Changes in the tax laws last year have made charitable giving a challenge. The standard deduction increased to $12,000 for individuals and $24,000 for couples.
As a result of these changes, it’s estimated that less than 10 percent of all tax filers will itemize deductions. The other 90-plus percent will take the standard deduction and no longer receive a tax benefit for their charitable giving.
The good news for most charities: donors give for reasons beyond taxes. When taxes are a concern, donors have creative options. One of those is a charitable donor advised fund at the Clinton County Foundation. There are three good reasons to do this.
• Reason number one: contributions to a donor advised fund are deductible, and gifts of appreciated property like stock are deductible at the full fair market value.
To continue to realize tax benefits from giving, some donors are “bundling” several years’ worth of charitable giving into a single year, and then distributing gifts over time. For example, a couple who gave $10,000 per year and itemized deductions before the tax changes may now choose to give $30,000 to a Clinton County donor advised fund every three years.
In this scenario, the couple would take the standard deduction during years when they are “saving up” to give and then itemize during the year when they’ve “bundled” their giving into one larger amount.
• Reason number two: once the Clinton County donor advised fund is established, donors may recommend distributions over the months and years ahead to benefit their favorite charities. This is the bundling advantage for tax purposes.
• Reason number three: It’s easy to set up a donor advised fund. Donors will have access to 24/7 online statements to track their charitable giving. Funds are administered and invested locally. Finally, the Foundation is a community organization and supports a variety of invaluable nonprofit activity. By establishing a donor advised fund, you are supporting many local charities in Clinton County.
It is an honor to serve Clinton County and to help keep our community strong today and for generations to come. The donor advised fund is a solution to those who need the tax deductions.
You can call the Foundation at 937-566-1634 and be sure to talk with your financial advisor.