Charitable Strategies

What you need to know

Charitable giving isn’t just about making a difference in the world—it’s also a smart financial strategy that can offer significant benefits to both you and the causes you care about. Whether you’re donating money, time, or resources, understanding the basics of charitable giving can help you maximize your impact and take advantage of potential tax benefits. Let’s dive into some key strategies that can make your charitable giving more effective and meaningful.

Why Charitable Giving Matters

Charitable giving allows you to support causes that matter to you, from education and healthcare to environmental conservation and social justice. Beyond the warm, fuzzy feeling you get from helping others, charitable donations can also provide tax benefits. By strategically planning your giving, you can reduce your taxable income and potentially lower your tax bill.

Charitable giving can also be an integral part of your estate planning. By incorporating charitable strategies into your will or setting up charitable trusts, you can ensure that your legacy continues to support the causes you care about long after you’re gone.

What Are Some Strategies for Charitable Giving?

  1. Cash Donations: These donations are simple, direct, and immediately beneficial to the charity. Plus, for those who itemize their deductions, cash donations can be deducted up to a set percentage of your adjusted gross income.
  2. Donating Appreciated Assets: Donating appreciated stocks, bonds, or mutual funds can be more beneficial than giving cash. You can avoid paying capital gains tax on the appreciation and get a tax deduction for the fair market value of the asset. Similar to stocks, donating appreciated real estate can provide significant tax benefits, avoiding capital gains tax and allowing a deduction for the property’s fair market value.
  3. Donor-Advised Funds (DAFs): DAFs let you make a charitable contribution, receive an immediate tax deduction, and then recommend grants to your favorite charities over time. Contributions to a DAF are tax-deductible in the year you make them, even if you distribute the funds to charities in future years.
  4. Charitable Trusts (CRTs) and Charitable Lead Trusts (CLTs): CRTs allow you to place assets in a trust, receive income from those assets for a specified period, and then donate the remaining assets to charity. This can provide income tax deductions, avoid capital gains taxes, and reduce estate taxes. In a CLT, a charity receives income from the trust for a set term, after which the remaining assets go to your beneficiaries. This can be an effective way to transfer assets to heirs at a reduced tax cost.
  5. Qualified Charitable Distributions (QCDs): For IRA Holders, if you’re over 70½, you can make a QCD directly from your IRA to a qualified charity, up to $100,000 annually. This counts toward your required minimum distribution (RMD) and can be excluded from your taxable income.
  6. Employer Matching Programs: Many employers offer matching gift programs, matching your charitable donations up to a certain amount. This effectively doubles your contribution without additional cost to you.

So How Should I Go About Planning My Charitable Giving Efforts?

First, start by identifying your goals. What causes matter to you most? Reflect upon issues and organizations that align with your values and passions. Then, set clear objectives by determining what you hope to achieve with your giving, whether that’s immediate impact, long-term change, or a combination of the two.

Second, create a budget by first identifying your giving capacity based on your financial situation. How much can you comfortably give without impacting your financial security? Then, allocate funds wisely considering potential tax benefits of different giving strategies. 

Third, consult a financial advisor. Why? Because professional guidance can help you naviate the complexities of charitable giving, ensuring you maximize the benefits for both you and the charities you support.

Finally, fourth – document your donations. Keeping detailed records is important for tax purposes. This includes receipts and acknowledgements from charities you support.


Are Charitable Strategies a Good Idea for Me? Now What?

Charitable strategies are crucial for legacy planning. Clients of Rely Wealth gain access to our network of professionals specializing in charitable strategies, allowing you to take advantage of our trusted relationships and unique expertise. With a solid charitable plan, you can make not only a big impact in the areas you care about most, but you’ll leave a legacy for your family in the process.

Ready to make an impact? Start exploring your charitable giving options today.

DISCLOSURE: Investment advisory services offered through Rely Wealth Partners, LLC, a DBA of tru Independence Asset Management, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission. This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.

We work with highly motivated individuals and families who want to be financially complete and value clarity.

Daniel Mauser — Founder and Managing Partner