Published: 3/19/2024

While people often think about charitable giving around the end of the year, planned giving strategies can and should be discussed and optimized year-round. Today, individuals and families are increasingly seeking to incorporate philanthropy into their financial plans to help maximize their impact and wealth goals.

Types of Charitable Contributions

Charitable contributions are donations made to qualified tax-exempt organizations, such as charities and non-profit entities. These donations can include cash, assets, or property and typically provide significant financial advantages.

Philanthropy is not only a noble act, but also a strategic tax move to complement your financial plan if done correctly. Charitable giving can lead to potential tax benefits by lowering taxable income, which can be particularly advantageous for high-net-worth investors.

  • Cash – Cash donations are a simple way to give to a charity or nonprofit, allowing a more immediate transfer to organizations to respond to challenges in a flexible way.
  • Appreciated Assets – Donating stocks, bonds, or real estate that have increased in value can offer more tax benefits than giving cash. If you donate long-term appreciated assets to charity, you generally don’t have to pay capital gains, and you can take an income tax deduction for the full fair-market value. It can be up to 30 percent of your adjusted gross income. Anything beyond the 30% can generally be carried forward and used in future years.
  • Donor-Advised Fund (DAF) – A DAF is a simple, flexible, and tax-advantageous way to give to your favorite charities. It is like a charitable investment account for the sole purpose of supporting charitable organizations that are important to you.

Think of these as personal “giving accounts” where you contribute assets, receive a tax deduction in the year of the donation, and recommend grants to charities over time. When you contribute cash, securities, or other assets to a donor-advised fund at a public charity, you are eligible to take an immediate tax deduction. Those funds can then be invested for tax-free growth, and you can recommend grants to eligible IRS-qualified public charities over a period of years.

Holistic Wealth Management

While financial advisors traditionally focus on achieving clients’ financial goals, such as a comfortable retirement, at PDS Planning we understand there is more to life. There is a growing trend in wealth management – and one we embrace – acknowledging the deeper desire of clients to align their investments with their core values and make a positive impact on the world.

While maximizing returns remains important, we recognize many seek a broader definition of “wealth” that includes intangible values like environmental sustainability, social justice, or community development.

By integrating values and strategic philanthropy into our wealth management conversations, we help clients achieve financial security and fulfill a sense of purpose. This holistic approach benefits your personal wealth needs but also leaves a positive and lasting impact on the world you care about.

The PDS Approach

By using the proper tax planning strategies, charitable contributions can reduce federal income, capital gains, and estate taxes. We help you understand each charitable giving strategy and help choose the options most applicable to you. By taking advantage of current tax laws, you can make the most use of your donation and support your favorite charity and causes you care about.

  • Identify Charities & Causes – What causes are you passionate about? What’s the best approach to donate in a meaningful way? We can help you get started.
  • Determine Financial Commitment – How much are you looking to give? We evaluate how a giving strategy fits into your overall financial plan and legacy goals.
  • Identify Tax Implications – What are the tax benefits or drawbacks of your current giving strategy? We evaluate how revisions could impact your taxes.
  • Define Giving Strategy – What’s the best way to fund the causes you care about? We help you identify various giving opportunities—including options like highly appreciated assets, required minimum distributions given directly to charity, and DAFs.
  • Regular Review of Giving Strategy – How should your giving strategy change over time? What factors impact your giving strategy? We work with you to regularly evaluate if there are better ways to give from a financial, investment, and tax perspective.

We can help you create a charitable giving strategy to make the desired impact to the causes you care about, while also taking advantage of tax laws to create the most benefit to you.

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