Charitable giving done wisely
Linda L. Esterson
Contributing Writer
The scope of charitable giving today is widespread.
According to JustGive.org, the average American gives about 3.1 percent of his or her income to charity. But the Web site also reports, that there is movement to give more.
According to AARP's 2003 multicultural study, "Time and Money: An In Depth Look at 45+ Volunteers and Donors," 87 percent of people age 45 and older have made donations to religious, public interest, educational, health or arts organizations. About four in 10 have donated to family members, while 32 percent have given money to non-related persons in need.
"A lot comes from people's own benevolence," says Marc Hertzberg, Esq., C.P.A., registered investment advisor representative with Wagner Capital Management Corp. in Pikesville. "Some people just want to be charitable, and while they're alive they get the personal gratification out of seeing a building named after them or knowing they've helped in some way."
Others, he notes, choose to donate to others to receive tax benefits.
Charitable giving occurs in a variety of ways.
• Give direct gifts -- personal checks written directly to an organization.
"This is the easiest, quickest way, and makes sense for small donations," says Hertzberg, who reminds donors to always insist on a receipt following a cash donation, as it is a new requirement for tax filings in 2007.
• Donate appreciated property - giving appreciated securities or real estate owned more than 12 months is an advantageous practice. Donors receive a full tax deduction on the fair market value of the property on the day of the donation. Some donations may require appraisals or other documentation.
• Give household items in good condition. - This is popular for seniors and all ages, however itemization is required.
Some people choose to direct charitable donations in their wills, when they will not be in need of the financial support any longer.
"It's a personal decision," Hertzberg explains. "Some decide not to leave any or all to the family. There's no real rationale or formula as to how much money people give away while they're alive or after they pass away."
People may choose from a variety of options for after-death donations as well.
• Donate retirement accounts or annuities to charity. Qualified charities are exempt from taxes on distributions from these accounts. Individual beneficiaries may have income tax issues with distributions from these accounts.
• Set up a charitable foundation to distribute wealth. Family members may run a foundation established by a loved one, draw a salary and administrate directives of the deceased. This preserves the legacy without putting the burden on the inheritors. Foundations can be established while the donor is alive.
• Placing assets in trusts may save time and money. By designating real estate, bank accounts and brokerage accounts in the name of a trust, the family and charities are assured that they will receive the inheritance in a timely manner. This avoids the often long, arduous and costly probate process. It also ensures that the deceased's wishes are carried out.
For more information and further detail on charitable giving, contact your financial advisor.
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