Are You Giving to Charity in the Most Tax-Efficient Way?

Many people give generously to charity throughout the year. They write checks, use their credit cards or transfer money directly from their bank accounts.

But they may be overlooking a more tax-efficient way to give.

Charitable giving is often treated as a private decision, something people may not think to discuss with their financial advisor. That is why we make charitable planning part of our conversations with clients. We ask whether giving is important to them, which organizations they support and how they currently make their donations.

If a client is donating cash, we may introduce alternatives such as gifting appreciated investments directly to a qualified charity or contributing them to a donor-advised fund.

For example, suppose someone wants to donate $20,000 and owns an investment that has significantly increased in value. Instead of selling the investment, paying capital gains taxes and then donating the cash, the client may be able to donate the investment directly.

This can potentially:

• Avoid capital gains taxes on the appreciation

• Create a charitable income-tax deduction

• Reduce taxable income

• Allow more of the client’s money to benefit the causes they care about

The strategy is only part of the value. Once clients decide how much they want to give and where they want it to go, we can also help coordinate and process the donations from their investment accounts. This removes another item from their to-do list while helping ensure the strategy is implemented correctly.

Clients are often surprised to learn that charitable giving can be integrated into their broader financial and tax planning.

Generosity begins with the desire to help others. Thoughtful planning can help that generosity go even further.

Charitable and tax strategies depend on each person’s circumstances. Consult your financial and tax advisors before implementing a strategy.