Charitable Giving

Charitable Giving: Teach Your Children Well

Children can understand charitable giving and helping others.  No age is too young to start.

With your kids of all ages, get them involved.  Create a change jar for giving to charity.  Each month or so decide as a family where to donate the money.  Then, if you want, roll the change or take it to the bank for counting with your child.  Writing a check is great but taking the money to the charity together is a tangible lesson.  Children learn in all ways including seeing and experiencing the location and people you are helping.

Some families donate time together.  They go and work at homeless shelters providing holiday meals or make it a monthly time to support their favorite charity. Making it age appropriate to your children is a perfect hands-on lesson.

My grandmother you to hand me a dollar to put in the basket at Sunday Mass. Yes, this was a start of a lesson.  However, the more intentional and planned and discussed donating is, the better the long-term outcome. 

Yes, as a parent you have plenty on your plate.  Teaching your child about charitable giving is a two for one accomplishment.  You are teaching your child about your values and helping others.  Plus, the giving circle will continue as they practice in future years the giving that you taught them. 

Remember, the dollar amount does not count as much as the action.  The attitude of gratitude is enhanced with giving.

Charitable Giving and RMD's

For those 70 ½ you can give directly to charity with your required minimum distribution.  Why is this important? 

Those over age 70 ½ need to take Required Minimum Distribution (RMD) from their non-taxable retirement accounts.  This means an annual distribution from the Traditional IRA, 401k, 403b or Thrift Savings account that was contributed to with tax-free contributions and grew tax-free.  The RMD does not affect Roth IRAs.

If this means you will be getting a RMD before the year end, consider this – your RMD from a Traditional IRA can go directly to charity.  This is a tax-free transfer if the money goes directly from your IRA retirement account.  This does not apply to your other retirement accounts unless the 401k or 403b is first rolled over to an IRA.

If you tend to give to charity a similar amount to your expected RMD, this type of planning needs to be in your financial tool box.  Not only will it save taxes because the RMD is not counted as income, your income will be lower than if you took the money and wrote the check to charity.  This is critical in planning cash flow because Medicare Part B premiums are based on your income.  Here in Vermont, property taxes are also based on annual income.  Removing income from your tax filing may help you in other ways. 

The law, which allows tax-free transfers of up to $100,000 from an IRA to a public charity is a great opportunity for 2017. Just remember, you will not be able to use the charitable deduction again if you itemized for your taxes.

Move quickly because though this is a possibility for the tax year ending December 31st, your financial institution is busy this time of year.  You will want the request and paperwork to be in process before December 15th to be sure this happens in a timely manner.

Finally, review with your tax advisor to see if this makes sense for you.

Giving In November With Thanks: Finding A Review on Your Charity

How do you know your charity is doing a good job?

Though we are great shoppers, we often do not research the causes we give to.  We are spending time on-line finding the best price, but many donors give without true knowledge of the charity.  Some charities names may sound good and they asked for money, so we give.  Before you give, investigate. 

There are two websites that analyze the charities for their fiscal responsibility and their true nature of helping the causes they represent.  If an organization is spending 50% of their money on administration costs, for example, they may not be the best place to give your donation.  Check out: Charitynavigator.org and Guidestar.org