Tips for Year-End Giving

by | Nov 4, 2022 | News

CFNLA CEO, Kristi Gustavson, recently sat down with a donor to discuss year-end giving and how CFNLA might help maximize her charitable giving while minimizing her taxes. This was their discussion:

JANE: Is now a good time for me to plan my year-end charitable giving?

KRISTI: Absolutely; particularly if you need time to visit with your CPA or accountant which we highly recommend as each donor’s tax strategy will differ!

JANE: Are there any charitable tax incentives I might take advantage of this year?

KRISTI: While CARES Act incentives expired,* if you itemize deductions when filing your tax returns you can deduct your charitable donations. To do so, an individual must donate a minimum of $12,950 in 2022, versus a $25,900 donation for married couples filing jointly.

JANE: My spouse and I normally donate around $15,000 a year to the charities we choose. What if we prefer this timeline or we are not sure yet which nonprofits we want to give to?

KRISTI: Not a problem. You can open a Donor Advised Fund (DAF) at CFNLA in 2022 and wait to distribute some or all the donation amount in later years. For example, if you open a DAF in 2022 with a contribution of $25,900 (so it is deductible), you can give $15,000 now to your favorite charities and the rest in 2023 or even later. The timing is up to you.   

JANE: Is it difficult to open a DAF?  

KRISTI: Not at all. A DAF can be opened in one day with a minimum of $5,000. 

JANE: I struggle at year-end to find all my charitable donation receipts for my tax preparer.

KRISTI: If you make all your donations through a DAF, you will only have one tax receipt from CFNLA. We will take care of all the rest for you. Once we ensure the nonprofits you choose are in good standing with the IRS, CFNLA will send them a grant check with all the pertinent information about you; or you may even choose to remain anonymous.     

JANE: Can I donate non-cash and, if so, what are the advantages to doing so?

KRISTI: An effective strategy to maximizing charitable giving while minimizing taxes is donating appreciated stock.  Appreciated stock gifted to CFNLA is exempt from capital gains tax. There may even be advantages to selling stocks at a loss and donating the sale proceeds. We recommend you discuss this with your tax advisor. 

JANE: Can I make a charitable contribution from my IRA to CFNLA?

KRISTI: Yes, if you are over 70 ½ you may donate up to $100,000/year in IRA assets directly to a charity. These “Qualified Charitable Distributions” (QCDs) may be made tax-free if directed to a nonprofit like CFNLA. While the IRS does not allow IRA donations to DAFs, you can donate to other funds at CFNLA like Designated, Field of Interest, or Special Initiative funds.  QCD’s can be used to satisfy your Required Minimum Distribution (RMD). I would be happy to visit with you and your tax advisor to discuss these all of these options in greater detail.

*For example, the charitable contribution rules have reverted back to no more than 50% of AGI for cash contributions and 30% of AGI for non-cash contributions.

Interested in opening a DAF? Contact Kristi Gustavson at 318-221-0582 or [email protected].