Trust Services and SIMPLIFY
So What’s the Deal with Year-End Giving?
Christmas trees, lights, carols, Santa commercials, packed stores, sale flyers, Salvation Army bell ringers, and fundraising letters. Is it just your imagination or does it seem like you are getting significantly more “asks” at this time of year, not just for your time but also for your donations?
It actually is not your imagination. We are currently in the middle of what the non-profit world refers to as the “Year-End Giving Season.” This is the time of year when non-profits receive the bulk of their annual gifts. According to Guidestar, more than 50% of organizations surveyed said they receive a majority of their annual contributions between October and December.
Is there some magic associated with giving in the last few months of the year that isn’t true at other times of the year? While there may be some psychological factors that encourage us to be more generous around the holidays, there’s typically no financial benefit to waiting until the end of the year to donate. In fact, most organizations would probably prefer to receive gifts throughout the year rather than having a spike in donations at
. Scripture has much to say about giving and living a generous lifestyle, but it never indicates that there are better times of the year to give than others.
The timing issue is actually a result of the tax benefits in the U.S. tax code that are associated with charitable giving. Taxpayers may receive a tax deduction for giving to certain non-profit organizations for donations up to 50% of their adjusted gross income, but the gifts must be made within a calendar year to qualify for the deduction in that tax year. For this reason, many people begin to look in December at their giving for the year in relation to their income and realize that they have an opportunity to give more in order to maximize their tax deduction.
People who are over age 70½ may also have an opportunity to reduce income taxes by making a Qualified Charitable Distribution from an Individual Retirement Account (IRA). Everyone older than 70½ is required to take a distribution out of their IRA annually and pay the income taxes, whether they need the income or not. If they haven’t needed to pull from their IRA, they may find themselves being forced to take this distribution at the end of the year, even though they may not want to increase their taxable income. If, however, they choose to send the distribution to a non-profit organization rather than take it themselves, they can avoid paying the income taxes on that amount.
There are reasons other than just the desire to maximize tax deductions that someone may want to consider additional giving at year end. Often, a year-end bonus from work will create a giving opportunity in December. Or someone may want to give a portion of his or her total financial increase for the year, including the growth
their investment portfolio. We work with one client who has called faithfully every year in December to find out how much his total net worth increased for the year so he can give a portion of it away. Investment growth is a wonderful opportunity to give the
appreciated asset rather than cash, avoiding the capital gains tax on the growth of the asset and allowing someone to give even more.
As the holiday season approaches, many companies will offer a matching program for any donations made by their employees. And private matching opportunities also exist. For example, one donor has agreed to match all donations to a charity he supports until the end of 2016, up to $60,000! These matching programs can be a great incentive for donors to make their gifts during the giving window for maximum impact of their donation.
While there can be valid reasons – other than procrastination – to wait until year end to make a charitable contribution, the most important thing to remember is that we are instructed by God to give generously and joyfully at any time. And if we can get a tax benefit by doing it before year end – even better!
If you would like more information on year-end giving or other charitable giving strategies, we are ready to help. Please contact a Ronald Blue Trust advisor at 800.987.2987 or email
Be sure to visit our
channel and follow us on
Disclaimer: Ronald Blue Trust obtains historical and other information from a wide variety of publicly available sources. The information and material provided is for informational purposes only and is intended to be educational in nature. We have taken reasonable care and precaution to ensure that the information is fair and accurate, or has been compiled from sources believed to be reliable. Nevertheless, we do not make any representations or warranty, express or implied, as to the accuracy, completeness, or fitness for any purpose or use of the information. The information may not in all cases be current and it is subject to continuous
change. Accordingly, you should not rely on any of the information as authoritative or a substitute for the exercise of your own skill and judgment in making any investment or other decision. We recommend that individuals consult with a professional advisor familiar with their particular situation for advice concerning specific investments, accounting, tax, and legal matters or other matters before taking any action. We shall not be liable for any direct, indirect, or consequential loss arising from any use of or reliance on the information contained here. Certain sections of this commentary may contain forward-looking statements that are based on our reasonable expectations, estimate, projections and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Investing involves risk and the value of your investment will fluctuate over time and you may gain or lose money. Past performance of any security, sector or investment style is not necessarily indicative of future results.