Financial Literacy
Get the Most From Your Charitable Giving
The holiday seasons are upon
us and that means tax season
is not far behind. A great way
to combine the benefits of helping
others and minimizing your tax bill
is through charitable donations.
Most charitable organizations
have 501(c)( 3) status, which is a tax
law provision exempting nonprofit
organizations from federal taxes. To
use a donation to a 501(c)( 3), a
receipt is necessary. DiversityInc
asked tax experts who work for
DiversityInc Top 50 Companies for
Diversity® for the best methods to
get the most from their giving.
Here’s what they said:
Donate Stock
“Most executives are highly concentrated in one particular stock, and
[giving the stock to a charity] is a
good way to diversify from that
stock,” says Jordan Raniszeski, CPA,
CFP and vice president, financial
planner of Wachovia Wealth
Management. Wachovia is
No. 21 on the Top 50.
A person who gives a
stock that has appreciated
does not pay taxes on the
stock’s increased value.
“By gifting stock you
avoid capital gains [tax],”
says Greg Schupra, vice
president, group manager
for Comerica Charitable
Services Group. Comerica
is No. 12 on the Top 50.
Set Up a
Donor-Adviser Fund
Some people want to give to
charity but don’t know
which charity. In that case,
set up donor-adviser funds
through community foundations, which can be found in
most major cities, or banks
that take the money you
want to donate and parcel it
out as you find charities you support.
“You get the deduction this year
and in future years you can ask the
donor fund to pay out to different
charities that you want to support,”
says Schupra. Comerica has a donor-adviser fund called the Comerica
Charitable Trust. “[The donor-adviser fund] gives you the deduction you
want and the timing to find the
charitable groups you care about.”
Donor-advisory funds also can
accept closely held stock, life-insur-
ance policies, real estate, and interests in limited-liability partnerships
and limited-liability corporations.
Update Your Will
Review your estate plan and named
beneficiaries. In the estate plan,
you’re thinking about family, but
Consider Whether to
Wait Until Jan. 1
Consider your income from year to
year. If your income will increase
next year through a bonus or a raise,
then you may want to bump donations until then to get the tax break.
“As we come up to the end of
2006, people focus on year-end giving. Sometimes you’re better off giving early the next year. That means
sit down to conduct a tax projection, which looks at what years
make most sense for you altruistically so you can maximize the tax benefit,” says Greg Rosica, tax partner
and contributing author to the
Ernst & Young Tax Guide. Ernst &
Young is No. 24 on the Top 50.
ILLUSTRATION /JULIE COLLINS ROUSSEAU
consider the charitable interests that
you want to continue to support
after you have died.
Use a Credit Card
“If you charge your contribution in
December, you don’t pay until
January, but you get the deduction
in December,” says Rosica.
BY YOJI COLE
© 2006 DiversityInc
Employer Matches
Finally, because charitable giving is
best when it is a maximized effort,
remember to ask your employer to
match all of your charitable contributions. Your employer’s contribution does not increase your personal
tax deduction, but of course, you
help someone in need. DI
