By Elizabeth B. Wagner, SVP, Director of Institutional Wealth Management, Bryn Mawr Trust
Charitable giving is a uniquely American phenomenon, driven by both social and tax considerations. In 2022, Americans gave $499.33 billion to charitable causes, according to the annual Giving USA dataset. Just under two-thirds of that came directly from individuals (not corporations, foundations, or bequests). Along with that groundswell of giving, nearly one in three American adults volunteer to help organizations they believe in, based on an AmeriCorps study. Six out of 10 American households are charitable, according to The Philanthropy Roundtable. Altogether, generosity seems to be something of a national pastime!
For those two-thirds of Americans for whom charitable giving is a priority, December is the month in which we make more charitable gifts than any other. Here are key factors to consider as the giving season draws near to make the most of your generosity.
Check Your List
Most people give to the same charities annually. Check your list from last year and match it up against what you’ve already done this year. If you don’t have a list, start now – use the notes section of your phone to track organization names, dates, and amounts. You’ll thank yourself for it next year.
Look at your list and decide if you still care about all those charities. Many people find their interests shift over time. Set your giving budget for the whole year intentionally, assuming 90% will go to your core priorities and 10% to social obligations (memorial gifts, a charitable walk completed by a family member). Then consider if could you eliminate any organizations that are less important to you. As you consolidate your giving, you’ll likely find larger gifts offer you more access to leadership and learning opportunities at the organizations you admire most.
Consider Appreciated Assets
Giving cash is often the least tax-advantaged asset. Do you have appreciated securities that would make a good charitable gift? When you gift securities you’ve held for more than a year, you receive a tax deduction for the market value of the shares (work with your tax advisor to determine how you should calculate this). Neither you nor the charity pay capital gains tax on any appreciation; you’re able to pass on all that growth directly to the charity tax-free.
No matter the current economic climate, if you’ve held assets in your portfolio for a few years, you may be able to consider a combination of rebalancing and gifting. Talk with your financial advisor well in advance of the year-end deadline.
Give from your IRA
If you’re 70½ or older, you can make Qualified Charitable Donations (QCDs) totaling up to $100,000 directly from your IRA. Once you have a Required Minimum Distribution (RMD), the amount of your QCD counts toward your RMD as well. You pay no federal (and, depending on where you live, sometimes no state) income tax on the amount donated. This requires a special form that you submit to the holder of your IRA.
Gift on Time
Should your contribution arrive after December 31, even if you sent it earlier, you won’t get a tax deduction for 2023. There are many reasons why charitable gifts don’t arrive on time, and often it’s not the donor’s fault, but earlier is always safer.
If you’re sending securities to a charity, verify in advance that they can receive stock gifts and ensure your gift is sent by your brokerage firm or custodian at least five business days before year-end.
Checks sent in the mail are credited to you based on the postmark date, but if you have sent a large check and are counting on the tax deduction, either notify the organization ahead of time or call a week later to ensure receipt.
For QCDs, complete and submit your paperwork by early December to ensure an on-time transaction.
About the Author
Elizabeth Baran Wagner is Senior Vice President and Director of Institutional Wealth Management for Bryn Mawr Trust. She has over two decades of experience advising long-term charitable solutions for high-net-worth individuals, families, and nonprofit institutions.
This communication is provided by Bryn Mawr Trust for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. No portion of this commentary is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax or legal advice. Certain information contained in this report is derived from sources that Bryn Mawr Trust believes to be reliable; however, Bryn Mawr Trust does not guarantee the accuracy or timeliness of such information and assumes no liability for any resulting damages.