’Tis the Season for Giving


“Helping people doesn’t have to be an unsound financial strategy.”

For those in the giving spirit this holiday season, there are many ways to help others while still helping yourself. And with a new tax code likely to ring in the new year, 2017 may very well be your last chance to personally benefit.

Under both tax proposals, tax breaks for charitable contributions are retained. However, other changes would likely mean that millions of Americans will no longer benefit from the charitable deductions they currently claim.

As proposed, the joint tax bill — House Resolution 1 — will double the standard deduction, limit deductibility of state and local taxes (up to $10,000), cap mortgage deductions on new homes (up to $750,000) and double the threshold for estate taxes. Analysts have projected that these changes will result in significantly fewer Americans itemizing their returns.

This has many charitable organizations worried. An Indiana University study estimated that the new tax code could reduce charitable giving by up to $13 billion per year.

So if you’re feeling charitable today or in the future, it might be worth boosting your giving this year. Sound financial strategies could include:

  •  Considering a Donor Advised Fund. If you want to take advantage of many years of charitable giving before the tax code changes, a donor advised fund allows you to bulk your deductions this year while still retaining advisory control over how and when your money is dispersed in the future. To make sure your investments have a triple-net effect, one of my favorite organizations is Impact Assets.org. With impact investing, the companies you invest in not only generate a financial return but support positive social and environmental outcomes.
  • Donating your required minimum distribution to charity if you are 70 and a half or older and do not benefit from itemized deductions. This year, Congress made permanent the ability to annually donate up to $100,000 ($200,000 per couple) from your tax-deferred retirement account directly to a charity of your choice, tax free.
  • With the S&P 500 up 139 percent over the last nine years, making a gift to the charity of your choice before a market correction takes that money away from you. Keep in mind, the last time we saw nine years of positive returns, they were followed by three consecutive years of losses, totaling 43 percent.

    Finally, if you don’t have a lot of money to give — or have not prospered in the Bitcoin craze — don’t forget you can always donate property, clothes, cars and even time while you can still benefit.

    Limitations on charitable giving can vary, so, as always, check with your financial advisor. But as Ann Landers said, “Do your givin’ while you’re living’ … then you’ll be knowin’ where it’s goin’.“

    Author of “Take Back Your Money” and “The Ten Truths of Wealth Creation,” John E. Girouard is a registered principal of Cambridge Investment Research and an investment advisor representative of Capital Investment Advisors in Georgetown.

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