Getting more out of giving back
Charitable giving can bring personal satisfaction, enabling you to support the causes and organizations that matter most to you. It can result in significant tax advantages as well – including mitigating income taxes, capital gains taxes and estate taxes. We design strategies to give you the confidence and clarity to benefit your family and the institutions and organizations you care about most.
We are here to help ensure that your contributions make the biggest positive impact possible – for you, your family, and the charitable organizations you support. You’ve got a lot of options – each with its own benefits and considerations – to help you give back and pay it forward. Our focus is on matching your giving goals and preferences with a strategy that makes sense for what you’d like to accomplish in your life, as well as the lives of others.
We can help you create a family mission statement to serve as the guiding force of your giving efforts. It can outline your giving goals, identify the causes you believe in, and clarify each family member’s role to keep everyone engaged and truly create your giving legacy.
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Would you like a relatively simple way to make charitable donations that can also give you immediate tax benefits? Let’s talk about creating a donor advised fund (DAF). It gives you a powerful say in how your charitable gifts are deployed. It offers many of the same benefits as private foundations, but is easy to set up and maintain. A DAF* allows you to make contributions when it makes the most sense for your situation, be eligible to take an immediate tax deduction, invest the assets to potentially grow tax free, and then make grant recommendations on your own timetable for distributing the funds to other qualified charitable organizations. We can help you set up your DAF by working with Raymond James Charitable.
Advantages and considerations
DAFs provide a way to get a tax deduction now and give over a period of years. If you are selling a business or contending with large gains this year, you may consider a DAF as a way to offset potential taxation. There are IRS guidelines to consider regarding this. We can discuss it with you.
*Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a donor advised fund for federal and state tax purposes. Raymond James Financial Services, Inc., is affiliated with Raymond James Trust, N.A.
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Many successful families have little need to rely on their required minimum distributions (RMDs) to maintain their quality of life in retirement, but they are – in fact – required, potentially triggering a taxable event. There is an option to put that money toward a higher purpose if you’re so inclined. For example, if you are at least age 70 1/2, have an IRA, and plan to donate to charity this year, you can direct up to $100,000 in RMDs into a qualified charitable distribution (QCD) from your IRA. This amount can then be excluded from your reported income. Generally, this is more advantageous than taking a distribution from your IRA, paying the tax, and then getting a deduction for donating to charity.
Advantages and considerations
Generally, QCDs may be useful in situations where the charitable deduction could not be fully utilized – either because your itemized deductions (including the charitable contribution) fall below the threshold of the standard deduction in the first place or because your charitable contribution is so large that it exceeds IRS contribution limits and must be carried forward. In addition, certain charities are not eligible to receive QCDs, including DAFs and private foundations. While the rules may be complicated, it’s worth exploring this option to determine if it makes sense for you, particularly from a tax perspective.
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Many of us would like the funds earmarked for philanthropic efforts to serve another purpose – providing income for you or your beneficiaries. Two specialized vehicles allow you to do just that. An irrevocable charitable remainder trust (CRT), for example, can generate an income stream for donors and other beneficiaries you name, with the remainder (thus the name) of the donated assets going to your designated charity after you pass away. A charitable lead trust (CLT) is similar, but the charity receives the income first for a set period and then your heirs receive the rest.
Advantages and considerations
A charitable remainder trust can give you steady income during your lifetime, then give your designated charity the remainder upon your death. As with any type of deductible charitable gift, you can use charitable trusts to offset gains from the sale of stock with a low-cost basis, an inheritance, or the sale of real estate or a business.
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Would you prefer to have ultimate say over your charitable giving assets, processes and decisions? Then setting up a private family foundation may be exactly what you’re looking for. Unlike a public charity, a private foundation makes donations, called grants, to other charities – and the choices are up to you (with some restrictions). It usually does not conduct its own charitable operations, however, it’s important to note that the activities of a private foundation must benefit the public in order to maintain tax-exempt status.
Advantages and considerations
Depending on your level of wealth, private foundations may be a good option. You would have more control with a foundation, but more control can also mean higher administrative costs. You’ll need to have a board to help govern the foundation and keep records of the board’s meetings and giving activities. Private foundations can use their assets to pay staff or fees related to running the foundation. You must make grants worth at least 5% of the foundation’s investment assets each year, and grants should be made to other nonprofits (under some circumstances and with proper documentation, it may be possible to make grants to individuals). Another thing to note: There’s a 1% to 2% excise tax on the organization’s investment assets. Other IRS restrictions apply, so you must be sure you receive the guidance you need to comply.
Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.
