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Daily Camera

Enid Ablowitz

Year-end Planning for Charitable Gifts

Newspapers are filled with holiday opportunities to give, from local toy drives or coat drives to national organizations appealing to the heightened awareness of need at this time of year.  While your heart will guide your giving, if you want a charitable deduction, there are some things you should know.

In order to claim a tax deduction for a charitable gift over $250, you must have a receipt from the charity that describes the gift and states whether or not you received any benefit in return.  If you are making gifts of used items, they must be listed and you, not the charity, determine the value you wish to claim.  Keep in mind that the value of the gift is discounted from the purchase price to reflect depreciated use.

The timing of a gift is very important in determining the tax year of the charitable deduction.  The deduction is valid in the year the gift is “delivered” to the charity.  So, if a check is mailed in one tax year and received in another, the mail date determines delivery.  If you use a credit card, the gift is made when charged, not when the bill is paid.  With stocks, the delivery date is when either the securities are mailed, actually received (like when stock certificates are hand-delivered) or when they are received or mailed to the charity’s broker or other agent.  If you are in doubt about how to be sure you gift is made in the year you intend, seek legal counsel.

Speaking of ways to make a gift, if you own stock you can give, you may want to look more carefully at this option before you write a check, especially if the stock is appreciated.  You could  get not only a charitable deduction, but you could also save on capital gains tax. 

Consider the following example:

Suppose you and your spouse write a check for $2,500 to a local charity and you’re in the 36% marginal tax bracket based on your combined adjusted gross income. Your charitable deduction is based on the fair market value of $2,500, so you save  $900 in taxes (36% of $2500) and the net cost of the gift is $1600.

Now, instead of writing a check, you decide to use appreciated stock with a market value of $2500. You select a stock you purchased 5 years ago for $1,500.  You still get the charitable deduction based on market value, but if you sold the stock, you would pay tax of $200 based on 20% of the $1,000 gain.  By making a gift of the stock, you get the charitable deduction and you save the $200 capital gains.  Now, the net cost of the gift is $1400.  

The same principle works no matter what tax bracket you are in, as long as you itemize.

As you think about year-end giving, you may want to find out more about the organizations you want to support, and how they will use your money. The best way is to talk to the director or a member of the board to understand the needs and opportunities.  If you don’t have a particular organization in mind, your community foundation can help you hone in on those that best match your interests.  In fact, here in Boulder, there’s a wonderful new website at www.CultureOfGiving.org that is a wealth of information, not only about the 106 local non-profits that are currently listed, but also about how to give and how much to give.  There are even stories about those who have given and those who have benefited from those gifts.

There are national websites that can help you locate and evaluate worthy causes as well.  You can check www.Charitywatch.org, a site created by the American Institute of Philanthropy to help donors screen organizations, or www.Guidestar.org that gathers financial information about non-profits. 

Give.  Make tax-wise gifts.  Give with impact.  And give generously. 

Send your questions about making charitable gifts to Enid Ablowitz, Features, Daily Camera, 1048 Pearl St., Boulder, 80302 or e-mail???/Fax????

Ablowitz, the Asst. Dean for Advancement at CU’s College of Engineering is a Certified Fund Raising Executive and has been working with donors for over a decade.  She is writing a book called Making Money Matter: 8 Steps to Thoughtful Giving.

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