Tips for the Year-end Giving Season
Two very different but oddly related thoughts come to my mind as I sit down to write this monthly column.
Thought one: that classic seasonal Santa jingle, “He’s making a list, checking it twice .” What lists are you making and how long are they this year? Most of us have some sort of list, short or long, of the family and friends to whom we plan to send holiday greetings or with whom we exchange gifts. I know people who sit down this time of year, as the tax year fades into sunset, and make their lists of the nonprofits they want to support with year-end contributions.
There may be favorite organizations you support year in and year out. There may be an urgent request or two this year from a human services organization or arts and cultural group whose government funding has been cut. There may be special projects or capital campaigns underway. As you well know, there is always something!
And thought two: How much grumbling one hears about the sheer volume of direct mail solicitations for charitable contributions gracing your mailboxes this time of year. It may seem like one a day, or five, or even 10! Ah, the trees that have been killed to produce all of these mailings. It can feel like a lot, yet as the adage is taught to all of us in the nonprofit fund-raising world: If you don’t ask, you won’t get.
The end-of-year and holiday season is very much a time of giving. And just as merchants hope the rush of December sales will bolster their profits for the whole year, so too do nonprofits count on end-of-year gifts to meet their operating budgets.
So here is a quick review of the many ways you can make a charitable gift in the next several weeks.
Gifts of cash, whether by check or by credit card, are the easiest and most popular method of making a charitable donation. These gifts are fully tax deductible for income tax purposes up to 50 percent of your adjusted gross income (less the value of any benefits you receive associated with the gift).
Gifts of securities, such as stocks, bonds and mutual funds that have increased in value, can bring tax savings. If owned for longer than one year, you pay no capital gains tax and are entitled to a charitable deduction for the full fair market value of the stock. To preserve tax advantages, it is critical that you transfer the securities directly to the nonprofit rather than sell the stock yourself. If you have investments that have decreased in value, considering selling them and making a deductible gift from the cash proceeds. You can deduct the loss in value (cost basis less current value) and derive a charitable deduction for the current market value.
Gifts of life insurance. If you own a life insurance policy that is no longer needed, it may be a perfect vehicle for a year-end charitable gift. What you do is name a favorite nonprofit organization as the owner and beneficiary of that policy.
If the policy has a cash value, you can take a charitable deduction approximately equal to the cash value at the time of the gift. In addition, if annual premiums are still to be made and you continue to pay them, those premiums will become tax deductible each year.
Gifts of real estate. If you have owned your home, a vacation home, acreage or a farm for many years, a charitable gift of that real estate can be especially tax-advantageous.
The property may have appreciated so much in value over the years that its sale would result in a sizeable capital gains tax. If given outright to a charity, you avoid the capital gains tax and, at the same time, realize a charitable deduction for the full market value of the real estate. In this case, or any case involving substantial or complex assets, we urge you to contact your tax or financial advisor to fully understand the impact of your gift.
And please remember that all gifts must be delivered, postmarked or transferred by Dec. 31 to qualify for tax deductibility in 2003.
Anne Wenzel is the executive director of the Western Colorado
Community Foundation, a regional organization promoting charitable giving
and providing resources to nonprofit organizations in our community.