Make Year-End Gifts Now

December 7, 2022 by Erin Dunigan

Did you know that more charitable giving happens in December than in any other time of the year? Over one-third of all charitable giving is done in the last quarter of the year. The majority of that giving happens in the month of December.

According to Greg Rousos, President of New Covenant Trust Company and Executive Vice President and Chief Operating Officer of the Presbyterian Foundation, December is a time to focus on charitable giving and close out the year strong.

In a recent webinar, Year-End Giving Made Simple hosted by the Presbyterian Foundation, Rousos shared with congregations four tips to maximize this end of the year benefit. You can watch the webinar here.

Context

It is no secret that this year has been a challenging one for the economy. Increasing inflation, stock market fluctuations, raising interest rates and economic uncertainties can all make people feel like they have less disposable income. But that does not mean that people don’t give.

“In times like these people focus more on prioritizing where to give,” Rousos said. People are always looking for opportunities to give, but in challenging financial times people are more selective where they give. “It is crucial to get your story out there and share your impact to help people prioritize and think to give to your congregation.”

Tip #1: Appreciated Securities

Only about 11% of our net worth, on average, is in our bank accounts. However, in our congregations we typically ask for cash gifts. But that ask is from the smallest portion of net worth that a family or individual has.

Appreciated securities are gifts from stocks, bonds, or other non-cash gifts such as real estate. Appreciated securities gifts are often significantly larger than cash gifts. One of the main reasons this is true is because of the tax benefits realized by donors when giving appreciated securities. With an appreciated securities gift, there is the potential that the capital gains are not taxed. There is also the benefit of a charitable tax deduction of the market value of the gift.

“With inflation people are feeling less secure from an income perspective so not only are we asking from the smallest sliver of the pie, people are also seeing that sliver decline,” Rousos said. “It is a great time to think about asking people to give appreciated securities.”

Rousos emphasized that these type of gifts take more time. Begin the process by mid-December at the latest. It is also important to note that the donor has to transfer the security “in kind” to receive the tax benefits. If your congregation is not set up to receive this type of gift, the Presbyterian Foundation can help with this.

Tip #2 : Donor-Advised Funds

Donor-Advised Funds have been the fastest growing charitable giving vehicle by far for many years now. Donor-Advised Funds are a vehicle in which a donor transfers assets to a charity and the donor retains advisory recommendations over the fund. The donor can recommend how it is invested, where to make grants, whether those grants are out of principle or out of income, and when the grants are to be made. Contributions to a Donor-Advised Fund are considered a tax-deductible gift.

An additional tax benefit consideration relates to itemized verses standardized deductions for charitable giving. When using itemized deductions, the total must be greater than the standard deduction amount. A Donor-Advised Fund allows the donor to “bunch” giving from multiple years into one year so that that year’s deduction can be itemized. “A Donor-Advised Fund allows me to make grants potentially over several years but to receive the tax benefits of them in one year,” Rousos said.

Many people don’t consider giving to their congregation from their Donor-Advised Fund so it is important to make members of your congregation aware that you accept Donor-Advised Fund grants. . It is also important to note that how you acknowledge that gift and thank for that gift is different than for a direct gift.

Tip #3: Qualified Charitable Distributions

If you are holding an IRA by the age of 72, you are required to start withdrawing a certain amount from it. This is called a required minimum distribution. Distributions from traditional IRAs are treated as ordinary income.

When this amount is included in your adjusted gross income, it can potentially phase out some tax benefits as well as impact tax levels for social security income and medicare premiums. By excluding this IRA distribution from adjustable gross income, you can potentially prevent phase outs, reduce taxes on social security income and possibly lower medicare premiums.

A Qualified Charitable Distribution is one such way to exclude the IRA distribution from being included in adjustable gross income. A Qualified Charitable Distribution fulfills the required minimum distribution and can be done beginning at 70 ½ years old.

The distribution from your IRA must go directly to the charity. These type of gifts also do take time so it is important to begin the process by mid-December.

Tip #4 Planned Giving Reminder

Interest in planned giving is growing dramatically. “People more and more are thinking about their legacy,” said Rousos.  They want to make sure they are remembered for what mattered to them. “It is your last will and testament, but it is also your last will and testimony,” he said.

Data from the IRS reflects that charitable bequests are actually three times larger than lifetime giving. When people commit to planned gifts, their annual giving goes up as well.

“A great time to remind people about planned giving is when they make a current gift,” Rousos said. “As you receive year end gifts and send your gift acknowledgement or thank you letter, remind people that it is a great time to consider a planned gift.”

Final Considerations

“In spite of the current conditions, don’t let the economic challenges deter you,” Rousos said. People are still making gifts.

“What matters more than anything is that you make sure to tell your story and that you communicate your impact, have a passion about what you are doing,” he said.  It is also important that that person makes a gift with the right asset and through the right gift vehicle.

In all of this, the Presbyterian Foundation is here to help.  Start with your Ministry Relations Officer, which you can find here.

Erin Dunigan is an ordained evangelist and teaching elder in the PC(USA). She is a graduate of Princeton Theological Seminary. She serves as a photographer, writer and communications consultant and lives near the border in Baja California, Mexico. In her free time, she is an avid gardener and leads horseback riding tours along one of the most pristine stretches of beach in Northern Baja.