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Year-End Charity Giving

November 14, 2013

Following, are some ways to contribute that I adapted from a letter I prepared for a charity I am on the Board of.  Substitute your organization’s name in the text and use it for your mailings.  It also has some good tips for those that make significant contributions.  Consult with a tax advisor before proceeding.

Ways to contribute

Contributions to NAME OF ORGANIZATION are deductible on your tax return if you itemize.  There are several effective tax methods that can allow you to get extra mileage from your contributions while maintaining your cash position.

Stock payments

Almost all contributions made to us are with checks or credit cards.  However, you can donate appreciated stock you owned more than one year.  You’ll get a full deduction for the stock’s value, not have to pay tax on the gain, and will conserve your cash.

Besides stock you purchased outright, you can donate dividend reinvestment shares, stock spin-off shares, stock in demutualized life insurance companies that you received for “free,” or stock you inherited or was given to you as a gift.

Making your contribution this way is a completely legitimate tax maneuver and can be done very easily.  Our organization’s policy is to immediately sell any securities transferred with the proceeds considered as your charitable contribution.

Transfers can easily be made by instructing your broker to transfer the stock you want to donate to our broker’s transfer address.  Contact the executive director for this information.

Charitable gift annuity

If you are over age 70 it might be advisable to contribute a charity gift annuity and guarantee a cash-flow to yourself for the rest of your life that is greater than the current long-term interest rates.  For example, a 70-year-old can get a 6.5% distribution for the rest of their life, a 75-year-old 7.1%, an 80-year-old an 8.0% payment and someone 85 a 9.5% payment.  Payouts can also be arranged for the rest of both spouses’ lives.  Further, there is a limited current income tax deduction based upon your age.  These payout rates will vary based on your age and current market interest rates when you make your contribution.  In exchange for the lifetime payment guarantee, there would be no refund of unexpended funds.

Life insurance

You can purchase a life insurance policy naming our organization as owner and beneficiary.  The annual premiums you pay will be tax deductible by you as a charitable contribution and we will receive the proceeds upon your death.  This is a way you can substantially help us secure our future and establish a leveraged legacy for yourself or family.  You can also provide us, if you wish, with instructions of how you want the proceeds applied.

Make donations from your IRA account

If you are over the age 70 ½ and/or taking required minimum distributions, you can direct a contribution to us from your IRA account.  The contribution would not be deductible but the withdrawal would not be taxable.  This is a way to make a contribution without using the cash you have in your individual name and can use the amount contributed as part of your required minimum distribution.  This method would particularly benefit people that do not itemize and would otherwise get no tax benefit from their charitable payment, or those in higher federal tax brackets that will not get a full benefit for their contributions, or who get no benefit from their deduction on their state income tax returns.  There is a maximum transfer of $100,000 and this is set to expire on December 31, 2013.

You can also designate our organization as a beneficiary, partial beneficiary or alternate beneficiary on your IRA, 401k, 403b or pension plan.  The amount donated this way would not be subject to income or estate taxes after you pass on.

Remember us in your will

A wonderful way to support us is to remember us with a bequest.  This can be any amount specified in your will or living trust.  You can also specify how you want your bequest applied.  You can include wording such as the following in your will or trust:

I designate $50,000 [or any amount of your choosing] to be paid to NAME OF ORGANIZATION. 

Other methods

There are other methods that can be used such as charity remainder or lead trusts, and gifts of inventory, real estate, art or antiques.  For additional information on the above and on other sophisticated tax techniques please contact the executive director who will put you in touch with a CPA volunteer to advise you on the best way you can contribute to us.  If you want additional information about anything mentioned above, please contact the executive director.

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