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Americans donated an estimated $358 billion to charities in 2014, according to National Philanthropic Trust . Not only is that a 7.1 percent uptick from the previous year, but statistics also show that the largest source of charitable giving came from individuals, as opposed to corporations.
Whether it’s supporting a national organization, local initiative or global relief effort, there are plenty of reasons to give back. And, with the deadline for deducting charitable contributions approaching on Dec. 31, there’s no better time like the present.
Make a Difference.
There are more than 1.5 million non-profit organizations in the U.S., according to the National Center for Charitable Statistics. People give back for multiple reasons—from being personally affected by a cause or knowing someone affected, sharing values of an organizations, empathizing with beneficiaries or wanting to help their community. Regardless of the stimuli, support can make the world of difference to both the organization and the giver. In fact, there are studies that explore ways in which charitable giving benefits for the giver, creating joy, feelings of empowerment, satisfaction and the like.
Anyone Can Do It.
Similar to a savings strategy, you don’t need to be in a certain income bracket to donate—any amount can generate benefits for the organization and donor. For instance, millennials have recently been recognized as ‘the giving generation.’ Simultaneously, this philanthropy-focused demographic is often referred to ‘financially strapped.’ Regardless of the income level and donated amount, giving money back for a greater good can empower the benefactor and create a rewarding experience, all while making a difference for the beneficiaries.
Contribute Now, Pick a Cause Later.
Many feel overwhelmed with the vast number of groups needing support. And with busy schedules, people often find it difficult to decide how to spend their money in a charitable way. Enter Donor-Advised Funds (DAF). A DAF enables one to receive an immediate tax deduction the year the irrevocable contribution is made, but does not force the benefactor to make any grants. The flexibility helps people be more systematic and methodical about their giving.
Financial Advantage.
Outside of the ‘feel-good’ sentiment, charitable giving can reduce tax liability and put you in a better financial position. And when you create a philanthropic strategy, you may find that you are actually able to donate more than originally expected. In the case of DAF contributions, donors can receive a tax deduction up to 50 percent of adjusted gross income for cash contributions and up to 30 percent of adjusted gross income for appreciated securities. Along with publicly traded securities, DAF holders can also contribute complex assets such as real estate, limited partnership interests, private C- and S-Corp stock, and other privately held assets.
More Options.
If you are already planning on donating by Dec. 31, consider donating appreciated stock from your investment portfolio in lieu of or in addition cash. Doing so will enable you to not only deduct the amount of the charitable donations, but also avoid tax on unrealized gains on that stock—a ‘double play’ of tax benefits.
If you aren’t already doing so, consider giving back to charity before the year comes to end. And if you are already highly philanthropic, consider creating a strategy around your vision. You just may be surprised at how much more you can donate, all while improving your financial situation.