Advisors’ 2022 Year End Giving Strategies

By Jake Tometich 4 weeks ago. Advising StrategyCharitable GivingTax Planning

The end of 2022 is drawing near, and that means that year-end planning conversations with clients are on the rise. Year end presents you with a unique opportunity to build relationships and trust with your clients—and their families—by showing them how they can increase their generosity through year-end giving. Set yourself apart and provide insight into unique ways your client can expand their end of year charitable giving, potentially increasing their tax deductions. Below is a checklist of key year-end giving strategies to share with your clients.

1. Year End Giving Strategy #1: IRA Qualified Charitable Distribution

IRA accounts with owners 70 ½ or older can satisfy the required minimum distribution (RMD) up to $100,000 with a qualified charitable distribution (QCD) directly to a charity or designated fund. Since a QCD is a gift of pre-tax dollars, the income is never taxed. Read more on IRA giving here.

Please note that QCDs must be clearly marked. A donor advised fund (DAF) is not an eligible recipient of a QCD. The Signatry offers other fund types that may receive a QCD, including designated funds. Grants from a designated fund can only be sent to a single charity. Learn more here.

2. Year End Giving Strategy #2: Stock Giving

Selling publicly traded stock and giving the proceeds to charity has been a common year-end giving strategy for many investors.

A better approach is to give publicly traded stock (which has been held for at least one year) directly to the charity before it’s sold. This method can increase the level of support to the charity because it will not incur capital gains tax on the donated stock once it is sold. However, charities are often not equipped to handle these types of noncash gifts.

A donor advised fund (DAF) can help bridge the gap. DAFs at The Signatry are equipped to accept publicly traded stock gifts, which are generally liquidated quickly without incurring capital gains tax. The funds can then be granted out to a public charity your client recommends. It is a simple solution that helps minimize tax burden. By encouraging your client to set up a DAF, you can simplify the giving process and further the impact of generosity while eliminating a lot of extra work for the clients’ favorite charities.

3. Year End Giving Strategy #3: Charitable Bunching

Bunching deductions is, in short, contributing more than one year’s worth of normal charitable contributions in a single tax year to achieve a deductible amount higher than the standard deduction. This is also known as charitable bunching, and it can help minimize your clients’ tax burdens in the long run and maximize what they can give to charity.

Example: A donor contributes 3 years’ worth of donations into a DAF. Because the donation is so large, the donor itemizes in that year and receives a tax deduction for the entire amount of their contribution. In later years, the donor recommends grants to charities from the DAF. This creates no additional tax deduction for the donor, but in those years the donor takes the standard deduction instead of itemizing.

As year-end and year end giving conversations approach, remember that you have an incredible opportunity to come together for God’s Kingdom and support the ministries serving those in need by providing year end giving insights and options for your clients. 1 Corinthians 12:14 says “For the body is not one member, but many.”

To learn more about how your gifts can make a lasting impact at The Signatry, contact me at [email protected] to get started.

Disclaimer: The Signatry does not provide legal, tax, financial or other professional advice. You should consult professional advisors concerning the legal, tax, or financial consequences of your charitable activities.

Noncash Charitable Contributions

Since most American citizens’ wealth is held in non-cash assets, your clients may be interested in noncash charitable contributions. Some nonprofits might not be equipped to facilitate a noncash gift, but this does not need to be an impediment to your client’s generosity goals.

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Jake Tometich
Jake Tometich As Director of Investment Education and Accounts, Jake transforms charitable giving and investments through Advisor Managed Accounts (AMAs). He holds a FINRA Series 65 License and Harvard Business School Certificate in Alternative Investments, has spent over 15 years in a number of roles in the investment management industry, and has co-founded a 501(c)(3) with his wife, Brooke.

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