Charitable Giving Strategies for Business Owners Before Year-End

Many business owners make their charitable gifts in the last weeks of the year. How you give can matter as much as how much you give, and a little planning can help your generosity go further.

Charitable Giving Strategies to Consider Before Year-End

Donate Appreciated Stock Instead of Cash

If your stock has grown in value, consider giving the shares directly to charity instead of selling them first. Say your stock is worth $1,000 and you paid $100 for it. If you sell it, you pay tax on the gain, and only what is left goes to the charity. If you donate the stock itself, your donation is based on its full fair market value.

Use a Donor-Advised Fund

A donor-advised fund is a charitable giving account, usually set up through an investment firm. You contribute to the fund, take the deduction in the year you contribute, and the money goes to the charities you choose over time. Owners often use them after a large event, like selling a business, to cover several years of giving.

A few things to know about donor-advised funds:

• You can fund it with cash, appreciated stock, real estate, or, with the right company structure, shares of your business.
• The money can grow in the fund, so your charities may ultimately receive more.
• Not every charity qualifies, so confirm your preferred organizations are eligible.
• There may be time limits on how long money can stay in the fund. Check with your investment advisor.

Make a Qualified Charitable Distribution From Your IRA

If you take required minimum distributions (RMDs) from an IRA, you can send that money directly to a charity. This is called a qualified charitable distribution, or QCD. The amount does not count as income on your tax return, so it stays out of your adjusted gross income.

Bunch Your Donations

Because the standard deduction is high, many people see little tax benefit from itemizing gifts every year. Bunching combines two years of giving into one year, and you take the standard deduction in the other. If you expect higher income next year, consider waiting to give early next year, then giving again at the end of that year.

Finding the Right Charitable Giving Strategies for You

The best approach depends on your income, your assets, and the causes that matter to you. If you would like help choosing what fits your situation, our team is happy to talk it through. Reach out to us at 847-517-8222 or complete our contact form.