As we experience unprecedented times, charities and nonprofits especially feel the hit of the COVID-19. Many of you contribute regularly at the end of the year to charities, but as these organizations experience a growing need for support, you may want to consider accelerating your giving schedule to donate now rather than later.  

What’s in Need? 

Pandemic relief groups have developed all over in light of COVID-19. There are groups focusing on providing meals and financial assistance to those who the pandemic has hit hardest.  Others are seeking to impact those working in the healthcare industry who have strained resources from their excessive demands. They may have faded into the background on news coverage lately but they still have considerable needs.  It’s only going to become more critical if we have a second spike in cases later this year.   

Social justice groups also are asking for financial support. While protests in the wake of George Floyd’s murder amplify the Black Lives Matter movement, marching may not be enough. These groups also need funding to create sustainable change.    

Most local charities depend on a single annual fundraiser, many of which occur in the spring.  Due to social distancing requirements, those events could not occur this year. As a result, these groups are struggling to keep their doors open and support the communities they serve. While their events may have been halted, they are still actively seeking financial support.  If you want your community to continue enjoying the benefits they provide, you need to help them survive until their next fundraiser.   

More charities are now competing against each other for the same pool of resources which has unfortunately diminished in size due to the economic shutdown.  Consider helping to expand that pool by giving now.  However, with any charitable giving, it’s important to know what your donation will be used for. Sources such as guidestar.org, charitynavigator.org, charitywatch.org and givewell.org are all helpful in both aiding your search and vetting organizations.   

Strategies for Charitable Giving 

Before writing that check, you should consider how your contribution fits into your financial plan.  First make sure you aren’t negatively impacting your own financial wellbeing.  Next, consider how to make your giving more efficient.  Here are a few strategies to consider when making your donation.  

 If you are over the age of 72, consider a qualified charitable distribution out of your retirement account. You can make a distribution for charity from a retirement account without increasing your AGI or taxable income.   Note, there is a $100,000 annual limit on these distributions. 

You can also donate appreciated securities. Most equity accounts were hit hard in the month of March but fortunately many have made a significant recovery. In fact, the FAANG stocks have exceeded their pre-Covid peak making them great candidates for a donation before rebalancing your portfolio.  If you choose to gift securities instead of cash it can help your tax planning.  You receive a charitable deduction for the full fair market value at the time of your donation and you never pay tax on the capital gain.    

Finally, you can make use of a donor-advised fund (DAF) to batch your charitable contributions. Batching refers to making multiple years’ worth of charitable contributions in one year.  When done properly, you can move deductions from lower tax years to higher tax years.  Also, the funds inside a DAF can be invested and will generally grow tax free.   

Final Thoughts 

If you have the means to do so, financially supporting causes you care about is one of the easiest ways to make a positive impact on your community.  The need right now is greater than ever. Charitable giving can be an integral part of your financial plan. I encourage you to talk to your financial advisor about the ways you can effectively give back. 

While the focus of this article is on charitable giving, it would be a mistake not to point out that being intentional with what you buy can make an impact as well. Small businesses are the lifeblood of our economy. They drive the innovation our economic growth depends on. Entrepreneurship is also the quickest path toward social mobility and the people who own a business are usually best positioned to create change. Shop local and minority owned businesses if you have the opportunity. The cumulative impact of our purchase decisions in a capitalist system will have a much larger impact than our charitable giving ever can.   

Stay in touch on my blog as I plan to later address in-depth planning strategies for charitable giving. 

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