Saving While Giving
You can decrease your tax burden by giving to Haverford Friends Meeting from the Required Minimal Distribution of your IRA, directly donating stocks or mutual funds which have realized capital gains, or designating Haverford Friends Meeting as a beneficiary of a Donor Advised Fund or of your will or estate.
For more information, contact your financial advisor or contact us.
Required Minimum Distributions
Individuals over age 72 (73, if you turn 72 on, or after, January 1, 2023) who have a traditional IRA are required to take a minimum amount out of the IRA each year, the "required minimum distribution" or RMD. These withdrawn funds are considered income to you. You must then pay tax on this additional income.
However, donations from your RMD to a nonprofit like Haverford Friends Meeting are not counted as income. You need not pay any tax on that amount. In addition, it may reduce your Medicare Part B and D premiums since they are calculated based on your income level.
Stocks and Mutual Funds
Normally, when you sell a stock or mutual fund that has appreciated and you have held it longer than one year, you will pay a federal tax of 15-20% and a Pennsylvania tax of about 3% on the capital gains. However, if you chose to donate that asset to Haverford Friends Meeting directly without selling it, you can avoid the tax. You will get the greatest tax advantage by donating stock that has had the greatest gain.
Donor Advised Funds
Another way of donating that is easier for Haverford Friends Meeting, and may well be easier and more convenient for you, is to give from a Donor Advised Fund (DAF), also known as a Charitable Giving Fund (CGF). When you transfer appreciated investments to a DAF, you get a charitable giving tax deduction for the value of the total investment instead of taking the appreciated value as taxable capital gains. A Donor Advised Fund makes donating to multiple charities over time very simple and easy. You set up a DAF with an institution like Schwab or Fidelity. You then arrange with the institution or stock broker that has your shares to transfer a specified amount of securities to the DAF/CGF that you have set up. The DAF-administering company then sells those assets and reinvests them in a wide variety of investments. You can then easily transfer funds electronically to charitable organizations from the DAF account. The recipient charity, such as Haverford Monthly Meeting, then receives a check or wire transfer rather than having to deal with selling an asset. If the value of the DAF assets increases, you will have more to donate. However, if the value decreases, you will have less to donate.
Discuss with an advisor at the institution managing your DAF that the funds are to be invested consistent with your social justice standards. Also, ask if any charges are incurred and whether there is a minimum donation amount. You take a tax deduction when you transfer assets to the DAF while the funds can be disbursed over whatever time you wish. You may not take the funds back or use them for personal reasons. For more information, visit the National Philanthropic Trust's page on Donor-Advised Funds.
Wills and Trusts
If you have a will or trust governing what will happen to your assets, you can designate Haverford Friends Meeting as a beneficiary to receive a percentage of those assets. If your estate is taxable, your estate will get a tax deduction on the portion contributed to Haverford Friends Meeting.