Charitable Giving For Regular People

by | May 5, 2010 | Estate Planning

Do you think of yourself as rich? Hopefully you do, but mostly in ways that don’t show up on a tax return. Are you rich in the things that really matter – loving family, good friends, your faith, serving others? Whether or not you think of yourself as a wealthy person, you can take advantage of the legal and tax benefits of giving to charity and doing it effectively.

Most people don’t give to charity just for the tax benefits. But if you believe in sharing what you have and making a difference in your community, then why not do it right?  Save some money from going to Uncle Sam and add it to what you plan to give to charity.

What is planned giving? It’s nothing more than making a plan to give in the best possible way. What is the best way? One that will best benefit the organization, save taxes, and protect your family by providing for you during your life. Planned giving can help you find the best way to decide:

  • What you give.
  • How you give it.
  • When you give it.

Here’s my top 10 things about charitable giving that everyone should know if their wealth is somewhere between Mother Theresa’s and Bill Gates.

  1. Use ticking tax time bomb assets. Do you have assets that may lead to a tax later? Such as stock or real estate that has gone up in value, or an IRA or annuity? Use those assets to give to charity. Avoid the capital gains tax and still get the deduction for the charitable gift.
  2. Give at your death. Think of the wealth you have. Suppose you decide to give a percentage of your assets at death to charity – maybe 1%, 5% or even 10%. If your kids get a little less at your death, will that reduce their quality of life? But just a small percentage of your estate going to charity can make a big difference in others and in your community.
  3. Give during life. There is one thing better than giving at your death. What’s that?  Giving while you’re still alive. By all means, give at your death. But if you can afford to give now and still live comfortably, then do it. There are 2 good reasons for this. You can get a tax deduction if you do it while you’re alive. Plus, it’s much more fun to give now while you can see how your gift is used and enjoy watching the impact it has on others.
  4. Look for a win-win situation. Suppose you want to make sure you have enough money to live on during your life, but also help a charity. There are special legal and tax tools we can use to give you a lifetime income that never runs out, while still giving to charity.
  5. Don’t worry about the fancy stuff. You’re already an expert in what you need to know to be an effective giver. Don’t worry about knowing all the details of how fancy charitable strategies work – charitable remainder trusts, charitable gift annuities, charitable lead trusts, etc. Focus on what you hope your gift will accomplish, and let professional help find the best way to do it.
  6. Remember why you’re doing it. In the end, you give because you want to make a difference. Maybe you give in memory of someone you love. Maybe you give because of all the blessings you have received in your life.
  7. Listen to a professional. Ask questions and listen to those who can help you do charitable giving in the best way. To get the most done in the most efficient way. The charity’s planned giving or development officer, your tax advisor, or an estate planning attorney can help you consider the best giving options.
  8. Use the right professional. Who do you use to help with your tax or legal strategies for charitable giving? Look for someone who handles these matters regularly and look for someone who is generous in giving to charity and helping others in their own life.
  9. Involve your family. Will your giving set an example for your children and grandchildren? Have you considered involving them now in making decisions about your charitable gifts?
  10. Be wise about who you give to. Give to organizations with a proven track record of helping others.

If you have questions about the best way to give to charity, contact our Client Coordinator at 217-726-9200 and schedule a phone call or appointment to see how we may be able to help.