Three Easiest Ways to Make Charitable Contributions By Rajesh Jyotishi October 2004 Would you like to benefit your favorite causes and also get some tax breaks at the same time? Would you like to be able to time your tax deductions and donate as your heart desires? Would you like to leave a legacy to be remembered by? If your answers are yes to any of the above questions, you need to make yourself more aware with charitable giving techniques. There are many ways a person can benefit from charitable giving and to support their favorite causes. You can use Charitable Trusts, Charitable Foundations, Donor Advised Funds, and Charitable Life Insurance Policies and of course make outright donations to your favorite charity with money or property. Some of these tools can be very complex and require some advanced planning. However, there are some very easy ways you can help others and get some significant tax breaks in the process. Outright Gifts: This has to be the easiest. Nothing beats pulling out your check book and making a donation to your favorite charity. Please keep your receipt. As long as the charity is a tax qualified 501(c) (3) you can take the deductions up to your contribution amount. You can also donate property such as clothes, furniture and even cars to worthwhile causes. The amount of deductions you are entitled to will be based upon the value of the property being donated. You can also setup an automatic withdrawal or payment plan going to your favorite charity. Many charities can help you do this. Or else, you can just set it up as part of your online banking with your existing bank or brokerage account. A $50/$100 a month can go a long way towards making a difference in the life of others yet it is not a large amount you will miss. Donor Advised Funds: Donor advised funds have become very popular over the last few years because of their simplicity and flexibility. Donor advised funds work like this: 1. You (The Donor) open an account with a donor advised fund and make your contributions. You can also contribute appreciated stocks, equities or real estate to reduce or eliminate any capital gains taxes or estate taxes. 2. The gift to the donor advised fund is irrevocable meaning you can't take it back. 3. You (The Donor) are entitled to take tax deductions in the year you make your contributions, but are not required to donate the amount the same time. This allows you to time your tax deductions. Suppose you need $10,000 in tax deductions this year. You can make a $10,000 contributions to your donor advised fund and are entitled to the deductions. However, you are not required to donate your contributions right away, nor are you required to donate to just one cause. 4. The money will sit in this account possibly earning interest or be invested into a mutual fund(s) growing and can be used at a later time to make contributions when you are ready. 5. You (The Donor) can advise the fund on when, how much and which tax exempt charity you would like to contribute to. You have the flexibility to make contributions as you like. You can also have your contributions be anonymous. 6. In the event of a death of a donor, you can specify successor donors. Many parents/grandparents like this feature because it allows them to teach the kids philanthropy. Wills, Life Insurance & Retirement Accounts: You can also include your favorite charities in your wills, life insurance policies, annuities and/or retirement accounts. The easiest way is to do this is to include them as your beneficiaries. It doesn't have to be 100%. It can be whatever percent you desire. Be creative: You may have heard when someone passes away the family would prefer you make donations to their favorite causes rather than bring flowers. I have also heard of people who request that for their birthdays and special events that the guests make contributions to their favorite charities instead of gifts. Many wealthy parents and grandparents are coming to a realization that they would like to give their children everything they might need, but they don't ever want to deprive them the joys of bringing home a pay check. Perhaps this is why Bill Gates has said that he intends on giving away most of his wealth during his lifetime. It would be great if we can make regular charitable giving a regular and systematic part of our lives. Most of us are too busy to donate our time and energies, but if we can donate some small amounts of money to those who are committed to donate the time and energy such as the volunteers with RAKSHA, VIBHA, ISHA YOGA, or your favorite temples, churches and cause related organizations, together we can make a very significant difference. Remember, you can't take it with you. Have you ever seen a hertz pull a U-haul? Ha! Ha! Information given here is general in nature. You should consult your tax/financial advisors before making related decisions. If you would like to learn more about charitable giving options and uses of trusts, you are welcome to contact me at RJ@Shalinfinancial.com or (770) 451-1932, ext. 101. Rajesh Jyotishi is a financial planner in the Atlanta area and a Registered Representative and Advisor Affiliate of FSC SECURITIES CORPORATION. A Registered Broker Dealer. Member of NASD, SIPC. Published by Khabar Magazine, Moneywise section September 2006.