A Season of Giving
By: Rev. Ed Bailey, Executive Director
It’s that time of the year when followers of Jesus begin to examine important decisions about charitable giving. It is also a time when churches and other nonprofits think about giving too. Did you know that According to the 2023 M+R Benchmarks Report, December giving accounts for roughly one fourth (26%) of annual nonprofit revenue? Some firms that track charitable giving believe the number is actually closer to 30 percent. Consider this statistic from Tithe.ly, “Every year, about 11% of charitable giving happens on the last three days. Most of those donations happen on the final day of the year—December 31, New Years Eve”.
If you have prepared and planned for this year’s season of giving, I am overjoyed! If you have not, I offer the following information can adapt and use in your church or organization.
Cash Gifts
Gifts of cash are common and convenient and can be made in person, online, or by mail. Gifts of cash are generally made with currency, check, credit card, and even electronic funds transfers (EFT). For 2023, cash gifts must be completed prior to December 31st. Remember to save all receipts and acknowledgements.
Non-cash Gifts
Non-cash gifts offer advantages too. Works of art, collectibles and other property can hold great value. Special IRS rules apply to these gift types. For example, for a non-cash gift greater than $5,000, a donor needs to have an independent appraisal for tax purposes. Check with your financial advisor for more information on arranging charitable gifts with non-cash assets.
Securities
Along with regular tax savings, you may be entitled to additional tax benefits when giving appreciated securities (e.g., stocks, bonds, mutual funds). Making gifts of highly appreciated securities allows you to avoid the capital gains tax that would be due if those assets were sold, offering tax savings even if using the standard deduction on your income tax return.
If you have owned the securities for more than one year, your gift is deductible and can be used to eliminate tax on up to 30 percent of your adjustable gross income (AGI) in the year of the gift. Any unused deduction amount may be used to reduce taxes in as many as five tax years. If you are considering a gift of securities, allow enough time for your gift to be completed by December 31st.
Retirement Plans
You may not realize you have other assets that can be used to help you meet your charitable goals. Many individuals have funds in a qualified retirement plan such as an Individual Retirement Account (IRA), a 401 (k) or a 403 (b). These may be a good choice for making current or future gifts, depending on your age and future needs.
For Those Age 72* and Older:
(*The change in the Required Minimum Distribution (RMD) age requirement from 70½ to 72 only applies to individuals who turned 70½ on or after January 1, 2020. Please speak with your tax advisor regarding the impact of this change on future RMDs.)
If you have an IRA, you can transfer up to $100,000 per year to qualified charities; $200,000 per year for a couple who each has an IRA. These charitable IRA transfers (a.k.a qualified charitable distributions, (QCD) are not taxed and count towards the annual Required Minimum Distribution (RMD).
Those who qualify should carefully consider the additional benefits of making all or a portion of their charitable gifts directly from an IRA. These tax-free gifts are particularly wise for those who may no longer itemize deductions on their annual income tax return. Please consult your financial advisor for specifics related to your personal situation.
Other Gifts:
Other gifts can be made from assets that may no longer be needed. For example, Life Insurance Policies that were taken out years ago for a specific purpose but are no longer needed today. If you have a policy like this, you may assign all rights and benefits of the policy to the Church.
You can also arrange a future gift by naming a charitable recipient as a beneficiary of a retirement plan. You and your family can enjoy use of the assets and charitable beneficiaries can receive any remaining funds in the future, free of income tax on amounts they receive.
The end of the year is one of the most generous times of the year. Hopefully the information provided will assist you in meeting your giving goals.
The information provided is general planning information and not intended as legal, accounting, or other professional advice. The services of an appropriate advisor should be obtained to discuss tax and other financial implications.
It’s that time of the year when followers of Jesus begin to examine important decisions about charitable giving. It is also a time when churches and other nonprofits think about giving too. Did you know that According to the 2023 M+R Benchmarks Report, December giving accounts for roughly one fourth (26%) of annual nonprofit revenue? Some firms that track charitable giving believe the number is actually closer to 30 percent. Consider this statistic from Tithe.ly, “Every year, about 11% of charitable giving happens on the last three days. Most of those donations happen on the final day of the year—December 31, New Years Eve”.
If you have prepared and planned for this year’s season of giving, I am overjoyed! If you have not, I offer the following information can adapt and use in your church or organization.
Cash Gifts
Gifts of cash are common and convenient and can be made in person, online, or by mail. Gifts of cash are generally made with currency, check, credit card, and even electronic funds transfers (EFT). For 2023, cash gifts must be completed prior to December 31st. Remember to save all receipts and acknowledgements.
Non-cash Gifts
Non-cash gifts offer advantages too. Works of art, collectibles and other property can hold great value. Special IRS rules apply to these gift types. For example, for a non-cash gift greater than $5,000, a donor needs to have an independent appraisal for tax purposes. Check with your financial advisor for more information on arranging charitable gifts with non-cash assets.
Securities
Along with regular tax savings, you may be entitled to additional tax benefits when giving appreciated securities (e.g., stocks, bonds, mutual funds). Making gifts of highly appreciated securities allows you to avoid the capital gains tax that would be due if those assets were sold, offering tax savings even if using the standard deduction on your income tax return.
If you have owned the securities for more than one year, your gift is deductible and can be used to eliminate tax on up to 30 percent of your adjustable gross income (AGI) in the year of the gift. Any unused deduction amount may be used to reduce taxes in as many as five tax years. If you are considering a gift of securities, allow enough time for your gift to be completed by December 31st.
Retirement Plans
You may not realize you have other assets that can be used to help you meet your charitable goals. Many individuals have funds in a qualified retirement plan such as an Individual Retirement Account (IRA), a 401 (k) or a 403 (b). These may be a good choice for making current or future gifts, depending on your age and future needs.
For Those Age 72* and Older:
(*The change in the Required Minimum Distribution (RMD) age requirement from 70½ to 72 only applies to individuals who turned 70½ on or after January 1, 2020. Please speak with your tax advisor regarding the impact of this change on future RMDs.)
If you have an IRA, you can transfer up to $100,000 per year to qualified charities; $200,000 per year for a couple who each has an IRA. These charitable IRA transfers (a.k.a qualified charitable distributions, (QCD) are not taxed and count towards the annual Required Minimum Distribution (RMD).
Those who qualify should carefully consider the additional benefits of making all or a portion of their charitable gifts directly from an IRA. These tax-free gifts are particularly wise for those who may no longer itemize deductions on their annual income tax return. Please consult your financial advisor for specifics related to your personal situation.
Other Gifts:
Other gifts can be made from assets that may no longer be needed. For example, Life Insurance Policies that were taken out years ago for a specific purpose but are no longer needed today. If you have a policy like this, you may assign all rights and benefits of the policy to the Church.
You can also arrange a future gift by naming a charitable recipient as a beneficiary of a retirement plan. You and your family can enjoy use of the assets and charitable beneficiaries can receive any remaining funds in the future, free of income tax on amounts they receive.
The end of the year is one of the most generous times of the year. Hopefully the information provided will assist you in meeting your giving goals.
The information provided is general planning information and not intended as legal, accounting, or other professional advice. The services of an appropriate advisor should be obtained to discuss tax and other financial implications.