Maximize the Tax Benefit of Your Faithful Giving

Maximize the Tax Benefit of Your Faithful Giving

by Dan Rebmann, Immediate Past President of Providence Place

We appreciate your support very much and can’t do our mission without your help. Times like these make that help more essential and yet more challenging at the same time.

There have been tax law changes over the last two years that have had a major impact in giving to Philanthropy. But there are also opportunities to maximize the tax value of your gifts to Providence Place. We would like to review with you some of the short term, intermediate term and long-term strategies that you can employ to maximize your tax advantages as you help Providence Place serve families in need.

Short Term

The passage of the CARES Act as part of the legislation designed to lessen the impact on the economy of the recent shutdowns has provisions to help encourage giving. Specifically, in 2020, every taxpayer can give $300 to a 501(C)3 non-profit and deduct that from their taxes regardless of whether they itemize deductions on their taxes or not. We encourage you to take advantage of this option as it will only be available in 2020. 

Intermediate Term

Depending on your age, and whether or not you have retirement plan accounts (401Ks, IRAs, Simplified Employee Pensions, etc.)., you may have been required to take withdrawals from these accounts. Did you know that you can make IRA distributions tax free if they are direct to a non-profit? This reduces your taxes and you don’t need to worry about whether you itemize or not. You must have the tax ID number of the charity you are supporting – Providence Place’s Tax ID number is 74-1168923 (In case you were wondering)!

If you aren’t able to itemize your deductions, you can also ‘bundle’ your contributions. This strategy works if you have the funds to make larger contributions that can be spread out over time. The easy way to do this is to make contributions in January and December of the same year so they both count on that year’s return and then skip a year and do it again the following January.

There are also special funds called Donor Advised Funds. These allow you to get a deduction for placing money in the Donor Advised Fund and then distribute the funds to charities over time. This works well if you have a big windfall, and would like to reduce the taxes on that one-time event.

You can also gift appreciated securities (Stocks, Bonds, Mutual Funds, etc.…). Providence Place can accept these contributions in their current form. You get to deduct the market value of the security at the time of the contribution, and don’t need to pay any capital gains taxes! Because Providence Place is a non-profit, we don’t pay capital gains taxes either. If you have low cost basis investments, they may be good candidates to use for donations.

Long Term

We are thankful for the many people who have been contributing to our cause for decades. Your faithful contributions have helped us serve so many people over the years. Many people like you have chosen to remember Providence Place in their Estate plan. This creates a legacy of giving. Let us know if you would like to discuss this in more detail.

All of these concepts are brief introductions to various concepts in giving. We encourage you to consult your financial professionals. Additionally, our Mission Advancement team is ready to assist you with assessing whether any of these strategies would be appropriate for you and your circumstances.

Thank you again for your commitment to Providence Place. We are thankful for the opportunities to serve that your support provides. May you be Blessed and be a Blessing to others.