by Kathryn Holding
With the season of giving and gratitude upon us, we are all making plans for our charitable contributions before the end of the year.
Every day, NCCF team members are approached by individuals and families asking different questions around charitable giving. We hope the information below will help answer these and give insight into how you may optimize charitable giving to achieve your philanthropic and financial goals for 2019:
I’d like to bundle my charitable gifts this year to itemize my charitable deductions. What should I do with this gift?
After federal tax reform through the Tax Cuts and Jobs Act of 2017, just 10% of taxpayers itemized deductions in 2018, compared with 30% in 2017. Individuals who want to maximize their charitable deductions under the new tax laws can benefit by “bundling” their charitable gifts – i.e., make two or more years’ worth of charitable contributions in a single year. This strategy helps push taxpayers over the itemizing threshold, where they can reap the benefit of deducting the full value of their donations.
How might bundling work for you at NCCF? You may consider using a bundled gift to start (or add to) a donor advised fund, which would enable you to direct annual grants to your favorite charitable organizations annually. The minimum required to start an endowed donor advised fund at NCCF is $25,000, which would push a married couple over the threshold for itemization. For itemizers, dollars are deductible up to 60% of adjusted gross income and excess deductions can be carried over and deducted in five future tax years.
I need to take my IRA distribution but don’t want to increase my gross income. Can I redirect those funds to a nonprofit?
A donor age 70½ and older may direct his or her annual IRA Qualified Charitable Distribution (maximum of $100,000) to a qualified charitable organization and avoid adding this amount to their gross income.
How might using your QCD work for you at NCCF? While a QCD may not be given to a donor advised fund, an individual may use their QCD to support other funds or start a designated fund, which would provide annual support to their favorite nonprofit organizations, religious institution, or alma mater. Over time, NCCF’s staff manages the distributions from the fund according to the terms established by the donor.
I have stock that has significantly increased. Can I donate it directly to a nonprofit to avoid capital gains?
Highly-appreciated stocks and other investments are tax-effective gifts, especially when capital gains tax can be avoided.
How would donating an appreciated asset to NCCF work? Whether you already have a fund with us or are interested in starting a fund, donating appreciated stock to NCCF is an easy process that allows donors to avoid capital gains taxes and receive a charitable income tax deduction. Be sure to review our year-end giving page for important deadlines for stock and other gifts.
My business sold and I have a significant taxable event. I’d like to offset with a charitable deduction, but don’t know what nonprofits I want to support. What should I do?
Remember my colleague Leslie Ann Jackson’s blog post about the North Carolina resident who won $344 million in the Powerball lottery? Yes, winning the lottery is a long shot. But receiving a financial windfall in other situations – selling your business, selling real estate, receiving stock proceeds when your employer is sold, receiving an inheritance – is more likely, and often presents similar questions, concerns and immediate decisions.
Here’s how you may consider incorporating NCCF in your financial, family and philanthropic plans:
You have immediate tax consequences now as a result of the taxable event, but you may not know where to make a charitable contribution. You may consider making a gift to NCCF to start a donor advised fund, providing immediate tax deductibility for the gift and giving you time to make important decisions about the charitable organizations you want to support.
Because of this significant life event, you may have the opportunity to utilize your donor advised fund to make high-impact grants. Our team of philanthropic experts will guide you through a process to determine the mission and goals for your family’s fund, identify and introduce you to nonprofit organizations that are working to address those issues you care about most and support you in building a family legacy plan.
NCCF’s development and finance teams will be closely monitoring email and phone during this season to serve you. Please contact us at (919) 828-4387 with any questions or to schedule an appointment.
This season and always, we are honored to be your partner in giving.