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Tax Benefits of Charitable Giving

Tax Benefits of Charitable Giving

Charitable giving can make a powerful, positive impact. When planned strategically, charitable donations can not only benefit the causes you care about but also offer significant tax benefits such as deductions and other incentives to reduce your taxable income. In this blog, we’re exploring the various tax benefits of charitable giving to help you make informed decisions that support both your community and your financial future.

Charitable Contribution Deductions

As a donor, if you choose to itemize deductions on your tax return rather than take the standard deduction, you can deduct contributions made to qualified charitable organizations. These can include cash donations, property, or other assets donated to organizations like nonprofits, educational institutions, or religious groups. For cash donations, donors can generally deduct up to 60% of their adjusted gross income (AGI). For non-cash assets, such as real estate or personal property, the deductible amount may vary and may be capped at 30% of AGI, depending on the nature of the asset and the charity type.

Additionally, you may be able to make deductions for volunteering expenses. While volunteer time itself isn’t deductible, out-of-pocket expenses related to volunteer work may be. This can include travel, supplies, uniforms, and other costs directly associated with the charity, as long as they are necessary to the work being done. 

It is also important to note that some states offer additional tax incentives or credits for charitable contributions, which can enhance federal tax savings. Talk to your financial advisor to learn more about your options to maximize your tax savings while giving back to your community.

Qualified Charitable Distributions (QCDs) and Donor Advised Funds (DAFs)

A QCD allows individuals who are 70 ½ years of age or older to make tax-free donations directly from their IRA to charity, with an annual limit of $100,000 per person. QCDs are counted toward the Required Minimum Distributions (RMDs) for the year, allowing you to reduce your IRA balance without increasing taxable income and triggering additional income tax. This is particularly beneficial for those who do not itemize deductions, as this tax benefit doesn’t require itemization. 

DAFs are another tax-efficient way to manage charitable contributions. Contributing to a DAF allows you to receive an immediate tax deduction in one tax year and then decide which charities to support over several years. This flexibility is especially helpful for high-income years when you need a larger deduction or for folks who alternate between taking the standard deduction and itemizing in different years.  

Donation of Appreciated Assets

Donating long-term appreciated assets, such as stocks, bonds, or real estate, allows the donor to avoid paying capital gains tax and still claim a charitable deduction. 

When donating an asset held for over a year, the deduction amount is generally the fair market value of the asset at the time of donation. This benefits you as a donor significantly because you avoid the capital gains tax you would otherwise owe if you sold the asset, potentially increasing the tax savings associated with your charitable contribution.

Carryover of Excess Contributions

If your total charitable contributions exceed the allowable deduction limit for the year, you can carry over the excess and apply it to future tax years. Charitable contributions above the AGI limits can be carried forward for up to five years, allowing donors to maximize their deduction over time, spreading the tax benefits and potentially avoiding the need to limit annual giving. 

Estate Tax Benefits

For high-net-worth individuals, charitable giving can also be a strategic part of estate planning, as it reduces the size of the taxable estate, thereby lowering estate tax obligations.

Donations made as part of an estate plan can lower the estate’s value, which is especially beneficial for estates that exceed the federal estate tax exemption amount. Additionally, charitable bequests can be deducted from the estate’s gross value, which may reduce the overall estate tax liability. 

Our Favorite Charitable Organizations

Are you ready to make charitable contributions but unsure where to start? These are some of our team’s favorite organizations to support: 

  • Rob and Yesy’s pick: United Way, developing community resources and partnerships that support a broad array of critical health and human service needs in our community
  • Steve’s pick: Kiwanis, improving the world one child and one community at a time.
  • Emily’s pick: SPUR North Shore, mobilizing volunteers in service and enrichment opportunities to support the needs of the North Shore Community.
  • Larry’s pick: Wings for Widows, providing free, professional coaching and education to help widowed men and women navigate the financial trauma experienced in widowhood.
  • Donna’s pick: Junior League of High Point, committed to promoting voluntarism and developing the potential of women in our community.
  • Cara’s pick: Community Servings,  an organization providing medically tailored, nutritious, scratch-made meals to chronically and critically ill individuals and their families
  • Erin’s pick: Best Buddies, which serves individuals with intellectual and developmental disabilities (IDD) and their families.

