CEO NOTES | These strategies may increase the effectiveness of your charitable giving
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About two years ago, I made the case for Christians to explore charitable giving strategies that minimize taxes and maximize giving. You might be surprised at the strategies available even to those of us whose income levels don’t bring to mind the term “loophole.”
A good place to start exploring your options is the website of one of several good ministries that help Christians give more effectively: the National Christian Foundation (ncfgiving.com) and WaterStone (waterstone.org), as well as denominational foundations like the PCA Foundation (pcafoundation.com), Southern Baptist Foundation (sbfdn.org), and LCMS Foundation (lcmsfoundation.org).
Here are some additional ideas to consider:
Set up a charitable gift annuity. CGAs are pretty simple: You give a charitable donation—usually an appreciated asset that you would owe taxes on if you sold it—and you receive annuity payments at a fixed rate of interest. The benefits to the donor (or a beneficiary) include a fixed income stream for life, some of which will be tax-free, and lengthy deferral of capital-gains tax on the funding asset, along with a tax deduction at the time of the gift. (Age-related and other restrictions apply.)
Donate using the required minimum distribution amount from an individual retirement annuity. (This strategy works for those over a certain age—currently 73—who do not depend on that income.) You can exclude the amount of your gift from taxable income, which is the equivalent of taking an itemized charitable deduction but with this added benefit: You can exclude your gift while still taking the standard deduction. You can begin making these gifts from your IRA even before required minimums must begin, as soon as age 70½.
Start a donor-advised fund. DAFs have many potential benefits, including simplifying giving to multiple organizations, including your church. But the main economic benefit is taking the deduction against taxable income—and saving taxes—this year even if you plan finally to grant the funds over subsequent years. Maximize the effect by giving to a DAF now— when you will receive a tax deduction—amounts you plan to give to church and charity at end of life, when you will not receive a deduction.
We’re happy to point you in the right direction on these and other giving strategies, even if your gifts don’t end up coming to WORLD. Email director of development Debra Meissner (email@example.com) to get started.
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