As another year comes to a close, you may have already started thinking about financial considerations. For many people—whether it’s for philanthropic reasons, tax planning reasons, or both—one consideration is charitable giving.
There are many financially efficient ways for you to give at the end of the year. Here are a few of the most popular:
GIVING GIFTS OF STOCK
Gifts of appreciated stock are an excellent way to avoid the capital gains tax you’d pay on an appreciated asset if you sold it, and you receive a charitable deduction for the full market value of the stock. If you have stock that has decreased in value, another strategy is to first sell stock—generating a tax loss you can use to offset any capital gains income—and then gift the sale proceeds, which further results in a charitable deduction.
DONOR-ADVISED FUNDS
The Academy’s partnership with Drexel University offers a unique charitable giving opportunity through the Drexel Donor Advised Fund (DAF). Establishing a Drexel DAF is a tremendously effective tool if you’re looking to generate a charitable deduction in 2016 but aren’t sure where you want your money to go. You give a gift of cash, appreciated securities, and other assets to your DAF, which in turn gifts the value of the assets to the Academy of Natural Sciences of Drexel University and to other charitable organizations of your choice. Once you’ve had time to think about where you want the funds to go, you can direct the money each year to the charitable recipients you choose.
A DAF can also be a way to involve your children or other family members in charitable giving, since multiple authorized users are permitted to direct where gifts go. Additionally, a DAF can offer anonymity if you’d like to keep your giving information private.
CHARITABLE TRUSTS
As you begin to plan for 2017, you may want to learn more about creating a charitable trust for future tax years.
Charitable lead trusts allow you to transfer assets that either produce income or are expected to experience strong growth to your heirs while providing a gift to a charity in the form of income during the term of the trust. You get a tax deduction for the value of the income stream going to charity—so the lower the discount rate, the greater your tax deduction. The assets remaining in the trust can be left to your heirs. The value of your gift to your heirs is the fair market value less the gift to charity, which means the charitable gift completely offsets the gift going to your heirs, making it effectively $0 for estate and gift tax purposes.
Charitable remainder trusts are the reverse of charitable lead trusts. The income beneficiary can be you or someone else, and whatever remains in the trust at the end of the trust term goes to charity. These trusts aren’t as attractive in low interest rate environments, but they may be worth considering for the future depending on your charitable goals and your income needs.
THINKING AHEAD
Please don’t hesitate to contact our Office of Institutional Advancement to learn more about how to make the most of your charitable giving and which solutions may work best for you as you consider supporting the Academy. If you have questions about how to support the Academy, please contact Vice President of Institutional Advancement Monica Cawvey Gallagher at 215-299-1013 or gallagher@ansp.org. She would be delighted to assist you. Thank you for your support!