Unsurprisingly, many of FinArc’s clients are charitably inclined. With FinArc’s guidance, clients can become more strategic and thoughtful about their giving.
Consider this; most charitable gifts are made in the form of cash and often in response to impromptu requests. While there are some benefits to giving cash (e.g. ease for both donor and recipient), there are more tax efficient approaches which might have greater impact.
FinArc assists many clients with donating highly appreciated stock or mutual fund shares directly to the organizations they care about. This allows you to avoid paying capital gains tax generated from selling the security, provides you with a larger charitable tax deduction, and provides more financial resources to the recipient. A qualified non-profit can sell the securities upon receipt without incurring any capital gains tax itself.
Another popular vehicle for charitable giving is a donor advised fund. Donor advised funds can be attractive because:
- They are relatively simple.
- They allow donors to better manage the timing of their charitable tax deduction. For instance you can time a contribution to your donor advised fund to help offset extraordinarily high taxable income in a particular year (e.g. upon the sale of a business, upon receiving a large bonus, etc.)
- They are flexible and allow donors to recommend grants over many years. You might intend to financially support an organization over the next 10 years, but prefer the tax deduction today. Your donor advised fund can facilitate this. If you change your mind regarding support level or the recipient, your donor advised fund allows for this too.
- They can be funded with a variety of assets (e.g. cash, highly appreciated public securities, or complex assets such as a private business, real estate, or art)
- They offer lower administrative costs and more privacy than private foundations.
- Contributions to a donor advised fund can be invested and grow to provide more financial support than the donor’s initial outlay.
To learn more about these and other philanthropic solutions, please contact us directly.