The Nuts and Bolts of Charitable Giving

The word “philanthropy” has come to carry a connotation of foundations making grants or wealthy people giving to nonprofits to help people in poverty. In fact, “philanthropy” comes from the Greek words “philos”, meaning “love”, and “anthropos”, meaning “man” or “humanity.” With this, we see the word “philanthropy” is the “love of humanity.”

God’s instruction for giving is clear in scripture. We are to give generously, cheerfully and voluntarily (2 Corinthians 9:6-7), and to those in need (1 John 3:17). After all, God is a God of abundance and rewards generosity.

As we come into the “giving” season, we thought it might be helpful to remind our supporters of new considerations and ways to give to Adult & Teen Challenge MidSouth (ATCM).

Giving Considerations

Under the CARES Act, taxpayers who take the standard deduction on their return can take a $300 deduction “above the line” ($600 for couples) for cash gifts to ATCM. For those who itemize, rather than the deduction limit of 60% of adjusted gross income (AGI), taxpayers may take 100% of their 2020 AGI (excludes charitable deductions carried forward from prior years).

For 2020, corporations may take a deduction of up to 25% of taxable income for qualifying charitable cash donations.

Stocks or Mutual Funds
Gifts using appreciated stocks or mutual funds, rather than cash, may yield a larger tax benefit since you can deduct the full value of securities held more than one year without paying capital gains taxes on the appreciation.

According to Martin Summitt, ATCM Board Member and Managing Partner for Bellweather Investments, “Gifts of stocks or mutual funds to support ATCM can be made easily by transferring the stock or funds to ATCM.”

Qualified Charitable Distribution (QCD)
For donors over the age of 70 ½ with an IRA, a qualified charitable distribution or rollover of up to $100,000 a year to ATCM will minimize your tax liability. Donating IRA funds directly to ATCM allows you to avoid taking possession of the funds and the tax bill that comes with it. It may all reduce taxation of other sources such as Social Security and net investment income.

Ways to Give

Ways to give to ATCM is as varied as your goals and resources. You may have a goal to make a big impact or create an enduring legacy, or perhaps your goal is to minimize present or future tax exposure. At the same time, your resources may be great or modest; they may be liquid or in stocks, bonds, real estate or other items of value.

Direct or “outright” gifts are those given from one person to another with no conditions attached. This is the most common and simplistic way to give financially or materially to ATCM.

Life Insurance
Life insurance is often the least considered but among the easiest ways to make a large benefit to a ATCM. If you have a life insurance policy, you can transfer ownership to ATCM. There are also ways to insure large benefits using life insurance plans. For more information on these, talk with your investment/wealth advisor.

Including ATCM in Your Will
Donating to ATCM through your will is a wonderful way to ensure the ministry continues after you pass. Working with a legal advisor, you may choose to make a cash gift, also called a pecuniary donation, a gift of property or shares, or a residuary gift where your full estate or what is left after your wishes are met will benefit ATCM.

Charitable Remainder Trust (CRT)
A CRT is best for givers who would like to create an income stream for themselves or loved one while also establishing a charitable legacy. In a CRT, you would donate an asset to a charitable trust which is then sold while in the trust. The proceeds are reinvested in an income-producing portfolio. Income based on the type of CRT comes back to you and any non-charity beneficiary as a fixed percentage of the value you donated each year.

Charitable Lead Trust (CLT)
Patterned after the CRT, the CLT leads with the gift in that the income generated goes to ATCM for a specified number of years, after which the remaining principal passes back to you or your non-charity beneficiary. This is ideal for givers who have an asset that will likely appreciate in value and want to hang on to it while putting it to good use in the meantime.

Private Foundations
A foundation is a legal entity that treats your philanthropic goals as its primary mission. Once it’s established, your foundation will be required to distribute 5% of its net asset value annually and you’ll pay excise taxes on net investment income.

For more information on 2020 giving considerations or ways to give, please call your wealth advisor.

DISCLAIMER: Adult & Teen Challenge MidSouth (ATCM) does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.