{"id":10175,"date":"2024-12-21T16:21:15","date_gmt":"2024-12-21T20:21:15","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=10175"},"modified":"2024-12-28T17:49:32","modified_gmt":"2024-12-28T21:49:32","slug":"charitable-giving-has-jumped-what-you-need-to-know-about-donating-by-the-end-of-the-year","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=10175","title":{"rendered":"Charitable giving has jumped: What you need to know about donating"},"content":{"rendered":"
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Americans made $3.6 billion in charitable donations this week \u2014 a double-digit increase of 16% from Giving Tuesday 2023\u2019s total of $3.1 billion, according to <\/span>The GivingTuesday Data Commons<\/a>, the group that tracks the data. And more people than ever \u2014 36.1 million \u2014 donated to a charity that day, up 7% from last year.<\/span><\/div>\n<\/div>\n<\/div>\n
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Add this to the mix: Giving by individuals is predicted to increase by 2.6% in 2024 and by 3.4% in 2025, surpassing previous annual average giving bumps, according to\u00a0research<\/a>\u00a0from the Indiana University Lilly Family School of Philanthropy.<\/p>\n

That feels good.<\/p>\n

As we slide into December, many of us who bypassed the much-hyped Giving Tuesday, me included, are focusing on making charitable contributions by year-end to reduce taxes or simply revel in that holiday spirit of giving.<\/p>\n

If your employer offers an employee match program, it likely has a Dec. 31 deadline. Some companies have a set list of charities they partner with, while others match gifts to any charity you select. Typically, there’s a cap on the maximum donation amount they\u2019ll match.<\/p>\n

Read on Yahoo Finance<\/a><\/em><\/strong><\/p>\n

From the collective heart<\/h2>\n

For me, and I suspect lots of you, giving is really more about your heart than a tax strategy.<\/p>\n

People have similar motivations for giving, according to Fidelity Charitable\u2019s\u00a0research<\/a>: making a difference, giving back to their community, and faith are aspects of financial giving donors find most rewarding.<\/p>\n

For Shannon Bonney, 26, that\u2019s the case.<\/p>\n

Last year, she became a member of\u00a0Many Hands<\/a>, a nonprofit philanthropic \u201cgiving circle\u201d with a membership of around 275 women. The collective giving organization supports nonprofits in the Washington, D.C., area focused on women, children, and families in socioeconomic need. Members under 35 make an annual gift of $300. Older donors contribute a minimum annual gift of $1,000.<\/p>\n

Donating through a\u00a0giving circle<\/a>, where individuals, often women, pool their funds and their decision-making to make grants, is the hottest trend in philanthropy. Per a\u00a0report<\/a>\u00a0from Philanthropy Together, the number of giving circles and the number of people who are part of one tripled between 2007 and\u00a02016<\/a>\u00a0\u2014 and then tripled again between 2016 and 2023. There are now more than 4,000 giving circles across the country with 370,000 members. Among them, they gave away more than $3 billion over a five-year period ending in 2023.<\/p>\n

\u201cI chose a giving circle because it\u2019s the most effective way to pool money with people and then get that in a lump sum to the organization,\u201d Bonney said. \u201cIt\u2019s a lot more impactful to have your money be part of tens of thousands of dollars that are going to that group.\u201d<\/p>\n

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The amount of giving per member varies by giving circle. Some circles set a lower giving level that can range from $200 to $500 annually. Others opt to set it higher, say, $5,000 to $25,000 a year. (The Giving Compass site has a\u00a0Giving Circle search tool<\/a>\u00a0to find ones near you focused on missions of interest).<\/p>\n

Tax-wise giving strategies<\/strong><\/h2>\n

Most of us don\u2019t know much about nitty-gritty tax strategies that could make our donations more financially impactful.<\/p>\n

To write off donations, your total tax deductions need to exceed the standard deduction to be worthwhile. For 2024, the\u00a0standard deduction<\/a>\u00a0is $14,600 for single filers and $29,200 for married couples filing jointly.<\/p>\n

The tax deduction is a lure for most Americans, with retirees marginally less likely than others to say it\u2019s important to their giving decision.<\/p>\n

One way to exceed that standard deduction threshold is to bunch together your contributions and give two years’ worth of deductions in one year, so your total giving will be high enough to allow you to itemize.<\/p>\n

\u201cThis can be extremely effective for gifting in years of higher-than-normal income \u2014 for example, if you sold a business or real estate, received a large bonus payout, exercised stock options, or sold and diversified a concentrated low-basis stock position,\u201d Brandon O\u2019Neill, a certified financial planner and charitable planning consultant at Fidelity Charitable, told Yahoo Finance.<\/p>\n

Another tax-saving strategy is making a charitable donation of stocks, ETFs, or mutual funds you’ve held for more than a year. This is a way to avoid owing capital gains taxes on their profits.<\/p>\n

You might also consider a\u00a0donor-advised fund\u00a0<\/a>(DAF), which is available from financial services firms like Fidelity, Schwab, and Vanguard. There could be\u00a0minimum amounts<\/a>\u00a0to open an account and to give to an individual charity along with annual administrative fees.<\/p>\n

When you make a contribution of cash, stocks, mutual funds, or ETFs to a DAF, you immediately receive a tax deduction, provided you itemize. You can then invest the money for growth that is tax-free until you choose which charities you want to donate to.<\/p>\n

These funds are going mainstream but are still under-the-radar for many Americans.<\/p>\n

\u201cA DAF is a simple, tax-effective way to dedicate money to charitable giving,\u201d O\u2019Neill said. \u201cYou can think about DAFs almost like a 529 or IRA for charitable giving because they allow you to strategize your giving.\u201d<\/p>\n

If you\u2019re aged 70\u00bd or older, a\u00a0qualified charitable distribution<\/a>\u00a0from an Individual Retirement Account (IRA) is another consideration.<\/p>\n

You make this distribution directly to a charity, reducing the amount of your taxable IRA that is subject to Required Minimum Distributions starting at age 73. You can’t deduct the qualified charitable distribution, but the money won’t be considered taxable income to you.<\/p>\n

Have a question about retirement? Personal finances? Anything career-related? Click here to drop Kerry Hannon a note.<\/em><\/strong><\/a><\/p>\n

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\u201cThe year-end retirement account balance is key to retirees because their required minimum distribution is based on that balance,\u201d Ed Slott, a certified public accountant in New York and an expert on IRAs, <\/span>previously told<\/a>\u00a0Yahoo Finance. \u201cYour RMD is your best asset to give to charity.\u201d<\/span><\/div>\n<\/div>\n<\/div>\n

This year you can donate up to $105,000 total to one or more charities directly from a taxable IRA.<\/p>\n

\u201cYou are getting it out at zero tax and giving it to a charity, something you would’ve done anyway,\u201d Slott said. \u201cPlus, if you do it correctly, with the timing of it, it can offset your RMD.\u201d<\/p>\n

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\"Kerry<\/a><\/div>\n
By Kerry Hannon<\/a>\u00a0\u00b7<\/span>\u00a0Senior Columnist<\/div>\n
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Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including “<\/em>In Control at 50+: How to Succeed in The New World of Work”<\/em><\/a>\u00a0and “Never Too Old To Get Rich.” Follow her on\u00a0<\/em>Bluesky:<\/em><\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n

Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more<\/strong><\/a><\/p>\n

Read the latest financial and business news from Yahoo\u00a0<\/strong><\/a>Finance<\/strong><\/a><\/p>\n<\/div>\n

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