The Times Herald (Norristown, PA)
Four ways to boost the impact of charitable giving
If philanthropy is part of your financial strategy, you may want to think outside of the box and look for methods of giving that go beyond traditional monetary donations. Recent changes in the tax landscape may also be a reason to take another look at how you give financially. The following are four increasingly popular strategies that can work for you:
If you hold stocks or other investments for more than one year that have gained value, you may consider liquidating the asset to make a charitable donation. Doing so may result in a taxable long-term capital gain. One potentially more efficient way to maximize the value of your donation is to give appreciated stock directly to a charity. The charity would receive an asset it can continue to hold or immediately sell and you would not count the gift as taxable income. Additionally, the market value of the stock at the time the gift is made is would generally be deductible from your adjusted gross income if you itemize your deductions (subject to income-based limitations). Check to ensure the charity accepts this type of donation before exploring it as a financial strategy.
Another way to consider gifting assets is to set up a charitable trust. Trusts can help you manage highly appreciated assets in a more tax-efficient manner while, in some cases, allowing you to split assets among charitable and non-charitable beneficiaries. The timing of each gift and the flexibility you want dictates the type of trust that works best. With a Charitable Lead Trust, a charity is funded with income from assets placed in the trust for a specified time period. After that time, the remaining assets revert to other named beneficiaries, such as your heirs.
In a Charitable Remainder Trust, the reverse occurs. The trust makes regular income payments back to you or another beneficiary. After a period of time specified in the trust, the remaining assets are directed to the named charities. These trusts have specific rules and are generally established through a professional. An alternative option is to choose a donor-advised fund, which allows you to make