The holidays bring a rise in giving for most non-profit organizations, including schools. Annually, about one quarter of all charitable gifts are made from Thanksgiving to Christmas, due both to the proximity to the end of the tax year and the altruistic tendencies brought on by the season. Most non-profits invest a great deal in holiday solicitations and efforts such as Giving Tuesday, immediately following Black Friday and Cyber Monday.
Four benefits fo making a gift at year end
- If you itemize deductions when you pay your income taxes, your charitable gift qualifies you for a tax deduction.
The amount of the deduction is based on your tax bracket. In some cases, up to 85% of the gift is deductible under current tax laws.
- Gifts of appreciated securities allow the donor to avoid capital gains.
If an investor has held an appreciated stock or mutual fund for more than one year, they can donate those securities and receive a tax deduction for the fair market value of the securities, and eliminate any capital gains assessments.
- Gifts of depreciated securities are also tax deductible and the capital loss can offset capital gains in the current year and possibly into the future.
- You can gift funds from your IRA to a non-profit without paying income taxes on the distribution.
If you are 70 ½ or older you can give up to $100,000 from your IRA, fulfilling your minimum distribution requirement without the income being taxable. Your IRA custodian should be contacted to discuss the necessary requirements.
Some helpful hints for year-end giving include:
- Make sure your check is dated December 31st or earlier, if your gift is to qualify for the current year.
- A contribution on a credit card is deductible in the year it is charged to your card. Initiate gifts in this form prior to year end.
- Gifts of securities should also be initiated subsequent to the end of the tax year.
- Verify the organization you are contributing to is a qualified charitable organization.
- A deduction will not be allowed for gifts over $250 unless you have written confirmation from the charity. At this threshold the canceled check alone is not sufficient.
- Contact your accountant or investment advisor for more personalized advice on making larger or more involved gifts.
A well thought out charitable gift allows the donor to both give and receive. Using the tips above, you can make an impact on the organizations that mean the most to you!
Janice Payne is the Director of Development at Sanford School in Hockessin, Delaware.