A message from Joseph Mastriani, CPA, Shareholder at Buckno Lisicky & Co. and CCCF Board Treasurer
The United States has been the most generous country in the world over the past decade, so says the World Giving Index, a ranking that recently measured how likely residents of 128 countries were to practice acts of generosity. Residents of Carbon County, likewise, share in this propensity for giving.
And when the coronavirus outbreak began to cause the shutdown of our nation’s economy, Congress passed the $2.2 trillion CARES Act on March 27 of this year to provide economic relief to workers, families and small businesses. Among its many relief provisions, the CARES Act expanded the amount of cash contributions that could be taken as a deduction by taxpayers by both allowing for a $300 per individual above-the-line tax-deductible donation as well as increasing the deduction cap for gifts to charity from 60% to 100% of adjusted gross income.
Now, nine months after the initial outbreak, multiple reports show that Americans have increased their level of charitable giving at a rate that surpasses those during the 2008 recession and after the September 11th, 2001 terrorist attacks. Grants to food banks and other food assistance programs are up nationally by a large margin. At the same time, donors have also given to their local and other regular charities, according to the report.
However, with the recent surge in new infections, non-profit organizations continue to struggle raising money to maintain operations. Many are seeing increased needs for their services and are facing unexpected COVID-related expenses, like the costs of installing plexi-glass barriers and purchasing PPE and cleaning supplies to maintain the health and safety of employees, volunteers, and clients.
As a way of providing help to these organizations, Donor Advised Funds (DAF), like those offered through the Carbon County Community Foundation, are uniquely positioned to facilitate when and where a donor believes the best use of their gift will result. It is this flexibility that has benefitted donors by contributing to charities in these unprecedented times of need.
Charitably-minded individuals should consider these three efficient giving strategies between now and the end of the year:
- Bunching Donations: Individuals can continue to maximize the tax-deductibility of their gifts by bunching donations in one year as opposed to spreading this amount over two, three or four years, thereby exceeding their available standard deduction and increasing tax savings in that year.
- Give Appreciated Stock: The stock market has been both down and up with the extreme volatility created by the pandemic. If you have publicly traded stock that has appreciated in value, consider giving that appreciated stock to a charity. If you sell appreciated stock, you will pay capital gains tax on the appreciation. However, if you give the stock to charity, you will receive a charitable income tax deduction equal to the full fair market value of the stock at the time of the gift and will avoid capital gains taxes.
- Make a Qualified Charitable Distribution (QCD) from your IRA: QCDs allow IRA owners who are age 70 ½ or older to transfer up to $100,000 annually from an IRA directly to a charity, tax-free. If you are married, you and your spouse may both transfer $100,000 for a total of $200,000. One caveat with utilizing QCDs is that they may not be contributed to Donor Advised Funds; however, CCCF offers other opportunities to make gifts outside a DAF account, such as field of interest funds and unrestricted gifts.
For additional guidance regarding the above-mentioned giving strategies, please consult your tax advisor.