CELEBRATE NATIONAL PHILANTHROPY DAY WITH 6 WAYS TO GIVE (AND COULD BENEFIT YOU)

Our calendars provide all kinds of interesting days to celebrate.

Fans of Night of the Radishes in Oaxaca, Mexico, enjoy radish carving and a radish competition. If you’re more of a beverage person, Don’t Cry Over Spilled Milk Day might be more your speed. Then there’s Work Like a Dog Day followed 10 days later by Relaxation Day.

So many days, so little time. Ironic, isn’t it?

One celebration that’s worthy of our time is National Philanthropy Day. It’s held every year on November 15 to bring attention to the importance of working together for the common good.

FUN FACT: President Ronald Reagan first proclaimed November 15 as National Philanthropy Day in 1986.

 Likely, you’ve heard something like, “The philanthropist Andrew Carnegie Mellon made a significant impact worldwide,” or “The family’s philanthropy saved thousands of starving women and their children.”

But what is philanthropy?

Charities Aid Foundation describes philanthropy as, “the desire to promote the welfare of others, normally through the generous [private] donation of money to good causes.”

What does it mean to be a philanthropist?

A philanthropist is a person who donates time, money, experience, skills or talent to help create a better world. Notable names include Warren Buffet, Bill Gates, Jeff Bezos and Elon Musk, and you might have even heard of Yvon Chouinard (founder, Patagonia), Serena Williams, Oseola McCarty and Elton John. 

Despite hearing stories of philanthropists like MacKenzie Scott, the ex-wife of Amazon founder Jeff Bezos, who’s given away $12 billion to charities since 2020—including to Memphis-area Youth Villages and Memphis Lift—anyone can be a philanthropist, regardless of status or net worth.

ONLY IN HOLLYWOOD

Celebrities like Brad Pitt, Angelina Jolie, Ashton Kutcher and Madonna rely on philanthropic advisers and companies to guide them in their charitable giving.

Celebrity or citizen, one of the greatest gifts of philanthropy is that it also gives back to you. Researchers have discovered that philanthropy can be a ray of happiness and health for both giver and receiver resulting in:

• Greater overall happiness

• Lower stress levels

• Better physical health

• Heightened sense of connection to others

Though it may feel like a lofty dream, engaging in philanthropy is less about having millions of dollars and more about thoughtfully choosing the right gift-giving strategies to maximize the value of your dollars.

Philanthropy ties empathy and meaning with your wealth. It gives it value and voice. It represents what you hold dear and expresses your hope for the world. 

6 Smart Ways to Boost the Power of Your Philanthropy (and possibly reduce taxes too)

• Make a gift in your will or trust. Flexibility is the name of the game with a will or trust. After you create a gift in your will, you’re free to change your plans at any time to reflect life’s changes until your will or trust goes into effect. Give a specific amount of cash or securities, a piece of property or a percentage of your estate.

• Name the charity as a beneficiary of your retirement plan assets or life insurance. One of the easiest gifts you can make is to create beneficiaries for your assets, like a retirement plan, life insurance policy, bank account or donor advised fund. Within minutes, you can set it up by filling out a beneficiary designation form supplied by your provider online.

• Donate retirement plan assets. Retirement plan assets are more heavily taxed if you leave them to family members. (In fact, Uncle Sam can take away as much as 37%.) Instead, consider gifting these assets to a tax-exempt charity. They don’t pay taxes on it, so every dollar directly supports your philanthropy.

• Make a gift and get income in return. A charitable gift annuity (CGA) allows you to make a gift to a charity and receive fixed payments for life. Sometimes referred to as a life income gift, this giving strategy enables you to boost your income while ensuring your hard-earned dollars support your philanthropic endeavors.

Among other reasons, a charitable gift annuity might be appealing if you own appreciated stock and want to sell some of the shares and reinvest the proceeds to generate more income, but don’t want to pay tax on the capital gain. Click here to read more about CGAs and their tax benefits. 

DID YOU KNOW: If you are 70½ or older, you can fund a gift annuity by making a one-time election of up to $50,000 (without being taxed on the distribution) from your IRA during a single calendar year. This option comes with special rules, so contact Alia Wealth Partners for details.  

• Give private business interests. C-Corporation, Limited Partnership or Limited Liability Company interests could be another advantageous philanthropic strategy. Benefits might include eliminating the long-term capital gains tax you would otherwise pay if you first sold the assets, then donated the proceeds.

• Establish a donor advised fund. A one-stop solution that simplifies your charitable giving, donor advised funds (DAFs) have experienced a recent surge in popularity. A DAF is an account in which you deposit assets to donate to charity over time. In return, you qualify for a federal income tax charitable deduction when you make a gift, among other benefits, including lower capital gains taxes.

You can use cash; stocks, bonds and mutual fund shares; life insurance; or money in IRAs or 401(k)s to set up a donor-advised fund.

A STEP FURTHER IN YOUR PHILANTHROPY

If you serve on a board at a nonprofit, first, congratulations and thank you for all you do. Board members are like volunteers, and though the position offers a few benefits for you, it also comes with significant time and financial commitments.

The IRS thanks you too. According to their website, you may deduct charitable contributions of money or property made to a qualified organization if you itemize your deductions. Generally, you may deduct up to 50% of your adjusted gross income, but a 30% limitation applies in some cases.

At Alia, our priority is to provide knowledgeable guidance to achieve your financial dreams and goals, including creating a legacy through philanthropy. Contact us today.