At the Community Foundation, we’re committed to making charitable giving both impactful and efficient. As year-end approaches let’s work together to ensure your giving is meaningful and potentially tax saving as well. Your generosity can greatly benefit our community, and we’re here to support you in achieving your charitable goals for this year.

If you’re uncertain about how or where to give, or if you’re solely motivated by tax benefits, don’t worry! Our team is ready to guide you through your options.

November is the perfect time to set things in motion, so you don’t get caught up in the year-end rush. Here are our top three giving tips for 2024, along with additional tax-saving strategies to consider:

• Donate Highly Appreciated Stock: Consider donating highly appreciated stock, rather than cash, to funds at the Community Foundation to maximize tax benefits.

• Bunch Donations into a Donor-Advised Fund (DAF): Use the “bundling” or “bunching” technique to contribute a larger, lump-sum amount to a DAF at the Community Foundation, allowing you to exceed the standard deduction and itemize. The assets in the DAF can then be distributed to your favorite charities over the next few years.

• Give from Your IRA: Donors aged 70½ and older can make Qualified Charitable Distributions (QCDs) directly from their IRA to designated or field-of-interest funds at the Community Foundation (DAFs are ineligible). This can be done for up to $105,000 per spouse and can help satisfy Required Minimum Distributions (RMDs).

Bunching Your Charitable Donations into a DAF

Instead of spreading out charitable donations annually, make a larger, lump-sum contribution to a DAF in a single year. By “bunching” donations that you would typically spread over several years, you can exceed the standard deduction threshold, allowing you to itemize and potentially achieve a larger tax benefit.

The funds in your DAF can be granted to charities over time, allowing flexibility to recommend grants to specific charities at your own pace.

Donate Appreciated Stock Instead of Cash

When you donate appreciated stock directly to the Community Foundation, you avoid paying capital gains tax on the increased value of the stock. If you were to sell the stock first and then donate the cash proceeds, you would likely owe capital gains tax on the appreciation.

You can generally claim a charitable deduction for the fair market value of the stock if you have held it for more than one year. This can help offset your taxable income, often providing a significant tax benefit.

We encourage you to consult with your tax advisor to determine if bunching your charitable giving into 2024 is the right choice for you.

Giving from Your IRA

If you are 70½ or older, you can reduce your taxes and make an impact through the Community Foundation with a Qualified Charitable Distribution (QCD). A QCD can help meet your Required Minimum Distribution (RMD) while allowing you to take the standard deduction and potentially reduce your taxable income.

While DAFs are not eligible to receive QCDs, the Community Foundation offers several options that can be explored and are detailed here on our website.

Additional Year-End Giving Tips

• Combine Charitable Giving with Investment Portfolio Rebalancing: Rebalancing often involves selling appreciated investments and using the proceeds to buy underrepresented assets in a portfolio. To potentially reduce the tax impact, consider a part-gift, part-sale strategy by donating long-term appreciated assets. This can offset the capital gains tax on the sale of appreciated assets while allowing you to claim a charitable deduction.

• Donor Advised Fund (DAF): A Donor Advised Fund lets you make a donation now, claim a 2024 tax deduction, and distribute charitable funds over time. The DAF acts as a charitable savings account, so you can recommend grants to specific charities over time, spreading out the actual donations as you wish. While the funds remain in the DAF, they can be invested and grow tax-free, potentially increasing the amount you have to donate in the future.

Important Deadlines

To qualify for deductions on your 2024 tax return, all donations must be received by December 31. If you’re considering a QCD from your IRA, submit your request by early December to ensure timely processing. If you wish to gift stock, please allow ample processing time to ensure the Community Foundation receives the stock before December 31, 2024.

Please Note: The Community Foundation does not provide tax or legal advice. We encourage donors to consult with their advisors and to include the Community Foundation in discussions to ensure your charitable plans are tax-smart.