Six Strategies to Make a Charitable Impact in 2021
2021 offers hope, renewal, and the start of the healing process as we move through and towards the end of the pandemic. Here are six outstanding strategies to make an impact this year and help repair and strengthen your community.
- Give Cash. Cash gifts now provide an “above the line” tax deduction of up to $300 for individuals and $600 for married filing joint filers. (Above the line deductions are direct reductions of your gross income. “Regular'' itemized deductions are taken after your adjusted gross income is calculated and only useable if they are greater than your standard deduction.) And whether your gifting budget is $10 or $10,000, giving cash is one of the most direct and easy ways to support GRuB’s mission.
- Give Regularly (join the Sustaining Circle). The work, the mission, and the expenses of almost all organizations, including GRuB, is ongoing. Operating expenses, utilities, and staff salaries must be paid each month. Consider becoming part of GRuB’s Sustaining Circle, like I have, to make sure GRuB stays financially strong month after month, year after year. Donors that join the Sustaining Circle pledge to give regularly - every month or every year. The more donors that join the Sustaining Circle, the more financial certainty GRuB has regarding its revenues and budget. This makes planning easier and ensures that programs continue.
- Give Appreciated Assets. If you have stocks or mutual funds that have grown over the years, a gift of some of these investments may save you a bundle on capital gains tax and will provide a significant tax deduction! Many people sell their investments and then gift the proceeds; however, gifting this way may subject you to capital gains taxes of 15% to 20%. A better approach is to consider gifting the entire investment directly to GRuB. This saves you from paying any capital gains tax at all and may allow you to take a deduction.
- Give to a Donor Advised Fund. A donor advised fund (or DAF for short) is an investment account designated for charitable gifting. Cash, stocks, or other assets are placed into the fund and then you, the donor, direct the fund to make gifts to the charitable missions of your choice - whenever you want. When you use a DAF, you get a deduction in the year you make the gift to the fund, not when you direct the DAF to make the donation.
- Give From Your IRA. If you are 72 or older and you have traditional or rollover IRAs, you are probably required to make annual distributions from your IRA (called RMDs). When you make withdrawals from these accounts, you are typically taxed at your ordinary income tax rate. One smart alternative is to make gifts directly from your IRA to the organizations of your choice. This gifting technique is called a Qualified Charitable Distribution (QCD) and is not taxed!
- Give a Legacy. Research shows that most people regularly make donations and are charitably inclined, but only about 6% actually include charitable gifts in their will. One sobering fact of the pandemic is that it has made many of us very aware of our own mortality. Including donations in your will and even as a beneficiary of your IRA is an excellent way to create a lasting impact and make an enduring statement about your life and your values.
These six strategies, in addition to the gift of your time or your skills, are excellent ways to make an impact and incredible difference in the lives of people in your community in 2021.
Disclaimer: The information provided is not intended to provide personal financial, tax, or legal advice. This article is for informational purposes only. You should consult your tax, legal, or financial advisor to understand the impact on your specific situation and the best strategy to implement.
Tom McLean is a CERTIFIED FINANCIAL PLANNER™ professional and founder of Advitica Financial Planning. He can be reached at firstname.lastname@example.org.