Charitable giving happens when you chose an organization that is close to your heart and give money or another asset. Living in California, there may be a specific charity that you especially like that is close to home. Or it may be a charity that spans the country or globe. You want to find the charity that works best for your goals as well.
There are different approaches to charitable giving. Clothes, household items, or even a vehicle may also be part of your gift. Any donation to a qualified 501(c)3 nonprofit receives consideration as charitable giving. The following are some types of charitable giving that work for philanthropic goals:
Donor-advised funds
Also called a DAF, you donate an amount that is non-refundable. It might be securities or cash. After directing the administrator of the funds to send grants, you immediately receive the tax benefit. Additionally, funding can continue after your death.
Real estate
Rather than paying a large tax when at the time of sale, property that you no longer use may be a donation to your favorite charity. You may be living on the property now, but you can set it up to be donated after your death.
Cash or stocks
Cash is the simplest type of gift. You’ll have a tax deduction that is equal to the value of your gift minus anything you may receive in return for it.
The long-term value of stocks makes them a tax-efficient way to give an appreciating gift. You will not have to deal with capital gains taxes as with the sale of the stock.
Charitable trusts
Your financial plan may include a charitable lead trust (CLT) or a charitable remainder trust (CRT). Charitable donations may include a stream of income from assets. The difference is that the charity may receive payment first, or the beneficiaries and donors receive payment first.
There are other types of charitable giving. These include assets, pooled income, private foundations and more.
Charitable giving varies and can range from money to stocks to real estate and more. The type of philanthropy that is in line with your financial and estate planning goals should be a significant consideration.
