Thanksgiving, the most delicious among seasons, is also the noblest of times. It reminds us of the need to make a difference in the lives of others. Combine it with a bit of smartness; charity will multiply your return on investment. Here are some powerful strategies to boost your efforts in this regard.
- Plan well in advance
Financial planning is a must to survive. This is common knowledge. But you should also integrate your acts of charity into it. This ensures that giving does not exceed your income. Consider combining your bank account with your funds for donation. The bank statement you receive after every donation is worth all your effort.
- Invest in a donor-advised fund
This is the best place to begin if yours is a small business. Every donation you make here is tax-deductible in the year you do it. And donating appreciated stocks multiplies the benefit you receive. You get tax-deduction and donate more than you plan in the same time.
- Consider the possibility of donating in kind
Donating cash is not the only means to get tax-deduction. You can also give gifts and enjoy the same benefit. Evaluate the fair price of the item being donated and keep a record. You also will need to report the same in the required section of your tax return file.
The deduction you receive may vary depending on the value of the item you donate. Same applies to the process of mentioning the same in your tax return file. Your most reliable source of information here is a certified tax advisor. You may also visit your country’s Government website designed for the purpose.
- Consider donating to a charitable remainder trust
Charitable remainder trust is perhaps the best way to donate for a good cause. It not only offers tax benefits, but also ensures you a consistent income. The trust continues to offer an income all your life. When you die, the remainder is passed on to the charitable organization you mention.
The process
You donate your appreciated asset to an established charitable trust. The trust sells it at the market price. It invests the amount it receives in assets that multiply the same. The trust provides you with an income for the time period you mention.
You may set it up for your children or any other person you desire. But know that rules of gift-taxation will apply if the person in question is not your life partner. You can also arrange it as a source of revenue for your lifetime. It can even be for the lifetime of the beneficiary. If you desire, you can limit the process a specified number of years. It is even possible to delay the payment until the time you choose. This will appreciate your asset and the income will multiply. The best thing about CRT is that it allows you to have full control of the entire process. And this is not the case when it comes to a donor-advised fund.
Finally, always stay on the safer side. Take all measures to ensure that the charity of your choice is a legitimate one. The Internet abounds in scams. And a bit of negligence will cost you dearly.
Avoid responding to calls or mails requesting funds. You may find it harder to resist after giving a few donations. However, know that every organization has its own administration costs. And nothing of your small donation will remain after such expenses.
Be prudent without being self-centered. It will make your money work to continue your noble gesture even after your death.