The giving season is upon us as 2014 comes to a close. Charitable donations are an important way of giving back to our community. If you are eager to give back or help out, just how do you decide how much to give and through whom? For those wishing to exercise wise stewardship, these issues are significant.
An increasingly popular metric is “effectiveness,” or the ability of a charity to make a difference. To some, this is a technical question and involves hard data, number-crunching and nonbiased analysis. Resolving the technical questions is an easier matter in the digital age. For example, you can log on to www.charitynavigator.org, among other websites, to research how “effective” your gift to a certain charity will be.
Beyond the charity’s ability to make a difference, you may want to know how much of your gift will be used for administration and marketing expenses, as opposed to actually feeding the hungry or buying medicines for a remote clinic. Many potential donors balk at giving to charities that spend more than ten percent of donations on things that do not directly benefit clients.
Measuring how a charity makes a difference is also a question of how you define “making a difference.” How do you determine the values most important to you and how do you prioritize among them? Do you give locally or give to the neediest? Many veterans of charitable giving spread out their gifts among a few charities that carry out good works both at home and abroad.
Another thing to consider with your charitable giving is providing for your own financial security while you provide for others. Your legal, accounting and financial advisors can help you with such gifting vehicles as charitable remainder trusts (CRTs), which enable you to avoid capital gains taxes, charitable gift annuities, which, like CRTs, provide you with an income stream and a current income tax deduction and in-kind gifts. In-kind gifts could be things like low-basis corporate stock or real estate which, if you sold, would result in capital gains tax liability. If you give the stock or real estate directly to your favorite charity, you will get a deduction for the full value of your gift, without incurring a capital gain.
Be sure to get current income tax deductions for your year-end gifts; write and deliver or mail your checks, or complete your credit card transactions, by December 31. If you are making in-kind gifts, deliver them and obtain receipts dated no later than December 31.
Time is ticking for those year-end gifts. It is time to nail down your priorities and preferences, obtain appropriate advice and make some important decisions. Enjoy a giving holiday season.
Scott Makuakane, Counselor at Law
Focusing exclusively on estate planning and trust law.
Watch Scott’s TV show, Malama Kupuna
Sundays at 8:30 p.m. on KWHE, Oceanic channel 11
O‘ahu: 808-587-8227 | firstname.lastname@example.org