Want to Close Out 2024 on a High Note? Charitable Giving May be the Answer

As the year comes to a close, many of us may be feeling exhausted from the effects of an election year, growing world conflicts, a stock market on steroids (a particularly nice gift!) and the usual stress that comes with a busy life. So, as we look to close the book on 2024, maybe now is a good time to appreciate what we have and how we can take account of our gains and share our fortunes with others. The end of the year is known as giving season, and it is a time I always look forward to both in terms of my own interest in giving back, and in helping our clients find the right approach for giving to the organizations that are most important to them.

There are many financial benefits to charitable giving, including of course, tax benefits. DBR & CO has a full roster of possible tools to help in this area depending on your situation. For example, you can contribute cash, stocks or other assets to a Donor Advised Fund (DAF) which is then managed by a public charity. The funds are then able to be invested to grow tax-free over time. For IRA owners over 70 ½ you can make qualified charitable distributions (QCDs) of up to $100,000 tax-free each year. You can also save on capital gains by donating long-term appreciated securities like stocks, bonds and mutual funds directly to charity.

An important thing to remember is that cash isn’t always king when it comes to charity. If you’re donating cash, it likely means you have already paid taxes on those funds, like regular income tax or investment capital gains tax. On the other hand, if you contribute an appreciated asset held long-term, then you’re donating a pre-tax asset, potentially eliminating taxable income and allowing you to receive a larger tax deduction. At the same time, your impact on the organization you are gifting to potentially increases.

While it is important to donate wisely for tax reasons, I find there are many rewarding personal reasons for charitable giving. For example, giving to causes that align with your values can make you feel satisfied. Supporting a cause with the rest of your family can form a lasting and memorable bond. Donating within your community can also help you become more engaged and connected where you live. In addition, you offer a good example for your peers to follow.

When I started our firm in 1994, Kathy and I set up a Donor Advised Fund with the Pittsburgh Foundation for our sons to learn about philanthropy. As teens, Jesse and Alec were given the responsibility of choosing where we donated. Naturally, as dog lovers our family gave to Animal Friends. But later we also gave to charities that had personal ties to our family. This included the Alzheimer’s Disease Research Center at the University of Pittsburgh. We even helped fund the building of a new ice rink facility at the school where our boys played hockey. With each gift, our family grew closer to each other, to the causes most important to us, and to the communities that helped shape us.

Additionally, there are some who suggest giving to charity helps you de-stress and improve your mental health. Doctors at the Cleveland Clinic claim that helping others can boost your heart and mind. The benefits that come with feeling good about our giving include lower blood pressure, a longer life span, less stress and even a ‘helpers high.’¹

There are many personal reasons to give to charities including the satisfaction of making a difference in the lives of others. As for the financial advantages to giving to charities, we work with institutions, boards and other organizations to generate awareness for our clients on how to make this a winning effort for all parties.

Regardless of outside circumstances, something we can all feel good about is giving to others. If you aren’t sure which charity you would like to give to this season, you can discuss your preferences with your advisor or you can search sites such as this for ideas: https://www.charitynavigator.org/

Thanks for reading, wishing you all a very happy holiday season!

Dave

¹ Cleveland Clinic, December 7, 2022 https://health.clevelandclinic.org/why-giving-is-good-for-your-health