Philanthropy literally means “to love mankind.” Charity similarly means a Christ like “love of one’s fellows.” These two terms can be used interchangeably. Both are people who seek to promote the welfare of others, through the donation of time or money.
Not everyone has the means or time to be charitably minded, but everyone should try to be as it changes who we are. When participating in charitable works or philanthropy, we experience a mental shift from an inward-looking to an outward-looking perspective of “what can I do for others.”
Philanthropy is an effective way to create more fulfillment in your life.
Why Philanthropy and Charitable Giving Matters
Giving Back – So many of us have benefited from people and/or organizations in our community and have seen the positive impact non-profit organizations can have which makes a person want to give back to others.
Creating A Legacy – Many of us want to be remembered and let future generations and others know the things that are important to us and the works they were involved in.
Helping Your Community– I think most of us want to make the world a little bit better. It’s always best to start in your own community.
Tax-Deductible Donations – Our Government sees the value of non-profit charitable organizations and allows you to reduce your taxes when donating money or other assets to tax-qualified organizations.
The Best Ways To Give To Charities
Add your chosen non-profit to your will or trust – This is an easy way to continue your legacy of giving long after you’re gone. By adding your chosen non-profit organization to your will or trust, your gift can help them create an endowment that can potentially keep their cause funded into perpetuity, even if it’s only a fraction of your estate.
Donate appreciated assets – If you have an appreciated stock, bond, real estate, business, or another commodity, you can receive a tax deduction and not have to recognize the gain from the appreciated asset if it is donated “in-kind” or as is. In-kind donations of an appreciated asset are a great way to help a good cause and reduce your tax burden.
Charitable Remainder Trusts (CRT) – If you have an asset that you’d like to generate a lifetime income from, like a property or investment account, you can donate the asset to a CRT. You would get a charitable deduction on your taxes in the year of the contribution. This deduction can also be carried forward on your taxes. The asset would be invested and income from the asset would be paid to the donor. At the end of the donor’s life, the remainder of the CRT account is given to the non-profit that was chosen. Some people buy a life insurance policy with tax savings to replace the gift at the end of the donor’s life. The CRT can be a very effective way to reduce taxes and get a lifetime income. Note: a CRT is irrevocable. Be sure to thoroughly research the pros and cons of a CRT and consult an accountant, attorney, and financial advisor before deciding to use a CRT.
Donating Required Minimum Distributions (RMD) – By donating your RMD or part of it, you can get the regular deduction you would get from a charitable donation, but depending upon your income tax level, it can also reduce your social security taxes and/or Medicare costs. Please consult a tax advisor as not everyone will receive this extra benefit.
Please contact WealthGuard Advisors if you have questions about or would like help with any of these gifting strategies.