October 24, 2019
by Julianne Buck
It’s October (my favorite month) and Halloween (my favorite holiday!). It also means year-end giving planning season is here!
Many nonprofits are prepping their year-end appeals to get mailed. Many donors are planning if, when, how, and how much they’ll give in year-end gifts to their favorite charities.
The most popular year-end gift is cash. Clean, easy, efficient. If your gift is over $250, the receiving charity must send you a tax receipt. If you gift is under $250, I believe that the receiving charity should send you a tax receipt anyway – it’s good donor relations! The tax receipt should also include how the charity plans to use your gift. Even gifts of $250 or less are impactful for charities!
Growing in popularity are gifts of appreciated stock. A couple of points, if I may: first check with your favorite charity to see if they have the ability to accept gifts of stock. This means they need a gift acceptance policy, a brokerage account where your financial agent will transfer the stock, and the charity needs sell orders in place so there’s no delay in the sale of the stock, which is then deposited into their designated account (usually checking). This is all assuming that the charity’s Gift Acceptance Policy allows for the acceptance of stock and the procedure of selling donated stock immediately.
Secondly, if you are going to donate stock, please do it no later than early December as it takes time to transfer the stock, liquidate it, and deposit it. With holiday closings, it’s best to not wait until the last two weeks of December.
Gifts of grain: this may sound a bit odd during a fall harvest that will most likely result in lower yields, but it is still worth mentioning. Again, ask your favorite charity whether they accept gifts of grain and how they will liquidate it. Again, the charity needs to have accounts set up in advance so that the transaction is smooth from start to finish. When grain is delivered to the elevator, the farmer informs the elevator how many bushels are “owned” by the charity, who then gives sale instructions to the elevator. The whole process is nearly identical to the donation, acceptance, sale, and deposit of gifts of stock.
Gifts of land and farmland: The Foundation has always accepted gifts of real estate upon review. Basic real estate such as residential lots are sold upon receipt and the cash is deposited into donor-designed funds or to the Foundation in general. As of early 2019, the Foundation, via Keep Grundy Growing LLC, will accept and retain gifts of farmland into donor-designed funds. Our half of the net proceeds of the farm operations is then available for grantmaking. For example, our new Peg Davis Seneca Civic Fund provides approximately $30,000 a year (forever) for grantmaking in Seneca as recommended by the Davis Civic Fund Committee.
As our area farmers plan their retirement, we hope they will consider gifts of farmland to us via Keep Grundy Growing LLC into funds to benefit us or their favorite charities. And, as with all of our donor-designed funds, donors can choose whether to allow children and grandchildren the right to advise on the grantmaking after the donors’ lifetime. What a great opportunity to build a family legacy, even for families who don’t want to farm the land anymore!
Gifts from your IRA: if you are age 70-1/2 or older, you can donate money from your IRA as part of your annual Required Minimum Distribution and not have that money counted as income, therefore no income tax on that portion. But please remember two things: 1) the gift must be transferred by your IRA administrator directly to the charity – if it comes to you first, it will be categorized as income. 2) gifts from IRAs can fund donor-designed funds at the Community Foundation – EXCEPT donor advised funds.
Lastly, bundling. With the new tax law raising the itemized amount to $24,000 per couple, fewer of us are able to itemize our charitable deductions. One option to still receiving itemized deductions is to bundle multi-year gifts into one. If you usually give your favorite charity $10,000 a year, you can “bundle” five years’ worth into one $50,000 gift to charity now, take the tax deduction allowed, make no gifts for four years, and repeat the bundled gift in Year 5.
Caution: Before you do this, ask your charity what they will do with that bundled gifts…do they realize that they will get zero dollars for four years? Will they spend your bundled amount now and go without until the next bundled gift arrives? Or will they save the money and only use $10,000 a year until the next bundled gift arrives?
Regardless of your charity’s answer, one solution is to use that bundled amount to start a donor advised or designated fund at the Community Foundation. With either fund, you as the donor get to choose the receiving charity and the timing of the distribution.
As I’ve said before, you don’t give TO the Community Foundation, you give THROUGH the Community Foundation. Regardless of your situation, we can help you structure a solution that works for both you and your favorite charity. Please be sure to contact us for more information. We are located at 520 W. Illinois Avenue in the historic Coleman Hardware building. You can also call us at 815-941-0852 or email me at [email protected]
And, as with all of our information, we ask you to consult your professional advisors before taking any action.