2020 will go down as a year like no other. Times are uncertain, needs are great, and resources are tight. Perhaps you’re unsure how to show you care. Philanthropy can make an impact on stabilizing communities and donors can play a leading role. With the end of the calendar year also comes the deadline for charitable giving, for those thinking of gaining a 2020 tax deduction. Here are four tips for making the most of your year-end giving:
1. Make your donation go further on Colorado Gives Day, December 8
Colorado Gives Day is an annual initiative that celebrates philanthropy through online giving. It is a safe and trusted way to support verified nonprofits. This year’s event is Tuesday, December 8, though you can conveniently schedule your donation today at coloradogives.org! If you select for your gift to process on Colorado Gives Day (instead of today), then your favorite cause also gains a portion of a $1 million incentive fund. The “shopping cart” feature allows donors to support multiple nonprofits in one transaction, so it is fast and easy to spread the love. Since 2007, more than $355 million has been raised for Colorado nonprofits from this event, including $39.6 million last year alone.
2. Talk to your advisor
Contact your financial advisor, CPA, or attorney to talk about the strategic ways to use charitable giving to offset your tax liability, especially if you incurred a “taxable” event. You may consider creating a Donor Advised fund. Donor Advised funds can help maximize your tax benefits while making giving easy, effective, and enjoyable. Perhaps a Charitable Remainder Trust (CRT) is the vehicle for you. A CRT allows the donor to receive income for life while saving on income, estate, and capital gains taxes.
3. Evaluate your giftable assets
Some assets are better to donate than others. In fact, in charitable giving, cash is rarely king. For instance, donating appreciated stocks or property can help you avoid capital gains taxes. But if cash is your gift of choice, the 2020 charitable deduction allows an “above the line” deduction of up to $300 ($600 if married filing jointly) for charitable contributions. The CARES Act also relaxes limitations on deductible charitable contributions for taxpayers who itemize from 60% of AGI (Annual Gross Income) to 100% of AGI; and any unused deductions may be carried forward for up to five years. In addition, the CARES Act waives required minimum distributions during 2020 for IRAs and retirement plans; however, these RMDs may still be gifted directly to a charity in the form of a non-taxable event. Gifts of life insurance, water/mineral rights, real estate, appreciated stock, and other non-cash assets provide unique opportunities for charitable giving.
4. Contact the Eastern Colorado Community Fund.
The Eastern Colorado Community Fund (ECCF) is your local resource for charitable giving. We can help you learn more about local nonprofit organizations, minimizing your tax burden and making strategic charitable decisions this holiday season. The Donor Advised fund option mentioned above will provide a tax deduction this year and allow you to distribute grants from your charitable fund to your favorite nonprofits at any time for years to come.
If you’re looking for gifting ideas, please consider these funds/local nonprofits that collaborate with the ECCF to manage their long-term assets: the Sterling Community Fund, the Sterling Family Resource Center, the Melissa Memorial Hospital Foundation, the Haxtun United Methodist Legacy and Scholarship Funds, the Haxtun Hospital District Foundation, Wray’s Calvary Lutheran Legacy Fund, the Colorado FFA Foundation, and the Haxtun Community Childcare Center. Donors receive a 50% tax credit for childcare contributions. By partnering with the ECCF/Community Foundation of Northern Colorado, nonprofit organizations can focus on the work they do best while benefiting from an established investment program, planned giving service, and the expertise of our staff.
Keep in mind that gifts by check must be postmarked by December 31 to be eligible for a 2020 tax deduction. Start non-cash gifts as soon as possible to allow time for processing.
John Chapdelaine is Director of the Eastern Colorado Community Fund. He contributes a feature on local philanthropy and giving options. To learn more about the Eastern Colorado Community Fund, contact the Community Foundation at (970) 224-3462 or [email protected].