What’s the Most Strategic Way to Give to Charities?
If you’re like some people, you’re saying, “What’s the most strategic way to give to charities? I really have causes that I care about, but when I give to charity, I want to know what’s the best way to give to those charities?”
So the first thing I would say is if you have appreciated assets — meaning stocks that have increased in value, or maybe a private business interest — that could be a more effective way to give to charity.
- Appreciated assets
- Private business interest
You could give appreciated assets, stocks, or private business as opposed to just writing a check.
Avoid Capital Gains on Appreciation of An Asset
We often say, “Friends don’t let friends give cash to charity.” The reason for that is if you have appreciated stock, or appreciated business interests, and give that to a charity, not only will you possibly get the charitable deduction on your itemized deductions, but you also can avoid that capital gains on the appreciation of that asset.
Charitable Distribution During Retirement
Another way is some of you here listening might be in your retirement years. There’s something called a qualified charitable distribution. Oftentimes we see our retired clients, they may be in a spot where they don’t do itemized deductions anymore. And they’re worried that “Hey if I write a check to the charity, I’m not really getting any tax benefit for it.”
Give Directly From a Retirement Account
Well, one way to still capture that tax benefit is to actually give directly from a retirement account, an IRA is an example. And when you do, that qualified charitable distribution from the IRA over to the charity, in essence, you’re, “avoiding that income.” It doesn’t show up on your tax return, which basically makes it tax-deductible for you as we like to say.
So, as you can see, there are more strategic ways to give to a charity other than just writing a check. So make sure that you’re on top of the best ways to be giving to your charity, the charitable organizations that you care most about.
I’m David Witter, founder, and CEO of Financial Harvest Wealth Advisors in Winter Park, Florida.