Estate Read Time: 3 min

Trends in Charitable Giving

According to the most recent report by Giving USA, Americans gave $499 billion to charity in 2022.1

Americans usually give to charity for two main reasons: to support a cause or organization they care about or to leave a legacy through their support.

When giving to charitable organizations, some people elect to support through cash donations. Others, however, understand that supporting an organization may generate tax benefits. They may opt to follow techniques that can maximize both the gift and the potential tax benefit.

Here's a quick review of a few charitable choices:

Direct gifts are just that: contributions made directly to charitable organizations. Direct gifts may be deductible from income taxes, depending on your individual situation.

Charitable gift annuities are not related to annuities offered by insurance companies. Under this arrangement, the donor gives money, securities, or real estate, and in return, the charitable organization agrees to pay the donor a fixed income. Upon the death of the donor, the assets pass to the charitable organization. Charitable gift annuities enable donors to receive consistent income and potentially manage their taxes.

Pooled-income funds pool contributions from various donors into a fund, which is invested by the charitable organization. Income from the fund is distributed to the donors according to their share of the fund. Pooled-income funds can enable donors to receive income, manage their tax burden, and make a future gift to charity.

Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the pooled-income fund can be obtained from your financial professional. Read it carefully before you invest or send money.

Gifts in trust enable donors to contribute to a charity and leave assets to beneficiaries. Generally, these irrevocable trusts take one of two forms. With a charitable remainder trust, the donor or chosen beneficiaries can receive lifetime income from the assets in the trust, which is then passed to the charity when the donor dies; in the case of a charitable lead trust, the charity receives the income from the assets in the trust, which passes to the donor's beneficiaries when the donor dies.

Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with these rules and regulations.

Donor-advised funds are funds administered by a charity to which a donor can make irrevocable contributions. This gift may have tax considerations, which is another benefit. The donor also can recommend that the fund make distributions to qualified charitable organizations.

Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the donor-advised fund can be obtained from your financial professional. Read it carefully before you invest or send money.

Some people are comfortable with their current gifting strategies. Others may want a more advanced strategy, however, which can maximize their gift and generate potential tax benefits. A financial professional can help you assess which approach may work best for you.

Remember, the information in this article is not intended as tax or legal advice. And it may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

1. GivingUSA.org, 2023

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

 

Related Content

Retirement Income and the Traditional Portfolio

Retirement Income and the Traditional Portfolio

Experiencing negative returns early in retirement can potentially undermine the sustainability of your assets.

Interested in a Fuel Efficient Car?

Interested in a Fuel Efficient Car?

Estimate how many months it may take to recover the out-of-pocket costs when buying a more efficient vehicle.

Volunteering in Retirement

Volunteering in Retirement

For many, retirement includes contributing their time and talents to an organization in need.

 

Have A Question About This Topic?







Thank you! Oops!

AI Tools Changing Retiree Entrepreneurship

The impact that Artificial Intelligence (AI) tools can have on retirees with a consulting or small business venture.

Red Flags for Tax Auditors

Here are six flags that may make your tax return prime for an IRS audit.

Social Media: #NewestBusinessLiabilityRisk

Social media may be a modern imperative for businesses looking to grow and build their brand, but it also introduces risk.

View all articles

What Is the Dividend Yield?

This calculator helps determine your pre-tax and after-tax dividend yield on a particular stock.

What's My Potential Estate Tax?

This calculator helps estimate your federal estate tax liability.

Saving for Retirement

This calculator can help you estimate how much you may need to save for retirement.

View all calculators

Long-Term-Care Protection Strategies

The chances of needing long-term care, its cost, and strategies for covering that cost.

An Inside Look at Retirement Living

A number of questions and concerns need to be addressed to help you better prepare for retirement living.

Your Cash Flow Statement

A presentation about managing money: using it, saving it, and even getting credit.

View all presentations

Questions to Consider When Buying a Vacation Home

Doing your research is key before buying a vacation home.

From Boats to Brokers

From the Dutch East India Company to Wall Street, the stock market has a long and storied history.

It May Be Time for a Financial Checkup

It’s never a bad time to speak with your financial professional about changes in your situation.

View all videos