Giving in Uncertain Times
By Terry Parker, Founder and Chairman Emeritus – National Christian Foundation
FamilyWise charitable giving strategies symbolize your family’s personal goals and values. You support the causes you believe in and seek to make a difference with the resources God has entrusted to you. However, in the practical design of charitable giving, issues that we often have very little control over like taxes, deductions, and gains impact these strategies.
As we launch into 2017 with a new administration, the likelihood of the rules changing that will impact charitable giving is high.
As I meet with families from all across the United States, I hear a wide variety of perspectives. However, one thing is consistent…uncertainty about what lies ahead. Uncertainty has a way of stalling our giving; yet, we are called to give and the charitable organizations we support depend upon our gifts. During the times of great uncertainty, charities may actually need our support the most. So, how can we give wisely in uncertain times?
Looking out on the horizon, here are a few items in discussion that could affect giving:
• The incoming administration promises to lower personal tax rates. If this happens, the net effect will be a reduction to the tax benefits of charitable contributions for most taxpayers.
• Proposals have been discussed which would limit itemized deductions in future years with a cap of $200,000 per return. Mortgage interest and other deductible items would fit within this cap.
• Charities may be in the hot seat in future years, experiencing increased scrutiny about who they hire and how they provide assistance.
• Proposals to limit deductions on long-term capital gain assets to the basis have been set forth. This would mean that when you give appreciated property, like publicly traded stock, your deduction would be limited to the price at which you bought the stock.
So what can we do from a practical standpoint to give wisely during uncertainty?
1. Consider the needs of the charities you support.
You may decide to give now rather than later, simply because the organizations that do good work need your support in difficult times.
2. Give today, accelerating your full income tax deduction.
Currently, you can take a five-year carry forward for deductions you haven’t utilized beyond your 50 percent adjusted gross income limitation.
3. Give regardless of the tax benefits.
Have a heart-to-heart conversation with your family. Discover where you know you are called to make an impact and don’t delay getting involved.
Although issues affecting giving have a high likelihood of changing, I’m advising people to accelerate charitable giving now. One option to optimize giving now is to use a donor advised fund. As my friend Ron Blue has often said, “Do your giving while you're living, so you’re knowing where it’s going.”