AprilPhilanthropy | City of Ideas
Start with a look back: While the dust settles for your accountant and adviser from the past year is a great time to take a personal look back at your giving in the past. Have you been as strategic as you’d like? Are you giving at the level you like? Are there changes you’d like to make, new areas to explore, issues to address? Do you feel like you actually had a plan, or did you scramble at the last minute to pull together paperwork or make decisions?
Advisers are increasingly sharing with us the notion that income tax planning, as opposed to predominantly estate tax planning, is the new name of the game. Now is the best time to decide if you want to make any strategic shifts, when there is still plenty of time to engage your adviser, seek out organizations that fit your goals, or even take your strategic grantmaking to the next level by engaging someone to help you build a long-term philanthropic strategy, like the experts in Donor Services or at the Philanthropic Initiative, a part of the Boston Foundation.
Take a look ahead: Your accountant will ask you this question, too, but if he or she is still in post-Tax Day recovery mode, look ahead and see if there are any events coming up that might have an impact on your tax status, from the obvious such as a sale of property or other one-time income event, to the more strategic, such as the decision to make 2014 the year you convert to a Roth IRA, or set up a Donor Advised Fund? Remember a Donor Advised Fund is most likely a more advantageous donation than a private foundation for tax purposes.
Or look even further ahead: If you want to develop a longer-term, intergenerational plan for your philanthropy, we often use the Thanksgiving dinner table as the “moment of opportunity.” But those summer visits, family vacations and other get-togethers can sometimes provide the relaxing backdrop for the philanthropic conversation, while giving you the lead time to put your ideas or strategies into action.
Additional resource: Learn how some families are building intergenerational philanthropy, with this article from our Philanthropic Adviser newsletter.
Recognize the value of the appreciated security: When you look at your portfolio, recognize those securities that may have the biggest impact on your tax situation if you used them in your charitable plans. For example, remember that donating appreciated securities to charity gives you a charitable deduction equal to the full fair market value of the securities and avoids the need to pay capital gains tax on the appreciation. You can use the cash you would have given as your vehicle for new investments (with a higher cost basis).
Additional resource: Learn more about giving complex assets here.
Keep an eye on the news: You don’t need to be a tax attorney or philanthropic adviser to keep an eye out for items that might affect your strategy. For example, the tax provision that allowed donors to make qualified charitable distribution (QCD) from an IRA expired on December 31, 2013. Odds are that it will be extended for 2014, but whether it is can have a big impact on your strategies.
Don’t be shy: Research done by The Philanthropic Initiative this past year in conjunction with US Trust found that clients don’t always feel like their financial advisors raise the philanthropic conversation often enough. If you’re curious, it’s an easier time to have that conversation in the sunlight of summer rather than under the gun at the end of the tax year.
Like many community foundations, The Boston Foundation works with professional advisers and donors to manage hundreds of donor advised funds, in our case more than 600. Don’t be shy about connecting with us, and check out some of the great information and resources available on the Giving pages of TBF.org and in our Donor Solutions Center – at tbf.org/solve.