Tools For Future Charitable Gifts
New tax laws are giving rise to creative ways to support charitable organizations you care about like Second Harvest. As the year winds down, here are a couple of attractive options available to consider while planning your contributions in the new tax environment.
Use or establish a Donor Advised Fund
Consider a large contribution in one tax year to establish or add to a donor advised fund. A larger gift may add to your itemized deductions that year. In subsequent years, when your deductible expenses are not large enough to itemize on your taxes, you can ask the donor advised fund administrator to make a distribution to a favorite charity to continue support. You will find more information about Donor Advised Funds through financial service firms that administer the funds, such as Fidelity or Schwab, or by contacting a local foundation such as Madison Community Foundation.
Bunching or bundling itemized deductions
If you have the flexibility to time the payment of qualifying deductible gifts, you may consider ‘bunching’ or bundling your charitable donations into alternate years. This may increase your likelihood of being able to itemize deductions in alternate years. If you make charitable gifts this way, you might notify the charity that your larger gift is for an extended period – such as two years.
As always, talk to a financial advisor before making decisions about how these tools may alter your tax and financial outlook.