Though
often unappreciated, the annual passage of tax season has benefits.
For
one, it offers some finality to the prior year in that we finally know if we
owe or are due a refund. For example, for the 2021 tax year, the IRS processed 88 million refunds averaging $3,039 each.
Simultaneously, filing a 2022 tax return often comes with finalizing quarterly
tax estimates for 2023, which many people use to build a framework for
current-year spending.
Fortunately,
charitable giving ranks high on many “how to use your refund” lists. Whether you have “bonus” money in the
form of a refund or gain some peace of mind by knowing your upcoming tax
obligations, giving intentionally and strategically always helps that gift go
further.
Unfortunately,
though, strategic and intentional giving may get lost when gifts to charity are
made through a quickly mailed check or an online payment in response to a phone
solicitation, television ad, mailer or online advertisement. The community
foundation, however, offers remedies for this!
Lean into intentionality
Many
donors give to the same causes annually, with causes tied to faith, health and
community ranking high among charitable
giving trends.
Recently, gifts involving food or home insecurity, natural disasters and
international conflicts have become increasingly popular.
Most
important is to give to causes that are near and dear to you and for which you
can see the ways your giving is contributing to meaningful, positive change in
the lives of people in our community. And if you can add to your current list
of beneficiary organizations to achieve meaningful impact, all the
better.
The
community foundation is a knowledgeable source of ideas, best practices, and
data-driven approaches to helping you measure your impact. Our team can be
especially helpful if you have a cause in mind but may not immediately have an
organization name or local chapter to support. Our team has vetted and even
pre-qualified many worthy organizations, and as a bonus, offers security
against sending gifts to scammers or bad actors who often start or perpetuate
their deceit by using familiar-sounding names of well-known organizations or
websites.
Level up your strategy
Now
that you’ve identified budget targets for your charitable giving and have a
strong sense of the causes you’d like to support, structuring your gift for
maximum impact and tax savings should be a top priority.
If
you already have a donor-advised fund at the community foundation, you know
that this vehicle has many benefits, including ready access to our staff of
experts; the convenience of jumping online to supporting favorite causes from
your fund; the ability to maximize a gift with accompanying tax benefits; and
even the opportunity to schedule a gift to coincide with the occasional
matching campaign hosted by a favorite charity. With full tax deductibility in
the year of the contribution, donor-advised funds are an ideal way to “mentally
offset” current year tax estimates that become known in April. If you don’t yet
have a donor-advised fund at the community foundation but are considering it,
this may be the perfect time to jump in.
With these tips in hand, and with the help of the PACF, you can better plan for the tax year ahead, knowing that causes important to you, whether legacy or new, will benefit from your generosity.