If planning your year-end giving feels more difficult this year, you are not alone.
The giving season is one of my favorite times of year. The opportunity to talk about the causes that are particularly important to each person – and then identify local nonprofit organizations that are making a difference in the area – is an annual tradition that brings special meaning to our family year-end holiday celebrations.
This year, inflation has made it more difficult for families to make ends meet and cover everyday essentials like groceries and gas. The need for services provided by our local nonprofits remains significant, especially for the more vulnerable members of our community.
On the other side, market declines and inflation have made 2022 a more challenging year for many of us to fulfill our annual giving objectives to the nonprofit organizations that provide critical support to families in need. Most of us are feeling the pinch, and the margins are incredibly small for everyone as we look to an uncertain economy in 2023.
Simply put – there is a lot of need and not as many resources this holiday season.
If you are like many of the community members I’ve spoken with recently, you are still looking for ways to support the organizations you care about and that rely on your support to achieve their missions. Here are some of the giving strategies that we are talking about right now with our team of professional advisors.
Give Unrestricted Gifts
Like all local businesses, nonprofits continue to navigate the uncertainties of a post-COVID world, with staff and volunteer shortages and inflation further complicating their service delivery models. It is vital that the nonprofits our community relies on for support receive the kind of financial support they need to respond to changing community needs. Flexibility helps each dollar go further.
When you give a nonprofit an unrestricted gift, you will be providing the type of support that sustains nonprofits and creates opportunities for nonprofits to direct their energy into fulfilling their mission.
Donations of Appreciated Stock Are Still A Win-Win
Not every stock is down, and it can still be extremely tax-efficient to donate appreciated stock to your favorite nonprofit – just make sure they are equipped to receive and process a gift of securities. Another option is to use that donation to replenish or establish a donor advised fund. Establishing a donor advised fund with a contribution of appreciated stock can help you maximize the tax benefits of your donation, streamlines your charitable giving recordkeeping moving forward, and still allows you to support your favorite local charities.
When you give appreciated stock held for more than one year (a long-term capital asset) to your donor-advised or another type of fund, instead of selling it outright, you avoid capital gains tax. Plus, marketable securities are typically deductible at their fair market value, further helping your overall income tax situation.
Don’t Overlook Arizona’s Tax Credit Opportunities
Arizona has a variety of charitable tax-credit opportunities that allow you to receive a dollar-for-dollar tax credit for donations to schools, qualified charitable organizations, and organizations that support children in foster care, among others.
You can view information about the various tax-credit opportunities and lists of approved organizations at https://azdor.gov/tax-credits.
Qualified Charitable Distributions Offer Special Benefits for Donors Over 70 ½
If you are over 70.5 years old, a Qualified Charitable Distribution (“QCD”) is a very smart way to support the nonprofits you care about here in Southern Arizona. Through a QCD – also sometimes called an IRA charitable rollover – you can direct up to $100,000 from your IRA to local charities. If you are over 72, QCDs also count toward your Required Minimum Distribution (RMD) for the year. That means you avoid income tax on the distributed funds.
Our team at the Community Foundation for Southern Arizona (CFSA) can work with you and your advisors to go over the rules for QCDs and evaluate whether the QCD is a good fit for you.
Although IRA distributions cannot be contributed to a donor advised fund, they offer an opportunity to reduce your taxable income while supporting a specific nonprofit or area of interest, including the initiatives and funds at CFSA, such as our Civic Leadership Fund, Greatest Need Fund, Healthy Communities Fund, Environmental Sustainability Impact Fund, or African American Legacy Fund.
To make a Qualified Charitable Distribution from your IRA to a nonprofit, I recommend starting the process as soon as possible to ensure that your gift is received and processed on or before December 30, 2022.
We Are Here to Support You
Please don’t hesitate to call or email our team if you need help determining how to best support local efforts to create a vibrant and equitable community for all Southern Arizonans. You can reach us at 520-770-0800 or by email at email@example.com. As always, we recommend connecting with your legal and financial advisors for specific information regarding your individual situation.
This year, please give the gift of generosity. Together, we can continue to support the vital nonprofit organizations in our community that enrich our lives and make Tucson a special place to live.
My best wishes to you and yours this holiday season.