See more of The Signatry community in action.

Tax Planning

Filter Posts

Categories
Topics
Nonprofits

How to Prepare for Year-End Giving

2 weeks ago By Kristin Hammett

With fall upon us, the cooler temperatures, autumn colors, and pumpkin spice everything, the year-end giving season is also here. The 2022 Year-End Giving will be interesting to watch. The 2022 Giving USA report, measuring 2021 giving numbers, reported an overall increase in giving of 4%, but when adjusted for inflation, it was down 0.7%. Giving from individuals increased nearly 5% over 2020, but remains below 70% of all giving for the 4th year in a row. Additionally, bequest gifts were down by over 7%. In light of the current giving climate, I have three ideas for nonprofit leaders to develop strong year-end messaging and successful year-end fundraising campaigns. Show your stuff. As you fine-tune your year-end messaging, consider sharing your impact through statistics and stories. Great messaging happens throughout the year, but year-end is the time to reinforce the impact you have been demonstrating all along. Share your success through progress reports, social media posts, videos (professional or organic from your phone), email, direct mail, phone calls, and personal meetings. Do it all. Tell your story well. The end of the year is the time to remind donors of the impact their generosity has within your work. As they contemplate their year-end giving decisions, be certain they understand the impact their gift has on those you serve. Be confident in the work God is accomplishing through your nonprofit! Motivate mid-level donors. When planning your end of year fundraising efforts, remember your mid-range donors. They are a valuable donor group that is discerning how to maintain generosity in a high-inflation environment. They consider tax implications of donating—or not. You need a messaging strategy which speaks to them directly. Reinforce the importance of the work they are accomplishing with their gift. Remind them they are solving problems and helping meet the needs of people you serve. Steward this relationship well – it may be at risk! Educate them on charitable bunching strategies – giving more through a donor advised fund one year and taking the standard deduction the next year. Segment your mid-level donors and send additional communication tailored with a special year-end message for them. Emphasize existing partners Often the trendy nonprofit fundraising idea is to attract new donors, but your year-end fundraising campaigns should focus on current donors. It is not wrong to get new donors, but invest more time in those already committed to the work you do. Building long-term relationships with donors leads these individuals to give large donations down the line that can help your organization the most. According to Bloomberg, most major gifts are given after 5 years of giving to an organization. Spend your time on those who have already demonstrated a commitment to your work. Donor acquisition strategies can take place the rest of the year. Remember, you cannot control the economy, global events, or a donor’s family circumstances. You CAN control your year-end message, how you communicate it, and to whom you communicate it. As you plan your year-end fundraising strategy, focus on what you are accomplishing. The problems you are helping solve are important. Donors partner with your nonprofit to make an impact. The impact of a year-end donation does not change.

Read More
Advisor

Advisors’ 2022 Year End Giving Strategies

2 weeks ago By Jake Tometich

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.

Read More
Advisor

Exploring Noncash Charitable Contributions with Clients

3 months ago By Jake Tometich

Since most American citizens’ wealth is held in non-cash assets, many of your clients may be interested in gifting these types of assets to their church or other nonprofit organization. Some nonprofits might not be equipped to facilitate such gifts, but this should not be an impediment to your client’s generosity goals. Navigating noncash charitable contributions is a specialty of The Signatry. Gifting complex assets provides your client the opportunity to use more of their resources to deepen their Kingdom impact. But with added complexity, gifting these assets requires extra planning and care. Our team can bridge the knowledge and experience gap. We can work with you and the donor to review issues such as timing, taxes, and potential risks and benefits to help determine if a complex, noncash charitable contribution is the right choice. When might a noncash charitable contribution make sense? Complex asset gifts are a natural by-product of major liquidity events you may be discussing with your clients and investors—especially C-suite executives, business owners, and entrepreneurs. The key is to complete the donation before your client sells the asset. Complex assets often have a low-cost basis, which can generate large capital gains and capital gains taxes. Gifting these assets can significantly lower (or eliminate entirely) capital gains taxes while providing income tax deductions on the fair market value of the asset. What steps are involved in preparing a noncash gift? To determine the fair market value of a complex asset, you and your client must arrange a qualified appraisal of the asset. There are restrictions on the timing of the appraisal relative to the potential gift, and the obligation to obtain the appraisal falls to the donor. The donor is also responsible for submitting an IRS Form 8283 with his or her tax return, which states the gift’s fair market value. The form must be signed by the appraiser, the organization receiving the gift, and the taxpayer. Every noncash charitable contribution looks different Because complex assets vary so much (from closely held business interests to real estate and more), the process for each asset gift differs. This is where our team can help. Please let us know if you would like to discuss any upcoming liquidity events or complex asset gift scenarios. You can also visit the Generosity Calculator on The Signatry’s website to explore the variables between traditionally selling a complex asset or gifting the non-cash asset to charity.

