With the holidays right around the corner, this marks the time of the year when we come together to gift and give back to one another. Be it among family and friends, with neighbors and colleagues, or to local businesses, we all share in the sensation of hope and joy in supporting our community. In that regard, it is important to recognize and give to the organizations who shape and strengthen our community – to the local nonprofits, charities, and foundations. These mission-driven organizations are pillars of our community, and for this reason alone, supporting their goals through charitable giving helps build an inclusive, growing community for us all. As Investment Managers, we at Stonebridge Capital Advisors work with clients to help structure their annual charitable contributions around this time – a strategy to which there are many benefits from both a tax benefit and community support standpoint.
When it comes to supporting your community, a charitable contribution to a nonprofit organization over the holiday season can make a tremendous difference.
While some nonprofits have a fiscal year-end date of June 30, there are others that have a December 31 date. This makes the impact of your donation much more important to help them meet their annual giving goals.
During the holiday season, many of the local, Minnesota-based nonprofits expand their services to serve greater needs within the community and to accomplish their annual goals. These services tend to be very expensive, especially when unprecedented challenges arise such as conflict from the winter weather. Moreover, there are a handful of organizations who, because of their purpose and area of focus (i.e. homelessness, malnourishment alleviation, and poverty), incur additional costs and rely even more on charitable contributions.
While total giving has remained relatively level over the last year, there is an increased need for individual giving. Some organizations thrive on this individual giving to keep programs running, further stressing the importance of charitable donations. Establishing a charitable contribution strategy also comes with fantastic tax benefits, offering you many unique ways to give to the nonprofits you love.
Making a Qualified Charitable Distribution (QCD) from your IRA can count towards your required minimum distributions, helping avoid income tax. IRA owners aged 70 and over can exclude up to $100,000 of gross income through a QCD. If you have a potentially high tax bracket year, this can drastically help your overall tax bill.
Direct contribution of stock to a nonprofit can help avoid capital gains. This can be particularly beneficial in situations where an individual was gifted a stock that has appreciated in value, raising the amount of capital gains incurred to sell the stock. This same strategy is applicable with restricted stock, although the restrictions must be removed before you can make the donation to a nonprofit.
Naming a nonprofit as the beneficiary of your IRA allows the organization to receive the full amount of the account without a tax burden. Because nonprofit organizations do not pay tax on bequeathed assets, this makes them ideal beneficiaries.
Cash contributions are an easy way to support an organization and are tax-deductible, just make sure you keep a record of your contributions.
Nonprofit organizations, charities, and foundation help to better, strengthen, and grow our communities, providing services that wouldn’t otherwise be available. With ample opportunities to support these organizations, through gifts, donations, sponsorships, volunteerism, connectivity, and activism, you contribute to making an incredible difference in our community. In addition to the extensive tax benefits and generous community support, there are many other strategies and reasons for individuals to make charitable contributions. Speak with your financial planners and tax professionals to confirm which strategies would work best for you and how they will impact your tax situation.
.svg)
.svg)
