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Two Ideas for Giving Tuesday

By Beverly Bowers November 27, 2023 Managing Money

I bet you have heard of Black Friday and Cyber Monday, but are you familiar with Giving Tuesday? Created in 2012, Giving Tuesday is a global day of giving that takes place on the Tuesday following Thanksgiving Day in the United States. It encourages people to give back to their communities and support charitable causes.

Here are a couple of ways to give that might also provide a tax benefit to you.

Donor-Advised Funds

A donor-advised fund (DAF) is a charitable investment account that allows donors to make charitable contributions, receive an upfront income tax deduction, and then disburse the funds as frequently as they wish over time. The account is managed by a sponsoring entity that is a section 501(c)(3) organization.

Many communities, religious entities, and even brokerage houses (Fidelity, Schwab, Vanguard, e.g.) sponsor donor-advised fund foundations or trusts to encourage charitable giving.

Some of the donor benefits of DAFs follow:

  • Receive an immediate charitable income tax deduction for your donation – no matter when the money is disbursed to a charity.
  • Make grants over time to any IRS-qualified public charity.
  • Until you disburse funds, invest the funds for tax-free growth. 
  • Donate long-term appreciated assets at fair market value to reduce potential capital gain tax.
  • Control when and where the DAF funds will be donated.
  • Simplify recordkeeping and organization of your charitable giving.
  • Support legacy planning.

Please note that a DAF may specify an account minimum and set a minimum grant size. Also, there are often fees associated with a DAF. It is always a good idea to check with your accountant or tax advisor to assure you that this, or any tax strategy, makes sense for you.

Charitable Rollover

Another tax-friendly option is a Qualified Charitable Distribution (QCD), sometimes called a Charitable Rollover. It allows you to support a qualified charity and, at the same time, count the donated funds toward your Required Minimum Distribution from your Traditional IRA when you reach RMD age (now 73).

Just follow these rules:

  • You must be 70 ½ or older.
  • You must make a DIRECT payment from your IRA to a qualified charity (see your account custodian for specific instructions).
  • The annual gift(s) may not exceed $100,000 in 2023 but that maximum will be increased for inflation starting in 2024.
  • The gift is NOT included in taxable income.
  • The gift is NOT a deductible charitable contribution for income tax purposes.
  • The gift counts toward your IRA’s Required Minimum Distribution.
  • Unfortunately, the charitable contribution cannot be made to a donor-advised fund.

Most financial institutions set a deadline for such a charitable request well before the end of the year, so this is time critical!

Although we don’t need a special day to be charitable, Giving Tuesday reminds us to be aware of those around us in need – human and animal – and include them in our holiday plans!


Let’s Have a Conversation:

Are you aware of DAFs? Charitable Rollovers? Have you used other methods for charitable giving – volunteer time, etc.?

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The Author

Beverly Bowers is a retired financial planner who has been solely responsible for her financial life over 25 years. Her passion is to make investments understandable – dispel the mystery and simplify the process. In 2021 she self-published a book, How to Dress a Naked Portfolio, a Tailored Introduction to Investing for Women. She relishes questions from all levels of investors. You may submit questions and sign up for her blogs on her website.

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