As a child I remember receiving the Sears and JC Penney Christmas catalogs in the fall and meticulously compiling a wish list complete with page numbers, item numbers and detailed product descriptions. I wanted to be sure it was crystal clear to my parents that I wanted the tan bike and not the red one, or “Item 47a” the green jacket and not the blue one. Today, my kids are doing Google searches and texting hyperlinks. Apparently, I’m slipping in my Christmas wish list due diligence and preparation, because I was asked this week, “Is there anything you want for Christmas?” We don’t get catalogs anymore. I haven’t been keeping a list, and now I’m caught unprepared. I’ve got to create a list of last-minute gift ideas!
In the world of philanthropy, end-of-year giving can be very similar. For many generous people, when they get to December and are able to reflect back on the year, or meet with their accountant, they suddenly realize one of two things: 1) they need to be generous in a hurry, or 2) they can be more generous than they originally thought possible. In either case, in mid-December, they need some helpful last-minute gift ideas. Here are a few last-minute gift ideas for those wishing to maximize their charitable giving this year.
First, give now to charities you know and trust. If you have a short list of “go-to” charities that you have supported over the years, give generously to support their important work. Nonprofits rely on consistent annual contributions and twenty-five percent of all charitable giving is done in the last five weeks of the year, so your immediate gift will help them accomplish their important work and will be greatly appreciated.
Second, if you need more time to give, set up a donor-advised fund to maximize your charitable giving. Maybe you would like to do more research about the charities you would like to support, or their specific needs. Or maybe you just have more money than you feel comfortable giving this year, and you would like to spread out your giving over the next year or longer. Maybe you have just had a major life event such as the sale of a business or receipt of an inheritance, and you need to make a gift to maximize your charitable giving and minimize your taxes this year, but the amount of money would support your generosity for many years. In each of these scenarios, setting up a donor-advised fund can help you meet this year’s tax objectives, and give you time to be a more thoughtful giver.
Another tax strategy for end-of-year giving is to stack gifts. You can make two years of charitable gifts this year into a donor-advised fund to help you exceed the threshold for itemizing deductions. Next year, you can make grants from your donor-advised fund and still take the standard deduction. This is a common strategy to try to maximize charitable giving and tax savings. Your CPA or financial advisor can help you determine if the strategy is right for your situation.
Finally, another end-of-year tax-planning tip is to maximize giving using your IRA. If you are age 70 ½ or older, you may be eligible to make a qualifying charitable distribution of up to $105,000 from your IRA and avoid receiving the distribution as taxable income. You can make such distributions directly to public charities and can use the strategy to create or add to scholarship funds, field of interest funds, and designated funds at East Texas Communities Foundation. Donor-advised funds are not eligible to receive such distributions from your IRA, but our staff can work with you to set up designated funds to benefit your favorite charities over a period of years, using your IRA. We would appreciate the opportunity to explore this helpful strategy with you, and we can get it done this year. Time is passing quickly in 2024, but there is still time to make important and meaningful last-minute gifts to support local charities now and in the future. Perhaps making a last-minute gift to charity, setting up a donor-advised fund, or using a strategic gift from your IRA is your next best opportunity to Give Well.
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