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.
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:
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.
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:
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!
Further reading, HAVE YOU WONDERED WHERE YOU CAN INVEST? LET’S LOOK AT THE OPTIONS.
Are you aware of DAFs? Charitable Rollovers? Have you used other methods for charitable giving – volunteer time, etc.?