Giving: a conversation

Jeanne Sullivan |

By Philip Lee, CFP®

Last week my son asked me about charities and why or how people give to others. What a great conversation to have with a son – so I explained that I like to help others who have been less fortunate or need help during a transition such as a job loss or a divorce. Last year I helped to serve meals at a women’s shelter and gave away clothes that no longer fit to a shelter -- my son snagged a couple of clothing items before final delivery to the shelter.

Anyways, this gave me an opportunity to share with him what I do as a financial advisor and to share the types of giving strategies that our clients employ. While my son is just starting out in life and may have limited financial resources he does have time which can be a gift.   

I often see four ways in which my clients give to charity and they include:

Gift of Time. One of my clients, a recent retiree, donates his time weekly at the Dana Farber Cancer center. While there is no specific financial advantage to do so, he has repeatedly told me that this is “good for his soul, good for the community and good for the patients”. I know that this may sound trite but he truly enjoys it and derives great joy. Try it out and you may discover something new. Another client gives her time by volunteering at a local food pantry.

Gift of highly appreciated securities. Clients can gift highly appreciated securities (stock, mutual funds, etc.) to a qualified organization deduct the fair market value of the gift, and avoid income tax on the capital gains; there may be limits to the deduction.

Gift of articles of clothing/house items. There are many nonprofit organizations serving the homeless and hungry who raise funds by operating a thrift shop. The Lifebridge Thrift Shop in Salem, Massachusetts is one near where I live.

You may also want to consider searching charities at Charity Navigator whose mission “has been to guide intelligent giving”. They rate the Financial Health and Accountability & Transparency of over 8,000 US-based charities providing programs and services in all 50 states and on 5 continents.

Gift your IRA. You can make all or part of your IRA distribution directly to a qualified charity up to $100,000 per taxpayer beginning at 70 ½. This qualified distribution will not be treated as taxable income by the IRS as long it is directly to the charity. The option is available through the end of 2016. Be careful that you, yourself, don’t need the money.