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June 19, 2021

‘Tis the Season for Charitable Giving

The Charity Aid Foundation recently released their fifth annual World Giving Index, which measures more than 135 countries according to the percentages of people that donate their time and/or money to charitable causes. The United States ranked #1 (tied with Myanmar) as the most charitable country in the world. Couple that with the fact that December 2nd was Giving Tuesday, a global day dedicated to giving back, and it seems to be the right time to discuss the best way to give to the charities and causes that you believe in before the year rings out.
Donating, however, is not always as simple as writing a check. Here are five things to consider that can help make the most of your giving.
1. Cash may not be the best option
While most might assume that cash is the obvious and best way to donate to a charitable cause, that is not necessarily the case. For tax purposes, a gift of a long-term, appreciated, publicly held stock is more advantageous. You are allowed a full market value (FMV) deduction for a donation of publicly traded securities held for more than a year. You also avoid the tax that would have applied to any future sale. Just be cautious that you allow enough time at the end of the year to make the transfer. Some donations will require a gift agreement, and smaller charities might have a longer process for receiving such a gift.
2. The importance of getting an acknowledgement
It is critical that you get a “contemporaneous” written acknowledgment for a gift of $250 or more. Failure to do so may cause you to lose the benefit of a charitable deduction. Be sure to obtain this acknowledgment by the earlier of filing the tax return or the due date for the return.
3. Get Appraisals for Property
When giving charitable gifts of property with a value greater than $5,000 ($10,000 for closely held stock) you need to have the property appraised by a qualified appraiser. Publicly traded stock, however, is the exception to this rule. Also, the appraisal must occur no sooner than 60 days before the date of the gift. Failure to obtain a qualified appraisal can result in a complete loss of the deduction.
4. Careful of giving money unrestricted
We often assume that when we are donating to a charity, that the funds will be used for the biggest or most recent disaster or cause. But unless explicitly stated by the organization or unless you, the donor, make this restriction, the gift can be used for any of the charity’s causes. So if you are passionate about a particular cause, do the due diligence to ensure your money is being used in the way that you intend.
5. Keep an eye on the numbers
Whether you are giving a small or large gift, it is always wise to run all the numbers first. When it comes to making these charitable deductions from your federal income tax, the rules can be complicated. The savings you see will depend on the asset given, the recipient, your total charitable gifts relative to your adjusted gross income (AGI), your tax rate, and whether the itemized deduction “phase-out” will apply. You will want to work closely with a financial advisor and tax professional, especially when giving large charitable gifts.
According to the Blackbaud Index, charitable donations rose by almost 2% in the months July – September, compared to that same time period in 2013. But it is the 4th quarter that non-profits and other charitable organizations are depending on for help and survival. In fact, 34% of all charitable giving is done in the last three months of the year, 18% in December alone.
We should always be looking to help others, but if you can only give just once, now is the time of year to do it. And when you do, be sure to donate wisely so you maximize both the organization’s benefits as well as your personal satisfaction and tax deductions.
If you’d like to discuss charitable giving plans, please visit us at or call us at (408) 779-0699.
RNP Advisory Services is a Registered Investment Advisor.Securities offered through Foothill Securities, Inc. – Member FINRA/SIPC, an unaffiliated company. Information provided is general and educational in nature and should not be construed as investment, legal or tax advice. RNP Advisory Services, Inc. does not provide legal or tax advice.

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