There is never a bad time to give to charity or someone less fortunate. There is always someone who needs help. Today’s near record unemployment amidst a global pandemic seems like a pretty darn good time to give since so many people are in need. It can be difficult to get over the fear that you need to take care only of your family and horde money, but being part of a community requires generosity and unselfishness. Whether you can give only your time, a small financial contribution, or you have more money to contribute to bless others with, if you can, you should give. The unselfish act of giving to others can benefit you positively, not only by providing you with good feelings and good karma, by allowing service organizations to stay afloat and able to provide for you in the event that you fall on hard times in the future. Generosity is good for everyone and there are several avenues to exercise that generosity.
Outright Donations
Providing money to a charitable organization which supports causes you feel strongly about is an easy way to give. There is no minimum dollar donation and you can often donate online or write a check, easy peasy. If you lack funds, you can also often donate your time by helping the organization provide food or goods to the people it serves, administrative functions, or by assisting with their fundraising efforts. You can evaluate a charity by using a site like Charity Navigator to ensure it is a legitimate charity and that only a small percentage of donations are used for overhead costs. Alternatively, you can also choose to bless people directly. If you know of a family directly affected by an unfortunate event (perhaps the family of a deceased law enforcement officer, a neighbor who lost their home to a fire or flood, or a friend who lost their job due to the pandemic or other health crisis), you may choose to donate directly to them, either monetarily or with an in-kind gift of food or labor to rebuild their home, for example. Donating directly to people who have fallen on hard times is immensely rewarding and you know that the donation goes directly to those who need it as no funds are used to cover overhead costs at a charity.
Assets in Trust
If you have a large sum of money that you want to pass onto a charity after your death, your best option is to put those funds in a trust. Creating a charitable trust allows you to pass on stock, assets, and even property to a 501(c)(3) organization after your death. The charitable trust transfers control of those assets to your intended charitable organization who can invest the assets and create an ongoing income stream for the charity. A charitable trust is an irrevocable trust, so you cannot make changes to it once it has been created. You should be sure of your estate plans and the charitable organizations you intend to support with them. Donating to charity via a trust allows you to take an income tax donation for the value of the assets in the trust, minus any payments the trust may make to you (if you create the trust when you are still alive) or its additional beneficiaries (perhaps other family members who will receive payments from the trust). If you have assets that have appreciated significantly, you can also avoid capital gains tax via donation to a charitable trust. A charitable trust also allows you to avoid estate tax if you have assets over $11 million dollars and would need to pay it (in which case, congratulations on a job well done). You will need to work with a professional to create a charitable trust, so speak to your financial planner and estate attorney to get the ball rolling.
Use Life Insurance To Give
If you have enough life insurance to provide for your family and you want to provide for those less fortunate, consider using those life insurance dollars to give to charity. You can create a trust (see above) and fund it with life insurance funds after your death. You could also add a rider to your life insurance policy to give a percentage of that policy’s payout to a charitable organization of your choosing. Alternatively, you could designate a charity as the beneficiary of the entire amount of the policy, but you would not receive the tax benefits as if you had donated the policy via a charitable trust.
Give Through Your IRA
If you are over 70 and a half and are required to take distributions from your IRA, you can choose qualified charitable distributions to satisfy that requirement and avoid paying taxes on the donation. You can avoid taxes on up to $100,000 of qualified charitable distributions annually, and your spouse can also donate $100,000 in the same way for an additional tax benefit. If you would have donated money to a charity anyway and you meet the age requirement, donating the funds via your IRA is a great tax-savings method to consider.
Whatever route you take to give, and whether that giving takes place now or after you are deceased, giving to those less fortunate is a way to grow your compassion and unselfishness for others. Even if you do not have a lot to give or can only give in non-monetary ways, giving to others who need help provides individuals and charitable organizations with vitally needed funds, and helps you do your small part in our great big global community.
