Leveraging your charitable giving

November 19, 2013 

With Thanksgiving and the holiday season approaching, giving back to the community comes into focus. Many of us have reasons to be thankful and share our wealth. Gifts of time or money can assist causes, individuals or institutions in the community, or to people we personally know.

If we use leverage we can increase the benefits to the recipient and the giver.

There are a number of opportunities to give to community or educational causes where another donor will match or increase the value of a gift. Obviously the recipient organization will see a greater benefit however, the giver will also benefit as their cause now has more resources to work with. Locally you can ask your employer, community foundations, the organizations or the media to determine what matching plans are available.

Another way to leverage your giving is by reducing your tax burden. Depending upon how you handle your deductions, you may be able to deduct your contributions. Although obtaining a tax deduction is not the reason most people give, it can be a significant benefit. When giving, the tax benefit will be different depending on whether you give cash, securities or other assets, and the organization to which you are giving. Cash is easy to value for tax purposes. However, if you have securities or other assets, such as a car, you need to look at the appreciated value, cost basis or market value to determine how much you can deduct. The type of organization (religious, educational, community, etc.) and the organization's mission can impact how much of the donation can be deducted. Although it may take some effort to give non-cash assets, if it allows you to give more or receive a greater tax break, it may be worth the effort for both parties. If you want to accomplish this in 2013, the time to start the pro

cess is now.

If you qualify, there is another tax saving way to leverage contributions and reduce your current, and future, tax bill. If you are 70 1/2 or older, you can donate directly from your Traditional IRA. Those 70 1/2 or older, must take required minimum distributions, which if they go to you, are taxed as normal income. If you plan to make charitable donations, you can have the transfer made directly to the organization. The withdrawal will count towards your required minimum distribution but will not be counted as income to you. The donation must be direct from the IRA, cannot be over $100,000 and meet other IRS requirements. It is best to contact your IRA custodian to assure it is done correctly. This popular tax provision expires at the end of 2013 but may be extended.

The internet has made it easier to collaborate on giving. If you cannot find a local cause in which you are interested, you can find Giving Circles online. Like minded people create circles to leverage their smaller contributions to increase the benefit to their causes. This can be an easy way to leverage a large number of smaller gifts. Before giving to any organization, do your research to assure they will utilize your gift towards the stated mission and not other uses. Doing your homework assures you are maximizing the impact of your contributions.

Next week, as we give thanks and celebrate Thanksgiving, think about how you can leverage your gifts. You can increase the value to the receiver as well yourself by taking a few simple steps to leverage your contributions.

Tom Roberts, a certified financial planner and the owner of A New Approach Financial Planning in Lakewood Ranch and Sarasota, can be reached at (941) 927-9590 or Tom@ANewApproachFP.com.

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