Good Financial Reads: How to Improve Your Charitable Giving for Taxes

Most of us give cash to the non-profits about which we are passionate. Fundraising appeals received from non-profits emphasize cash because it’s the easiest, most accessible, way to donate. There’s nothing wrong with giving cash. It makes sense for those who don’t have a larger investment portfolio or incomes high enough to create tax headaches. 

As a financial planner, I try to practice what I preach. Touting the benefits of charitable giving and the tools available to facilitate donations is part of my mission when guiding clients. One charitable giving tool that is becoming more and more popular is a donor-advised fund (DAF). I have one, and I’d like to tell you why you should consider having one, too.  

Americans give more than $450 billion a year to charity, with the vast majority made up of individual donations. When people think of giving a donation, they usually think about giving in cash, checks, or credit cards. But as stock ownership has increased in the United States – particularly for corporate executives who receive restricted stock options as part of their compensation – the opportunity to donate stock has also increased.

A jolly mood encompasses society in December. The gift-giving culture becomes top of mind for families, friends, and colleagues. You’ll also hear a familiar ringing when around town: the bells of Salvation Army volunteers next to their red cauldrons. Instead of giving your loose change as your way to make an impact, consider how you can strategize your philanthropic efforts before year-end. Your tax plan may also thank you.