By: Maurice Stouse, Financial Advisor and Branch Manager
The United States and its citizens are one of the most charitable in all the world. And even though tax laws have made some changes to charitable giving, investors and savers alike are not only thinking about how and what they are giving but also how they might be able to be smarter givers. The question is, how do you do it? Giving is motivated by the three Ts: Time, talent and treasure. This article is focused on the giving of treasure.
It all starts with a review of today’s givers, the “who”. In 2018, Raymond James produced a white paper on charitable giving, and we are sharing some of that insight for you here. If you looked at some numbers, you would find that a giver is typically a mature American (88%) and 72% of all givers are classified as baby boomers. Next, what are their causes? The study says the top four are: 31% to religious institutions; 14% for education; 12% to human services and 11% to foundations. And lastly, where do the givers typically come from? The leaders are Utah, D.C., Mississippi and Tennessee.
So, how and why are people giving? People want to make a difference, to create a legacy and to act upon a sense of moral duty. There are incentives as well: Potentially lower taxes, managing their wealth and guidance on estate planning. Giving can be as straightforward as a cash, check or even stock donations. Other assets might qualify as well. This can be cumbersome however if you have several nonprofits that you want to support.
An idea growing in popularity and utilization is the Donor Advised Fund or DAF. Raymond James calls it “the new face of giving’ and it is the fastest growing charitable vehicle in America. DAFs are public charities and qualify under IRS section 501(c)3. The way that they work is that they take in contributions from the giver by way of cash (or check) but also securities (stocks and bonds for example). Depending on someone’s situation a tax deduction might even apply. The DAF in turn takes the contributions and invests them into mutual funds for growth or income or preservation of capital.
Note the wording of the donor advised. That means that the donor can directly ask the DAF to periodically, or when they would like to, send contributions on to another charity. That charity could be educational (a college, university or any educational nonprofit) , religious (church), human services or foundations (educational, athletic as example). In the meantime, any amounts not gifted out can be left to grow and accumulate over time, for many years.
In the end, giving is simpler, one contribution, to one charity that can then be dispersed as you request or advise. Many firms allow you to do this online or even delegate it to your advisor, at your direction. You can title or name the account as well. These accounts also allow you to name successor donor advisors or a final recipient charity of the value of the account at your death. Many people appreciate having this available for making donations to their schools, churches, hospitals and various local or national/international causes.
Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes.
Maurice Stouse is a Financial Advisor and the branch manager of The First Wealth Management and Raymond James. Main office located at First Florida Bank, a division of The First, 2000 98 Palms Blvd, Destin, FL 32451. Branch offices in Niceville, Mary Esther, Miramar Beach, Freeport and Panama City. Phone 850.654.8124. Raymond James advisors do not offer tax advice. Please see your tax professionals. Email: Maurice.email@example.com.
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