Bundling Your Giving and Donor-Advised Funds

With the 2018 tax law changes behind us, many donors are looking ahead to April now, considering their 2019 tax filing. Certainly, charitable giving was affected by the 2018 increase in the standard deduction, which may impact your decisions on how to strategically make year-end gifts.

One approach to consider is “bundling” your donations. Please consult with your tax or financial advisors to determine the best strategies for you.

WHAT IS BUNDLING?

The increase in the standard deduction can be used to your advantage. Have you considered bundling several years of giving to Wheeler into one gift? A larger donation that exceeds the standard deduction may help you make a greater impact with your giving and provide tax benefits now. You can then take advantage of the standard deduction in the next few years.

Donor-Advised Funds: One Approach to Bundling

Bundling donations through a donor-advised fund gives additional flexibility and benefits to you. While the tax benefits of bundling through a direct gift are the same as through a donor-advised fund, creating a donor-advised fund this year allows you to take the tax benefit now, whether or not you actually make donations from it in 2019.

Many donors may choose to be more private with their giving. Donating through a donor-advised fund allows you to make grants through the name of the fund that is established, which doesn’t have to include your name.

Another advantage is that donor-advised funds can be created with many types of assets, more than some organizations you want to support can accept themselves. This could include real estate, art, employer stock, and more. Donors can deduct the full market value of certain contributed assets as well, depending on your adjusted gross income:

• Up to 60% of AGI for cash
• Up to 30% of AGI for appreciated assets, with no capital gains tax

A donor-advised fund is also not subject to estate taxes, and your investments can appreciate tax-free.

Lastly, to encourage teaching the benefits of philanthropic giving, you can also involve your children or grandchildren as successor advisors to your family fund, allowing your legacy to carry on for generations.

Talk to a retirement advisor about the steps needed to establish a donor-advised fund, or whether bundling your giving makes sense for your financial situation!