Lessening your tax burden while making contributions to established worthy causes in the valley is a clear win-win, and now’s the time.
The story below is an excerpt from our March/April 2015 issue. For the full story download our FREE iOS app or view our digital edition for FREE today!
Spring is tax season, and a good time to consider not only new investment possibilities but also how best to donate to your favorite charity in the Roanoke Valley. Through charitable investing, you can accomplish both while reducing your tax burden – possibly receiving supplemental income – and supporting charitable work that matters to you. And if you represent a local business, supporting charities will enhance your company’s reputation in the community and potentially attract new customers.
Charitable giving and investing can be valuable tools for tax, retirement and estate planning. Donations and donor-advised funds offer tax deductions, while charitable trusts and annuities offer a partial tax deduction and provide a source of income for the investor or heirs.
Outright gifts are eligible for a tax deduction, and the qualified charity gains immediate access to the money. The larger the donation, the greater the tax benefit (up to 50 percent of the donor’s adjusted gross income). While donating cash is good, donating appreciated securities is even better. By donating stocks or mutual funds which have grown in value directly to the charity, the savvy investor can circumvent the capital gains tax while providing the charity with the full fair market value of the donated securities.
Bequests, or end-of-life gifts of cash, stocks, mutual funds or other assets, provide a donation to the charity and income and estate tax benefits to the donor’s estate. Investors can also name a charity as beneficiary of all or part of their employer retirement plan (like a 401(k) or 403(b)), IRA or life insurance policy assets.
Donor-advised funds (DAFs) give investors greater control over how their gifts are used. The investor receives a tax deduction for the fair market value of the gift on the date of donation, and the DAF invests the proceeds. As the gift grows, the donor can make grant recommendations every year. Although DAFs may incur some administrative fees and require a minimum investment, they are growing in popularity due to their flexibility and convenience of managing (often online). Popular DAFs include the Foundation for Roanoke Valley, Fidelity Charitable Gift Fund, Schwab Charitable Fund and Vanguard Charitable Endowment Program.
Charitable trusts, charitable gift annuities and pooled income funds can all provide a benefit to both the qualified charitable organization and the donor or the donor’s family members or heirs. Because of this dual benefit, these are regarded as partial charitable gifts and are best established with the help of an estate-planning attorney.
Your investments can make a difference in the Roanoke Valley if you decide to invest in one of these prominent area charities:
• United Way of Roanoke Valley: community education, health and financial stability.
• Roanoke Valley SPCA: animal welfare.
• Rescue Mission: social welfare.
• Roanoke Symphony Orchestra: music and arts.
• Boys and Girls Club of Southwest Virginia: youth development.
• Habitat for Humanity: affordable housing.
• Red Cross-Roanoke Chapter: health, safety and disaster relief.
To learn more about these charities and charitable giving, visit these websites:
• Charity Navigator: charitynavigator.org
• CharityWatch: charitywatch.org
• BBB Wise Giving Alliance: give.org
Your charitable contributions can make a difference for your finances, your family, and the organizations you support.