Ways To Give Smarter
While donations via cash, check, or credit card make up the majority of gifts to non-profits across the country, many people may not realize that there are other, more strategic ways to support the causes they care about. These alternatives can provide greater benefits for both the donor and the organization.
Donating Stock or Appreciated Securities
One of the most tax-efficient ways to give is by donating stock or other long-term appreciated securities. By doing so, you can avoid paying capital gains taxes on the appreciated value of the asset while making a significant impact on Parc Center for Disabilities.
For example, if a donor sells $100,000 in stock, they would typically owe $14,250 in long-term capital gains taxes, leaving $85,750 to donate to Parc Center for Disabilities. In this scenario, the donor would receive a tax deduction of $27,440 if they are in the 32% tax bracket.
However, if that same donor chose to donate the $100,000 in stock directly to Parc Center for Disabilities, they would pay $0 in capital gains taxes, allowing them to donate the full $100,000. Additionally, the donor would receive a $32,000 tax deduction—maximizing the benefits of their gift.
In short, by donating stock directly instead of selling it first, Parc Center for Disabilities receives the full $100,000 gift, the donor avoids $14,250 in capital gains taxes, and they receive a larger tax deduction of $32,000 compared to $27,440. Donating appreciated securities can be a smarter and more impactful way to give!
Here are more details that might be helpful to you regarding donating stock or appreciated securities.
IRA Charitable Rollover
If you are 70 ½ years or older, you can use your IRA to make a powerful contribution to Parc Center for Disabilities while potentially reducing your tax burden. If you find the annual Required Minimum Distribution (RMD) from your IRA to be a tax liability, or if you regularly donate via cash, check, or credit card, giving through your IRA could be a smarter option.
By donating directly from your IRA to Parc Center for Disabilities, you can lower your taxable income for the year. For instance, if you typically donate $10,000 each year through cash, check, or credit card, you might be able to claim a deduction—if you itemize your taxes. However, if you instead donate the $10,000 as an IRA Charitable Rollover, that amount won’t count as taxable income. This could save you significantly on taxes, especially if you’re in the 32% tax bracket, potentially reducing your tax liability by $3,200 for the same donation amount.
Here are more details of how this simple process can work for you and save you taxes!
Additionally, any IRA Charitable Rollover gifts you make will count toward your RMD, which starts at age 72. You can contribute up to $100,000 annually from your IRA through this giving method, making it a strategic way to support Parc Center for Disabilities and manage your financial planning.
Please note: The IRA Charitable Rollover provision does not apply to 401k, 403b and Roth IRA retirement assets. Consult your financial advisor for more information.
Donor Advised Funds
Once you’ve established and funded a Donor Advised Fund (DAF) through a reputable institution, you can easily recommend grants to Parc Center for Disabilities at any time throughout the year.
A Donor Advised Fund is a strategic way to give, as you’ve already received tax benefits for the contributions made to your DAF. Additionally, any growth within the fund is tax-free and can be directed to qualified non-profits like Parc Center for Disabilities. This makes giving through your DAF not only convenient but also financially beneficial.
Here are more details that might be helpful to you as you issue a DAF grant to Parc Center For Disabilities.
Parc Center For Disabilities does not provide tax, legal or financial advice. These materials have been prepared for informational purposes only, and are not intended to provide, and should not be relied on for tax, legal or financial advice. You should consult your own tax, legal and financial advisors before engaging in any transaction.