With nonprofits now in the midst of their year-end fundraising campaigns, make sure you don’t forget about two important planned gifts that can make a big tax difference for donors.
- Gifts of appreciated securities – a donor can give you appreciated securities they have owned for one year or more and get a tax deduction for the full fair market value of the securities. They also pay no capital gains tax. This gift is especially attractive with the steady increase in the market over the past year.
- Charitable IRA rollover – a donor who is at least 70 ½ can direct his IRA custodian to distribute from his IRA to a charitable organization. The distribution must go directly to the charity. Most charities qualify except for supporting organizations, donor advised funds and private foundations. The donor can give up to $100,000. The donor will not report any income, will get no deduction, but can count the distribution toward his or her required minimum distribution for the year, which where the real benefit comes in.
The distribution must come from an IRA. If the donor doesn’t have an IRA, they will need to rollover a distribution from their existing plan, such a 401(k), to an IRA.
- Donor advised funds – donor advised funds are still the planned giving technique fundraisers love to hate. Make sure you put a choice on your response card that reminds the donor you accept donations from Donor Advised Funds. Also, include an option on your website. Donors don’t always think about gifts to you from their DAF, unless you remind them.
Make sure you give the donor a receipt with the appropriate language on it. Improper documentation still generates a surprising number of disputes with the IRS.
If you have questions about these or other planned gifts, please call us for assistance. We hope you all have a successful year-end fundraising drive.