As we navigate a global health crisis, a recession and how to best address racial inequality — and all during this turbulent political year-- I think many of us are asking ourselves how we, as individuals, can help create a change that is so desperately needed.
After recently attending a Seattle Philanthropic Advisors meeting in which three experts spoke about how difficult it is today for charitable organizations to meet growing needs, I felt it a good time to reiterate the tax-efficient gifting possible outlined in 2020 CARES Act.
The CARES Act Giving Incentives include:
- For just the year 2020, the IRS has increased the 60-percent adjusted gross income limitation for individuals' charitable contributions. Thus, a donor can fully deduct cash gifts made directly to the charitable organization equal to as much as 100 percent of their AGI this year.1
- A temporary Universal Charitable Deduction. In 2020, taxpayers who do not itemize their deductions can take a one-time deduction of up to $300 for gifts made to charitable organizations.2
Another giving vehicle is the Donor-Advised Fund (DAF). While not a part of the CARES Act, this is a compelling way to direct and manage your giving.
- The DAF is a vehicle that allows donors to make an irrevocable charitable contribution and then receive an immediate tax deduction. The donor may direct contributions or grants to their favorite charitable organizations from the fund over time.3 For example, I establish The Carlton Family Giving Fund, then distribute donations to my favorite qualified 501c3s at my discretion. Say each person in the family had their favorite organizations. This could be a fun way for everyone to be involved in helping our community in the way that felt especially important to them. And it’s a great tool to instill family giving starting at a young age.
I encourage you to visit Givingcompass.org. This site was created by the Raikes Foundation to help the public obtain vetted information on driving impact on meaningful change. It is a vast and educational site that includes a philanthropy resource directory searchable by issue or location.
Tips for giving during the pandemic:
- Allow the organization to best direct your contribution to the area with the most need (vs. specifically directing how the org. should spend your funds).
- Needs will be ongoing. Perhaps revise the donation to be less upfront, but continuous throughout the year.
Keep in mind, that because I’m not a tax advisor, this material is not intended to be construed as tax advice. Always consult your tax professional for details regarding your specific situation.
If you want to talk more about setting up a Donor-Advised Fund or how giving can be a bigger part of your financial plan, I welcome that conversation at any time.