If you’re ready to spread a little holiday cheer, did you know you may have options to maximize your giving (and potential tax savings) while preserving your cash? Several of CAC’s donors are taking advantage of these money-wise tips before the December 31 tax year deadline for charitable giving.
IRAs and Required Minimum Distributions (RMD)
“When my wife, Abbie, and I reached 72 years of age we were required to begin taking minimum distributions from our tax deferred investments, my 401K and her teacher’s 403B plan,” said CAC board member and donor Bob Tucker.
What Tucker and his wife learned from their financial advisor is that an individual can avoid paying taxes on the required minimum distribution by donating it to a 501(c)3 charity.
“We wait till early December each year to maximize the return on our investments,” Tucker continued. “We determine which charities we are going to make a contribution to and have checks sent directly to each of those organizations from our investment accounts. We do good and avoid the taxes we would have otherwise been required to pay. Our charities benefit, the government is happy with it and we support the organizations we would have supported in any case.”
Donor-Advised Fund (DAF) Giving
A Donor-Advised Fund is a managed investment account into which an individual makes contributions and receives a tax benefit at the time the assets are placed in the DAF. The National Philanthropic Trust (NPT) 2024 DAF report highlighted data that shows there are over 1.7 million DAF accounts holding over 250 billion dollars in assets. In 2023, DAF account owners directed almost $55 billion in grants to charitable organizations. These grants can range from $10 to $10,000+ as donors request gift amounts based on their individual DAF holdings.
Donor Linn Meyer recently made a gift to CAC using her DAF.
“I'm more than happy to support CAC of North and Northwest Cook County because I think the work that is being done is incredibly important,” Meyer shared. “I know it helps a lot of kids who really need understanding, support and essential help, and, by using my donor-advised fund to contribute, I can easily direct a gift to CAC and even do it as an EFT (Electronic Financial Transfer). It's quick and effective all the way around.”
Like an IRA RMD, a gift from one’s DAF doesn’t take cash out of the donor’s pocket, which can be an important benefit to the donor during the holidays.
Double the Donation Option Maximizes Giving
Donors may also not realize that many corporations offer to match gifts made by employees to their chosen charities. This includes DAF gifts to charities (but not into the DAF itself). CAC has integrated Double the Donation’s app into its giving page so donors can easily check if their employer will match a donation to CAC. It takes just a few minutes to enter your information in an online form. If the employer does offer matching, the app provides simple next steps to request the match be made. For questions on Double the Donation, contact CAC Development Coordinator Alexis Gilkes at agilkes@cachelps.org.
As always, CAC recommends that donors consult with their financial planner/tax advisor to receive professional advice related to their philanthropic interests.
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