Tools for strategic giving before year-end
As part of the CARES Act, Congress expanded the opportunity to claim deductions for charitable giving in 2021, but those special rules don’t apply to the 2022 tax year. However, there are still a variety of ways to maximize the tax benefits of charitable contributions this year. Whether you currently have a fund established with us at CFGV or not, this is a great time to make an investment in our shared community. Depending on your age, income, tax filing status, and other factors, there are some unique giving tools that may help you reduce your tax liability for 2022 if you act before the end of the year (see full list of giving deadlines here), and CFGV is set up to accept a variety of charitable gifts.
Contribute to a Donor Advised Fund
To date in 2022, Advisors of Donor Advised Funds have recommended grants totaling over $375,000 to nonprofits in the Gunnison Valley and beyond. Their impact on our community is profound and we’re always grateful for the opportunity to partner with generous individuals to make thoughtful investments that help community members thrive.
Establishing a Donor Advised Fund (DAF) with CFGV this giving season (or contributing to an existing fund) is a great way to join your fellow members of the community in building a strong, vibrant Gunnison Valley. DAFs allow you (and others you include) to actively participate in the grant-making process over time. After establishing a DAF, you’ll then be able to recommend grants to the Board for organizations that matter most to you at a given time. This type of fund affords the flexibility to change the organizations you support through the years and is especially useful if you want to take a charitable deduction in one year and make distributions over several years, or if you wish to involve your family in your ongoing charitable giving.
Gifts of Appreciated Stocks vs. Required Minimum Distribution
Many people have access to two additional strategic giving options in Appreciated Securities and a Qualified Charitable Deduction (QCD) that counts toward your Required Minimum Distribution (RMD). Review the table below to see if one of these opportunities might be right for you:
|Appreciated Securities||Qualified Charitable Deduction (QCD) from Required Minimum Distribution (RMD)|
|No monetary limit and this includes stocks, bonds, and mutual funds.||Must be $100,000 or less.|
|No age requirement.||Must be 72 or older.|
|Donations can be made to a Donor Advised Fund, or any other fund, held at CFGV.||Donations cannot be made to Donor Advised Funds but may be made to any other fund held at CFGV. (Tip: Designated funds can function very similarly to Donor Advised Funds, have fewer restrictions, and can accept RMDs).|
|A direct transfer of appreciated securities to CFGV (or other nonprofit) will help you avoid capital gains taxes, which can be a maximum of 20%. (Tip: If a nonprofit you support doesn’t have a way to accept a transfer of appreciated securities, CFGV can act as a conduit for your gift to that organization).||Distributions must be a direct transfer from the IRA trustee to CFGV (or other nonprofit) and should not be transferred to the donor prior to distribution to CFGV.|
|You’ll generally be able to take a tax deduction for the full market value of the donation.||Using a QCD excludes an IRA withdrawal from income, thereby lowering the taxpayer’s Adjusted Gross Income.|
Which Tool Is Right for your Strategic Giving?
It depends on your philanthropic goals, tax liability, age, and other factors. If you’re interested in establishing a charitable fund in partnership with CFGV or making a gift of Appreciated Securities or a QCD from your IRA to a new or existing fund, please give Lauren Kugler, our Executive Director, a call today at 970-641-8837.
This post should not be construed as tax or legal advice.