3rd Quarter 2017

Tax-Smart Ways to Give to Charity

This is the time of year people tend to scramble to give money to charities so they can lock in a tax deduction before the year ends. But it's important to research the charity first and consider ways to donate that could give you a bigger tax break.

Check out the charity. Rather than responding to a phone call or email asking for donations — which could be from a scam artist trying to steal your money or your identity — research charities carefully. Several resources analyze the legitimacy and efficiency of charities, such as the Better Business Bureau's Wise Giving Alliance ( and These organizations also recommend charities that focus on certain timely topics, such as hurricane relief. You can check whether an organization is eligible to receive tax-deductible contributions at

Give appreciated stock or mutual funds. Many people write a check to the charities to earn a tax deduction. But you could get an even bigger tax benefit by giving appreciated investments from a taxable account. As long as you have owned the securities from more than a year, you can deduct the current market value of the investment, and you'll avoid having to pay capital gains tax on the increase in value since you purchased the stock or fund. Ask the charity if it will accept appreciated assets.

Give your RMD to charity. If you're 70½ or older, you can give up to $100,000 each year from your IRA directly to charity tax-free. The money counts toward your required minimum distribution for the year but isn't included in your adjusted gross income as long as it goes directly from the IRA to the charity.

Open a donor-advised fund. Such funds, available through many financial institutions and community foundations, let you lock in a tax deduction for 2017 contributions and decide later which charities to support. You can usually contribute appreciated assets to a donor-advised fund, in addition to cash, and have the fund contribute to charities of any size, including small charities that are only equipped to accept cash and checks. You can identify local community foundations at

Plan charitable giving throughout the year. Rather than waiting until the last minute to figure out how much you can afford to give, at the same time you're juggling expenses for holiday gifts and travel, build up a giving fund throughout the year. You can open a separate checking account for your charitable fund or just designate assets you'd like to give sometime during the year. That way, you may afford to give more at year end, and you'll also have money available to give to help victims of emergencies that happen before then, such as after the recent hurricanes.

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