When discussing meaningful charitable activity, it’s important to explore the option of giving non-cash assets.
When discussing meaningful charitable activity, it’s important to explore the option of giving non-cash assets. Cash, check and credit card gifts are popular options for donating, but they offer limited tax benefits – particularly when making larger gifts. When someone donates highly appreciated non-cash assets prior to liquidation, they can maximize charitable tax benefits and be eligible to receive an income tax deduction, subject to AGI limitations, and eliminate capital gains tax on the gifted portion. This lowers their tax burden while increasing the amount available to support community needs.
Estimates suggest that more than 90% of wealth is held in assets other than cash, representing an immense potential for charitable impact. Popular types of non-cash gift types include:
- Stocks, bonds and mutual funds
- Business interests
- Real estate
- Life estate
- Life insurance policies
- Retirement account assets
- Charitable trusts and annuities
- Virtual currency
Before we know it, the end of 2024 will be here. This season represents an especially crucial time for advisors to discuss year-end giving with clients and how non-cash assets might fit into that plan.
When advisors have philanthropic conversations with their clients, reminding them of the array of benefits that exist when giving non-cash assets is imperative:
- Tax Benefits: Eliminate capital gains taxes on highly appreciated assets to lower your tax burden while increasing the amount available to support your community.
- Charitable Deduction: Gifted assets are eligible for charitable income tax deductions at fair market value in the year when you make the gift.
- Long-Term Giving: If you choose to give through a community foundation, once the gift is liquidated, proceeds of non-cash gifts can be invested and endowed, providing more time for you to make key charitable decisions.
Not only will these types of discussions enhance your relationship with current clients and build new business, but they will also maximize tax benefits for the client while increasing the overall donated amount that will benefit communities today and in the future.
Community foundations can be resources for advisors who are looking to deepen their relationships with their clients. Partnering with them can augment an advisor’s relationships by delivering expert charitable advice and customized personal giving solutions for clients, while benefiting our communities for generations. The advisor remains the expert on financial/wealth management, while community foundations support them and their clients to make informed decisions about charitable giving. QCBN
By Lisa Sahady
For more information on how you can add value to your client relationships with the help of a community foundation, visit azfoundation.org/advisors, or call one of our offices serving Northern Arizona: ACF of Yavapai County at 928-583-7815; ACF of Sedona at 928-399-7218; or ACF of Flagstaff at 928-526-1956.
Lisa Sahady is the regional director of the Arizona Community Foundation of Yavapai County.
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