Read More
Advisor

Warren Buffett’s Missed Opportunity

3 years ago By Evan Lange

When it comes to charitable giving, it often seems like the world’s wealthiest individuals have it figured out. With so many assets to manage, these donors know how to support charitable causes while capitalizing on the tax benefits of the giving process, right? Unfortunately, not all get it right. In July, an article in Forbes announced that Warren Buffett is donating $3.6 billion of his Berkshire Hathaway stock to charity. It also offered advice on how other donors could maximize their giving by following in Buffett’s footsteps. The problem? Buffett is primarily giving the stock to private foundations. Consequently, he is missing out on significant tax benefits he could receive if he utilized a donor advised fund (DAF) instead. There are important differences, when it comes to tax benefits, that all donors and advisors should consider.

Read More
Advisor

Spring, Basketball, and Taxes

4 years ago By Evan Lange

Happy Spring! I love this time of year because the weather is getting warmer, lots of good basketball games, and it is tax time. Yes, I get excited about tax season because we finally find out how year-end tax planning strategies worked.  This is especially true because the 2018 tax year applied the new 2017 tax reform laws. Based on the phone calls I have received this Spring, a lot of people are feeling the effects of the changes.  Below is a recap of these conversations and some potential solutions moving forward: Doubled Standard Deduction. Only about 10% of all households in the U.S. will itemize their tax deductions for the 2018 tax year. The standard deduction (increased to $24,000 for married and $12,000 for individual), meant that many households that itemized deductions, including charitable giving, will no longer need to itemize. Unfortunately, several households left tax savings on the table, because they failed to plan properly. SALT Deduction Capped. State and local taxes (SALT) used to be fully deductible, but now SALT deductions are now capped at $10,000. This has affected several middle-income earners. Charitable Deduction Increases. Taxpayers that itemize may now deduct up to 60% of their adjusted gross income each year in charitable contributions; a 10% increase from 2017. Taxpayers may carry forward any amount that exceeds this limit up to five years after the gift is made. Taxpayers may still deduct up to 30% of their AGI using gifts non-cash assets to charity. The most noticeable effect of the 2017 tax reform, from a charitable giving standpoint, most households will not receive a tax benefit (in the form of a deduction) from their charitable gifts in 2018. In my opinion, this has occurred because of the increased standard deduction and the cap on the SALT deduction. For 2019, make sure that your clients consider two easy tax-saving strategies: Bunching charitable gifts one year using a donor advised fund. By combining multiple years of charitable giving in 2019, clients will be able to itemize their deductions for 2019. In the subsequent years, the client could give to charity from their DAF and then take the standard deduction for those years. Click here to learn more about bunching. Give assets! While several itemized deductions have been eliminated, the charitable deduction remained intact, including donating capital assets (assets that would be subject to long-term capital gains tax). When capital assets are given the donor receives a fair market value income tax deduction for the donation, and the capital gains that would have been paid will likely be avoided entirely by the charity. The vast majority of all charitable giving in the U.S. are cash gifts, but the real tax benefit is by donating capital assets!  Make sure your clients do it!

Read More

Join the conversation. Get the newsletter.