To fully leverage the tax benefits of charitable giving, it is essential to fully understand the rules and regulations at hand. It is also recommended that you consult a financial advisor who can guide you in making tax-efficient donations. At Blakely Financial we are here to help you navigate these decisions so you can give with confidence, knowing your contributions are making a meaningful impact both for others and for your own financial future. Contact us today to get started. 

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
National Nonprofit Day: How Blakely Financial Gives Back

National Nonprofit Day: How Blakely Financial Gives Back

To celebrate National Nonprofit Day on August 17th, we are recognizing the amazing and impactful work of nonprofit organizations within our community and around the world. Read on to learn more about our favorite local organizations and how the Blakely Financial team gives back to the community.

Kiwanis

Steve LaFrance, former President of Kiwanis of High Point, believes in improving the world, one child and one community at a time. Steve and the BFI team continue to support the Kiwanis’ mission. 

With clubs in nearly 80 nations and geographic locations, Kiwanis strives to be a positive influence in communities worldwide, so that one day, all children will wake up in communities that believe in them, nurture them, and provide the support they need to thrive. Kiwanis clubs are local groups of like-minded volunteers who love serving together to change children’s lives. When club members serve kids, they support the Kiwanis causes of: health and nutrition, education and literacy, and youth leadership development. Kiwanis clubs partner with each other and with organizations whose missions align with theirs all around the world to serve the kids who need it most and make an impact that lasts from infancy to adulthood.

SPUR North Shore

Blakely Financial is proud to support SPUR North Shore, where Emily Promise serves as the Treasurer and is also an active board member. SPUR strives to remove barriers to volunteering by providing a platform to cultivate a community of doers across the North Shore and nurturing the desire to make a difference.

Founder Jocelyn Cook wanted to create an organization where young children, families, and individuals could dive into giving back through opportunities that embraced busy schedules, varying experiences, and interest levels. The result is SPUR: an organization mobilizing volunteers in service and enrichment opportunities to support the needs of the North Shore community, embracing the notion that we don’t have to change the world on our own, we simply need to do our little bit of good to make a difference.

Junior League of High Point

Since joining in 2000 and serving as Past President, Donna Blakely, along with the Blakely Financial team, has remained dedicated to supporting the Junior League of High Point’s mission to advance women’s leadership for meaningful community impact through volunteer action, collaboration, and training, and their commitment to breaking down barriers that hinder women from achieving success.

Members of JLHP share a commitment to voluntarism and building a better community. Above all else, their goal is to promote and perpetuate social change in the High Point communities that will benefit the most. JLHP empowers women and provides valuable leadership training to give local women the tools they need to get involved, put their talents to work, and positively impact the Greater High Point Region.

United Way

Blakely Financial is proud to support the United Way and its twenty-five partner agencies that do so much for our neighbors in need. We LIVE UNITED with the United Way of Greater High Point

The United Way’s mission is​ to develop resources and partnerships to make measurable differences in people’s lives, fighting for the education, health, and financial stability of every person in every community. Programs funded by United Way help children learn and families thrive, build self-sufficiency and independence, create stronger and safer neighborhoods, and improve the health of our communities. 

How Blakely Financial Gives Back: Serving Nonprofit Organizations, Endowments, and Foundations

As an independent financial planning firm, we serve our clients with objectivity, integrity, and experience with the goal of providing clarity, insight, and guidance regarding their financial goals. We act as fiduciaries for our clients by providing financial planning and advisor-managed investment solutions through Commonwealth Financial Network®.

For nonprofits, endowments, and foundations, Blakely Financial provides trusted advice and professional guidance to maximize your group’s financial resources. We help you address the challenge of finding the correct balance of risk and rewards in the management of your assets to support your mission for generations into the future.

 

To learn more about supporting nonprofit organizations or about working with Blakely Financial as a nonprofit organization, contact us today.

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.