is happy to work alongside you and your advisors to help evaluate giving strategies, facilitate gifts of appreciated assets, establish or add to a donor-advised fund, and make your charitable goals a reality.
If you'd like to discuss year-end giving opportunities, contact Amand Sosa. I’m here to help you maximize both your impact and your generosity.
Email: Amanda@otsegofoundation.org / Phone: 989-7310597
Gifts can be made online here: https://godonate.akoyago.com/OCF
Or checks can be mailed to: (Please make checks payable to OCF with chosen fund name in memo line)
Otsego Community Foundation PO Box 344 Gaylord, MI 49734
