Year-End Giving: How to Make the Most of Your Donations
As the year draws to a close, it’s the perfect time to take a closer look at your charitable giving strategy.
Why now? Year-end is important for several reasons:
- Tax Benefits: Contributions made by December 31st can help reduce your taxable income for the year. Whether you're itemizing deductions or looking to offset capital gains, last-minute donations can significantly impact your tax return.
- Review & Reassess: The end of the year offers an opportunity to review your philanthropic goals. Did you achieve the impact you aimed for? Is it time to shift focus or support new causes? Assess your current giving plan to ensure it aligns with both your values and financial goals.
- Maximize Your Impact: Many charities ramp up their efforts during the holiday season, making your contributions even more meaningful. By donating now, you can help organizations meet their year-end goals and provide critical support during the winter months.
What Should You Review in Your Charitable Giving Plan?
- Goals & Alignment: Are your donations aligned with your personal values and financial goals? Consider whether your giving strategy reflects the causes that matter most to you and your family.
- Donation Timing: Have you optimized the timing of your contributions for maximum tax benefits? If you haven't yet reached your charitable giving goals for the year, now is the time to catch up.
- Gift Vehicles: Are you utilizing the most effective methods for giving, such as Donor-Advised Funds (DAFs), appreciated securities, or charitable trusts? Review the vehicles you’ve used and explore if there are more advantageous options.
- Impact Measurement: Evaluate the effectiveness of your donations. Are the organizations you’ve supported making the impact you expected? Use this time to research and possibly pivot to charities that better align with your impact goals.
Why Consider Making Last-Minute Donations?
- Tax Efficiency: Donating appreciated securities can help you avoid capital gains tax while still claiming the full market value of the donation as a deduction.
- Charitable Deduction Limits: If you’re close to the limit on charitable deductions, consider bunching contributions or accelerating next year’s donations to maximize your tax benefits this year.
- Holiday Season Needs: Many charities rely heavily on year-end donations to fund their programs for the coming year. Your contributions can make a significant difference during this critical period.
Year-End Charitable Giving Checklist
- Review Your 2024 Charitable Contributions: Make sure you’ve met your giving goals and identify any additional donations you want to make.
- Research Charities: Use tools like Charity Navigator or GuideStar to ensure the organizations you support are financially healthy and have a strong track record of impact.
- Consider Gifting Appreciated Assets: If you hold appreciated securities, consider donating them directly to avoid capital gains tax.
- Evaluate Your Deduction Strategy: Decide whether to itemize deductions or use the standard deduction, and plan your donations accordingly.
- Set Up a Donor-Advised Fund (DAF): If you’re not ready to choose a charity, a DAF allows you to make a donation and decide on the recipient later while still getting the tax benefit now.
- Update Your Estate Plan: Ensure that your will or trust reflects your current charitable intentions, especially if your goals have changed over the year.
By taking these steps, you can maximize the impact of your charitable giving, support the causes that matter most to you, and benefit from potential tax advantages.
Ready to review your charitable giving plan? Reach out to our team for personalized advice - simply email us at entrust@entrustwp.com or give us a call at (860) 838-3730.
Entrust Wealth Partners and LPL Financial do not provide tax advice or services. Please consult your tax advisor regarding your specific situation.
