Charitable Giving Under New Tax Laws
At Greater Tacoma Community Foundation, we know donors carry out their charitable giving because they care deeply about their community and the causes they support. At the same time, we recognize many people are looking for strategies to structure their giving in a way that maximizes impact for the organizations they support as well as their own philanthropic goals.
The announcement of the Tax Cuts and Jobs Act at the end of 2017 raised many questions about the impact the new law would have on charitable giving. With the standard deduction increasing to $24,000, and the number of individuals who benefit from itemized deductions decreasing dramatically, many in the nonprofit sector wondered if people would continue their regular charitable giving even if they didn’t get the same tax deduction.
As part of our ongoing support as a trusted philanthropic partner, we aim to provide our community with resources to help them achieve their philanthropic goals. Below are a few tips on charitable giving under the new tax laws from local Financial Advisor Allyn Hughes. Allyn is an Owner & Financial Advisor at BHJ Wealth in Gig Harbor, and has also served as a member of GTCF’s Professional Advisor Committee.
“Whatever your intent, the new tax laws give you a reason to engage with the knowledgeable GTCF staff to design a program that best reflects your preferences and financial situation.” -Allyn Hughes
Strategies for Charitable Giving Under the New Tax Laws
- Donor Advised Funds
“Consider creating a Donor Advised Fund (DAF) with a larger amount than you might otherwise gift in a single year. This will allow you to contribute a larger amount to this fund and take the deduction.”
- Gifts of Stock
“Gift stocks or other appreciated assets for which you don’t know the cost basis. Even if you don’t receive a tax deduction, you would still avoid paying capital gains tax on the growth in the asset.”
- Bunch Gifts in Specific Years
“Plan to accrue a portion of your take-home pay each year for charitable contributions. Keep this money in a separate savings account. Use this account to make gifts only in years when your total deductions are above $24,000 (if married filing jointly), or $12,000 if you file as an individual.”
- IRA Routing
“If you are over 70½ and are taking annual Required Minimum Distributions (RMDs) from your IRAs, you may route up to $100,000 of the RMD each year directly to charities without paying income tax on the IRA withdrawal.”
GTCF’s Donor Services team is here to help you if you would like more information about setting up a Donor Advised Fund or utilizing any of these other giving strategies. If you have any questions, please feel free to email us, or give us a call at (253) 383-5622.