Year-End Charitable Giving Strategies

October 30, 2021

At the time we’re writing this message, Halloween is upon us, and Thanksgiving and Christmas are around the corner. During this time of year, we begin contemplating the charitable gifts we’d like to make before December 31st. It’s a critical time to give generously to support our communities while taking advantage of tax benefits.

You may be considering making a gift to your fund or your local affiliate foundation’s fund, or you may wish to start a new fund at NCCF. Whatever your charitable giving goal, the development team stands ready to support you this giving season.

CARES Act and 2021 Charitable Giving:

The charitable giving incentives included in the 2020 CARES Act were extended through the end of 2021:

Taxpayers who do not itemize their charitable deductions can claim a tax benefit up to $300 (individual) or $600 (married couple filing jointly) for cash gifts made to public charities in 2021.
Taxpayers who itemize their charitable deductions may deduct cash contributions to public charities up to 100% of their adjusted gross income in 2021, an increase from the usual 60% limit.

The increased 100% AGI limit does not apply to:
• Gifts of non-cash assets like stock or other illiquid assets;
• Gifts made to donor advised funds (DAFs)
• Charitable contributions carried forward from a prior tax year.

You are still able to make a cash gift to your DAF and deduct up to 60% of AGI. If you’d like to take advantage of the 100% AGI limit, consider blending cash gifts to your DAF and an NCCF agency endowment or to your local NCCF affiliate’s endowment. You could also establish a designated fund to provide annual support to your favorite nonprofit organization, or start a scholarship endowment to support continuing education in North Carolina.
Corporate taxpayers may deduct up to 25% of their taxable income in 2021, an increase from the typical 10% limit. Like the incentives for individuals, the company’s charitable gift cannot be made to a donor advised fund. If you’d like to work with NCCF and take advantage of this incentive, consider started a scholarship fund or making a gift to your local NCCF affiliate’s community fund.

CARES Act Details

Appreciated assets are tax-effective gifts.

Gifts of appreciated assets like stock, securities, mutual funds, closely held stock, real property, and others are often tax-effective gifts, especially when capital gains taxes can be avoided. Charitable gifts of long-term appreciated assets are deductible up to 30% of your adjusted gross income, and alleviate capital gains taxes if you sold the asset. If you would like to make a gift of an appreciated non-cash asset, please contact the Development Officer in your region to assist you.

IRA Qualified Charitable Distributions:

Donors age 70 ½ or older can transfer up to $100,000 annually from IRA accounts to a qualified public charity without having to recognize the distribution as income. The Qualified Charitable Distribution may not be given to a donor advised fund, but may be made to other NCCF funds such as your local affiliate foundation’s grantmaking fund or scholarship funds.

“Bundling” charitable gifts is still an effective tax strategy

Charitable contributions can only reduce your tax bill if you itemize your taxes, which generally happens when the combined total of your anticipated deductions – including charitable gifts – add up to more than the standard deduction. The standard deduction for a single filer is $12,400, for married filing jointly is $24,800, and for head of household is $18,650. If your anticipated deductions are less than the standard deduction, you’ll likely choose to take the standard deduction and will not itemize.

Individuals who want to maximize their charitable deductions and itemize in 2021 can “bundle” 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.

Bundling your charitable gifts is an ideal strategy to add to or establish a donor advised fund at NCCF. The minimum required to start an endowed donor advised fund at NCCF is $25,000, which would push a married couple filing jointly over the $24,800 threshold for itemization. For itemizers making gifts to DAFs, dollars are deductible up to 60% of adjusted gross income and excess deductions can be carried over and deducted in five future tax years.

As always, check with your financial or other professional advisor to determine what type giving is most appropriate for you. The NCCF team stands by ready to assist you in your charitable giving this season.

Kathryn Roebuck Holding, J.D.

Director of Development

Email
(919) 256-6932
To begin and for donors in central North Carolina

Beth Boney Jenkins

Development Officer, East

Email
(910) 782-2895
For donors in eastern North Carolina

Megan Lynch Ellis

Development Officer, West

Email
(828) 355-4306
For donors in western counties