Understanding Charitable Giving: Strategies and Tools

 
wacopiesociety.org
 
Ask for a Piece
of 
THEIR
 Pie!
 
How Legacy Gifts Create a Sustainable
Future for Your Nonprofit
 
Jamie Goble
Director of Planned Giving
 
 
Jeremy Mocek
Investment Manager
 
We 
promote solutions 
to
community challenges,
strengthen nonprofits,
 
engage
philanthropists 
and 
manage
charitable assets
 in order to
improve quality of life in
McLennan County.
 
Waco Foundation Mission
 
$471 billion 
was
given to charities
and nonprofit
organizations in
2020  - 
69% 
of
that was given by
individual
donors, and 
9%
from donor
bequests.
 
THE STATE OF CHARITABLE
GIVING
 
https://curtisgroupconsultants.com/giving-usa-2020-giving-reached-over-400-billion/
 
Most common way to give?
 
Cash:
Convenient
Easily recorded
Immediate impact
 
Although convenient, is cash always our most tax-
efficient way to give?
UNDERSTANDING WAYS TO GIVE
 
Average Inflation Rate 1914-2022: 
3.26%
Leads to Loss of Purchasing Power
 
Challenges for Nonprofits:
General Expense Increases (utilities, maintenance)
Employee/Staff Compensation & Insurance
Building Improvements or Special Projects
Activities and Program Expense Increases
PERSPECTIVE ON GIVING CASH
 
 
a 
future gift
.
 
often 
illiquid, with tax consequences, and requires planning.
 
typically, a bequest in a will or a beneficiary of a retirement plan or
life insurance policy.
 
usually larger than lifetime gifts and are mostly from resources
other than cash.
 
not something most donors are thinking of until someone talks to
them about making one.
 
A component to long-term success of any nonprofit
organization.
What is Planned Giving?
 
Appreciated Asset Donation
Qualified Charitable Distribution (QCD)
Charitable Remainder Unitrust (CRUT)
Charitable Remainder Annuity Trust (CRAT)
Charitable Lead Trust
Donor Advised Fund (DAF)
Strategies for Nonprofit Organizations
Charitable Planning Tools and
Techniques
 
Gifting appreciated stock to charity
:
Stocks owned by donor that have a very low initial
cost
That are held in a general non-retirement account
Would potentially have a capital gains tax
consequence if sold outright.
Allows donor to use the stock as a gift to the
nonprofit, while 
escaping the capital gains tax 
AND
receiving a 
tax deduction
.
*Remember – Charities pay no taxes when
selling stock!
APPRECIATED ASSET DONATION
 
 
Example:
Mr. Donor bought 
400
 shares of Apple Inc. (AAPL) for 
$74.36/shr
 on
1/3/2021.
Value at that time = 
$29,744
Share price on 1/13/2022 = 
$175.53/shr
Value on 1/13/2022 = 
$70,212
Long-Term Capital Gain = 
$40,468
Mr. Donor gifts 
100
 shares to his charity
Charity receives 
$17,553 
worth of AAPL stock
Capital gain tax of 
$2,632 
is avoided (15% rate)
Donor receives 
$17,553 
charitable deduction
APPRECIATED ASSET DONATION:
DETAILED EXAMPLE
 
Known as a 
QCD
:
Used for making charitable gifts from a tax-deferred
retirement account (IRA, 401k, etc.)
Withdrawals from these accounts are 
taxable as ordinary
income
.
A QCD allows for a gift to be distributed from a qualified
account and be sent directly to charity.
This allows the amount to be excluded from income,
rather than having to itemize it as a deduction*
 
QUALIFIED CHARITABLE
DISTRIBUTION
 
 
What to know about QCDs
 
QCDs come from Required Minimum Distributions (RMDs)
Many retirees are subject to RMDs, but might not need the
income. Still must take it and pay tax.
A donor can send some or all of the RMD amount to a charity or
nonprofit.
Mitigates or eliminates unnecessary tax liability.
 
*
MUST
 go directly to charity or nonprofit to take full advantage.
 
QUALIFIED CHARITABLE
DISTRIBUTION
 
 
Charitable device designed for flexible giving:
 
Donor opens an account with DAF sponsor (typically a foundation)
Makes 
irrevocable
 gift of appreciated assets or cash to the DAF
Receives an immediate tax deduction for contribution
Up to 60% of AGI for cash donations
30% for stock donations
5-year carryforward for unused deduction
Assets can then be invested and professionally managed, creating
tax-free growth.
Donor can distribute to any charitable organization as they see fit at
any time.
DONOR ADVISED FUND (DAF)
 
DONOR ADVISED FUND (DAF)
Cash or
Appreciated
Securities
Account
Name
Professional
Investment
Management
Give Over Time at
Your Convenience
 
DAF
 
DONOR
 
Charity
 
Charity
 
Charity
 
Capital Gains Tax Avoidance &
Income Tax Deduction
 
 
Major Legacy Planning Benefits Include:
 
Allows for maximum giving flexibility.
 
Creates highest tax deduction allowed by IRS ($ for $)
 
Can be continuously funded (more tax deductions)
 
Can be structured as a family legacy tool, allowing the next
generation to take control of future giving as successor owners.
 
 
DONOR ADVISED FUND (DAF)
 
Planned Giving Services
 
Strengthening Nonprofits & Engaging Philanthropists
 
We facilitate and accept a variety of planned gifts:
Gifts of Stock
Gifts of Business Interests
Retirement Assets
Real Property
 
We partner with donors and their professional advisors to administer
gifts for any nonprofit.
 
We provide stewardship of donor gifts through the 
Pie Society
 
 
Planned Giving Services
 
Strengthening Nonprofits & Engaging Philanthropists
 
Pie Society
Who?
Community-wide giving society of generous donors
What?
Promise to leaving a portion of their estate
When?
At death, or in the future
Why?
Ensure charities that strengthen our community continue their
work for generations to come
How?
Facilitate & steward planned giving
 
 
 
Q & A
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Explore different ways to give effectively, beyond cash donations. Learn about appreciated asset donations, donor-advised funds, and qualified charitable distributions to maximize your impact while optimizing tax benefits for charitable giving.


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  1. THE STATE OF CHARITABLE GIVING https://curtisgroupconsultants.com/giving-usa-2020-giving-reached-over-400-billion/

  2. UNDERSTANDING WAYS TO GIVE Most common way to give? Cash: Convenient Easily recorded Immediate impact Although convenient, is cash always our most tax- efficient way to give?

  3. PERSPECTIVE ON GIVING CASH Average Inflation Rate 1914-2022: 3.26% Leads to Loss of Purchasing Power Challenges for Nonprofits: General Expense Increases (utilities, maintenance) Employee/Staff Compensation & Insurance Building Improvements or Special Projects Activities and Program Expense Increases

  4. Charitable Planning Tools and Techniques

  5. APPRECIATED ASSET DONATION

  6. APPRECIATED ASSET DONATION: DETAILED EXAMPLE

  7. QUALIFIED CHARITABLE DISTRIBUTION

  8. QUALIFIED CHARITABLE DISTRIBUTION

  9. DONOR ADVISED FUND (DAF)

  10. DONOR ADVISED FUND (DAF) Account Name Professional Investment Management Give Over Time at Your Convenience Cash or Appreciated Securities Charity Charity DAF DONOR Charity Capital Gains Tax Avoidance & Income Tax Deduction

  11. DONOR ADVISED FUND (DAF)

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