Whether you want to support education and provide scholarships for local nursing students or establish a charitable legacy to benefit future generations, there are a variety of options available that can minimize your tax liability while maximizing your impact. Here is an easy giving checklist to help you do more and (hopefully) save more.
1. Determine your philanthropic and financial goals. Once you have an idea of what you want to achieve, you can start creating a plan to align your charitable giving with your overall financial strategy.
2. Research and consider different giving options. There are several options available, each with its own tax advantages and implications. For instance, giving through your estate plan, which typically involves a larger gift. Even if you choose to allocate a small portion of your estate (5-10%), it has the opportunity to grow over time. Establishing a bequest can help reduce estate taxes, leaving your beneficiaries with more of your estate to distribute to those charities close to your heart. Another option is a donor advised fund (DAF), which can provide immediate tax benefits and the flexibility to recommend grants from the fund. This allows you to schedule your grants in a way that works best for you. You may also receive a reduction in income tax, capital gains tax, and/or estate tax by using a DAF. Additionally, you can choose to donate directly from your checking account, which may result in a deduction if you qualify for an itemized tax return.
4. Always seek the guidance of a financial advisor or tax professional to determine the best approach for your specific situation. Their expertise can provide reassurance and help you lay out a realistic plan for your giving that aligns with your values and long-term financial strategy.
5. Your giving plan is flexible. Over time, your charitable interests may change, and that's okay. Review your plan every couple of years to ensure it continues to meet your philanthropic and financial goals, allowing you to adapt and grow with your giving.
There are numerous charitable giving options that provide various tax advantages and can be tailored to meet your philanthropic and financial goals. When you’re ready to start marking off your checklist, consult with a financial advisor or tax professional to determine the best options for your specific situation. If you would like more information about the tax-smart options available at your community foundation, Cole Eason, Vice President of Advancement, would be happy to work through this checklist with you.
