Spring 2017 Issue of Horizons

Don’t Forget! At tax time, the IRS requires substantiation for all of your charitable contributions. Donations over $250 require written acknowledgment from the charity and non-cash donations over $5,000, other than publicly traded securities, may require an appraisal. Charitable deductions under $250 must be substantiated by receipts or canceled checks. In addition, charitable organizations are required to provide documentation for contributions in excess of $75 for which you received a benefit, such as event tickets or merchandise.

Example: Suppose you have a portfolio of appreciated securities and have considered charitable giving; however, you are unsure of the appropriate time to give. If you are in a higher tax bracket or have a year with a large amount of income (through a bonus, business sale, options exercise, etc.), a DAF will present an opportunity for you to reduce your current year tax liability by making charitable contributions to offset income. You will receive an immediate tax benefit for the donation of appreciated securities and avoid paying any capital gains tax on the sale of those securities, reducing your potential income tax burden. From this point on, you can advise the DAF on which charities the contributions will be distributed to. Community Foundation Generally set up in large metropolitan areas, community foundations serve with the goal of enhancing the lives of people within a geographic area. Community foundations are typically recognized as public charities in part because they receive support from the general public.

Many private foundations do not accept donations and instead invest their principal funding, then distribute the income from investments for charitable purposes. Supporting Organization A supporting organization carries out its exempt purposes by supporting a named public charity. This type of charity is treated as a public charity for income tax purposes. Gift Annuity A gift annuity involves a contract between a donor and charity, whereby the donor transfers cash or property to a charity in exchange for a partial deduction and a lifetime stream of annual income from the charity. Deferred Gifts Deferred gifts are similar to a charitable gift annuity with the exception that you choose to wait for the first annuity payment, rather than having payments begin immediately. This can give donors the opportunity and flexibility to meet their wealth management goals. Charitable Remainder Trust (CRT) A CRT typically sells stock and reinvests the proceeds in a diversified portfolio. The donor transfers highly appreciated assets into a CRT

Private Foundation A private foundation is a nonprofit

organization that is typically established via a single primary donation from an individual or a business and whose funds and programs are managed by its own trustees or directors.

Charitable Giving: Good for the Community...Good for You

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