Making a Difference: How to Optimize Your Charitable Giving Strategy?

While a charitable contributions plan should never be pursued primarily for the goal of claiming a tax credit, there are methods you can contribute to help charities in need today while simultaneously claiming the maximum benefit available to you. The ideal charitable giving strategy for you will be determined by your age, the quantity and type of assets you wish to give, and the degree of control you want to have over the gift. It's always a good idea to speak with your tax advisor.

Some Charitable Giving Strategies to Consider

1. Include Non-Cash Gifts (Such As Stock) In Your Giving Strategy
Non-cash property donations, like cash gifts, are tax-deductible; however, tax regulations provide specific advantages for non-cash property contributions, particularly those that have improved in value since bought or received. If you have appreciated equities, bonds, treasuries, or mutual funds, you can minimize your tax burden while increasing the value of your donation by contributing appreciated securities. Donating your shares to a charity directly also provides you with two important tax incentives: it may help you avoid paying capital gains tax on the stock you sell, and the stock contribution is tax-deductible at its current market value. As a result, the stock in your portfolio that has appreciated the most over time is typically the best to donate because it provides the biggest tax benefit.

2. Automate Your Donating to Achieve Your Objectives
Many contributors have a basic notion of how much they'd want to donate each year, so having a number in mind, as well as pre-scheduling gifts throughout the year to meet that goal, may be beneficial. You may already pay your bills in this manner; doing so for charity increases your chances of contributing what you intended and balancing your donations with other aspects of your budget. Fully automated charitable contributions from your bank account or credit card are simple to set up. Some employers will also assist you with payroll deductions. As an added plus, you won't have to rush to turn in your contributions at the end of the year.

3. Make a Donor-Advised Fund (DAF)
Creating a donor-advised fund is another way to obtain tax savings while also giving to organizations over time. This enables you to give a bigger sum this year (and benefit from the tax advantage) while also allowing you to spread payments from the donor-advised fund out over time. For example, you could deposit $12,000 into a donor-advised fund today and give $4,000 to your favorite organizations every year for the next three years.

4. See How Your Income Is Changing With Time
If your income is bound to change in the future, give more in years when your income is higher because you may get bigger tax savings from the tax credit. For example, if you know you'll be in a higher income bracket this year than next year due to a significant work bonus or other situational factors, it's better to take the tax credit now rather than later.

5. Working with an advisor
While all of these charitable giving tax strategies have benefits, it may not be easy for you to recognize the best time to employ them or decide upon which strategies work best in your situation. Working with trusted financial, tax, and estate planning professionals can help you craft the optimal giving strategy to maximize your philanthropic goals and tax savings during your lifetime and beyond.

Conclusion

As your financial planner, Bellwether Investment Management can assist you in developing a customized approach that best matches your needs. While you may have adopted charitable donations as a financial or tax-planning strategy, there's little doubt those advantages will hold a candle to the simple joy of making a positive difference in the lives of others around you.

Here at Bellwether, we can help you make the right choices about charitable giving. Book an investment portfolio review today, free of charge, or speak to our team to learn more.

You can also reach out for a full PDF white paper with detailed charitable giving strategies.

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© Bellwether Investment Management Inc. 2024. This communication is intended for residents of the provinces in which we are registered and is not meant to be a solicitation to any persons not resident in those provinces. Any opinions expressed in this article are just that, and are not guarantees of any future performance or returns. Some of the information contained in this article has been drawn from sources believed to be reliable but due to the fact that it is provided by a third party, it cannot be guaranteed to be accurate or complete. Bellwether Investment Management Inc., Bellwether Estate and Insurance Services Inc. and Bellwether Family Wealth cannot provide tax advice and therefore we recommend that you consult your tax advisor for further assistance with your tax planning and the preparation of your tax return. The report is prepared for general informational purposes only and the securities mentioned in this report should not be construed as a recommendation for any specific securities.