Thoughts on Charitable Giving

As we approach the Thanksgiving holiday, I want to offer a few unique ideas that may be useful as you plan any year end charitable giving.

Kiva is dedicated to fighting world poverty through micro-finance - the process of lending money to entrepreneurs in the developing world. Kiva's motto is "make a loan, change a life."

Kiva is unique in that they directly connect the lender (you) with the borrower. You can select a borrower and read about their plans for the money. You’ll receive updates on the loan as it gets paid back. The average loan is less than $500, and 99% get paid back in full. The best part is that once you've been paid back you can re-loan the money to someone else.

Kiva offers gift certificates, which make great holiday gifts. They are also a great way to involve your children in philanthropy and offer them a broader perspective on the world.

GuideStar is a site you may find useful for more traditional giving. GuideStar is a comprehensive database of all U.S. non-profit organizations. Free registration is required, and once online, you can use the site to research schools, churches, and charities. There is free access to historical tax returns, which can give you insight into an organization's operating budget and balance sheet. More comprehensive data is available through a paid subscription.

Charitable IRA Distributions

A special provision in the tax code for 2011 allows IRA owners over age 70 1/2 to donate up to $100,000 directly from their IRA to qualified charities. This a unique opportunity worth exploring if a) you don't need or want the funds in your IRA and b) are charitably inclined.

You have till year end to make the donation regardless of whether you’ve already taken your 2011 required minimum distribution (RMD). If you have not yet taken your 2011 RMD, the donation to charity can count towards it.

Donation of Appreciated Securities

At the intersection of investments, taxes and charitable giving, lies an exciting opportunity - well exciting for me at least. If you have taxable investments with embedded gains you can give them directly to charity.

This has several advantages. Not only do you receive the charitable deduction for the donation, but you eliminate the capital gains tax liability associated with the investment. If you were planning to make the gift in cash, you can use the cash instead to repurchase the investment. The net result – you’ve made your gift, received your charitable deduction, and have the same investment portfolio but with a new, stepped-up cost basis. (Caveat: this is a simplified explanation of a complex strategy. Please consult your advisors before implementing.)

During these challenging economic times, it is easy to lose sight of how blessed we are. I hope you find these ideas useful and inspiring as you contemplate your own giving through the end of the year.

Posted by Jay Healy at 4:03 PM
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