Charitable Giving Strategies: Part I

As we approach the end of 2019, Baldrige Asset Management would like to provide you various ways to contribute to your favorite charities. The basics of the more common charitable giving strategies are summarized here:  

• Gifting appreciated securities:
  • Tax-efficient strategy by gifting appreciated stock, ideally held long-term. You will save the capital gains tax for both federal and state taxes.
  • If you gift a large amount, or even multiple years’ worth of donations in one year, you also benefit from the tax savings on the amount that exceeds the standard deduction.
  • Gifting physical items or other appreciated property is another option.
• Qualified Charitable Distribution:
  • If you are over the age of 70.5, you can gift up to $100,000 tax-free from your IRA annually, avoiding taxation at your standard income rate.
  • Add check writing to your IRA to send tax-free checks directly to qualified charities or sign one-off forms.
  • Read more details about this strategy here. 
• Donor Advised Fund:
  • You contribute to a donor advised fund your charitable gift, after which you can make grants or distributions to various charities whenever you want.
  • Can “bunch” multiple years of donations at one time, which will allow you to both itemize over the standard deduction rate and avoid capital gains taxes.
  • Options are available at Schwab Charitable and Fidelity Charitable with their associated fees and investment tracks. Charitable accounts with balances over $250,000 can have Baldrige Asset Management oversee and choose the investments. Alternatives are available elsewhere if would like BAM oversight under that threshold. 
• Private Foundation:
  • There are family, corporate, and other types of Private Foundations.
  • Foundations primarily make grants to public charities, although they sometimes conduct their own charitable activities.
  • Main benefits: the Foundation’s board maintains 100% control of the funds and goals of the Foundation, leaving a family or corporate legacy. 
  • Common downsides include recordkeeping, regulatory, and reporting requirements. 
• Charitable Remainder Trust:
  • A gift of property, assets, or cash to an irrevocable trust.
  • Donor can receive an income stream from the trust for a set number of years or their lifetime if preferred.
  • Named charities receive the remaining assets at the end of the term. 

In Part II of this topic, we will be discussing factors to take into consideration when determining charitable giving strategies, including the most recent changes to tax laws. 

Until next time,Diana Lormand, FPQP™
Director of Client Services

Disclaimers 
Baldrige Asset Management LLC is registered as an investment adviser with the SEC and only conducts business in states where it is properly notice filed, or is excluded or exempted from registration requirements. Discussions on our blog do not involve the rendering of personalized investment advice, but are limited to the dissemination of general information. A professional advisor should be consulted before implementing any strategy that may be suggested. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability.

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