For a lot of us, it’s part of our seasonal routine: When the holidays come, we send gifts to our favorite people and donations to our favorite nonprofits. We think the end of the year is the best time to give to charity.
But the truth may make you rethink year-end giving:
1. Nonprofits need your donations before year-end, but they don’t necessarily need them at the end of the year. A gift in late October is no less effective than one in late December. In fact, with all the busyness of processing last-minute donations, an early gift might be the best gift!
2. You get the same tax benefits for the year whether you make a gift in October or December. Why not ease the burden your financial advisors and stockbrokers feel at the end of the year by giving before the rush? You’ll be less stressed too.
3. If you want to use your IRA required minimum distribution (RMD) for your charitable giving, you should decide that early in the year – before you take a distribution. That way, you get the tax benefits of making a qualified charitable distribution. And the best way to guarantee it gets done in the right tax year is to initiate the gift by November, before your IRA custodian gets overwhelmed with year-end requests.
4. The market doesn’t perform according to calendar dates. Why should your giving? For appreciated assets, the best time to give is when you feel they’ve appreciated and can maximize your charitable giving. Don’t let December 31st make that decision.
5. There’s no need to wait until you receive your year-end bonus or want to sell appreciated stock to get the ball rolling on a donor advised fund. You can start the paperwork to establish a fund now. Then, transfer your gift into the fund when you’re ready, and start recommending grants!
Have questions? The Catholic Community Foundation of Minnesota can help. Give us a call today at 651.389.0300.
We advise you to seek your own legal, tax, and financial advice in connection with gift and planning matters. The Catholic Community Foundation of Minnesota and its staff do not provide legal, tax, or financial advice.