To Give or Not to Give: That is Not the Question

By Sue Pyke, Marketing Manager, RSF Foundation

The holiday season is a time of increased charitable giving for many people. We have a heightened awareness of needs in the community through the numerous appeals from worthy organizations that fill our mailboxes. The end of the year also is a significant time for people to take advantage of the tax deductions currently available for charitable gifts.

However, the negotiations underway in Washington about tax changes set to begin in 2013 are creating uncertainty for many taxpayers about how to approach their 2012 year-end giving. The tax deduction for charitable giving is in danger of being reduced or eliminated as part of these fiscal discussions.

In the context of this uncertainty, the question for the 2012 giving season is not whether to give, but rather when and how to give. Do you give in 2012 because you can be certain of how the deductibility of your charitable gift will be treated? Or, do you wait and make the gift in 2013 for a deduction in the context of higher tax rates? Does it make sense to gift appreciated stock, or to accelerate pledge payments in 2012?

These questions are frequent topics of conversation at the Rancho Santa Fe Foundation. “We recommend that you consult with your tax advisor to determine whether a charitable donation fits with your personal goals and makes tax sense,” says Neil Hokanson, chairman-elect of the Foundation.

Many of the Rancho Santa Fe Foundation donors have donor-advised funds (DAFs) for their charitable giving. An article that appeared on Dec. 9 in The Wall Street Journal reported that many charitable givers are opening DAFs to make their 2012 year-end donations. The article pointed out the advantages of these funds for 2012 in particular: “If you give regularly, and if you have the financial flexibility to do so, consider increasing your donations this year to capture today’s tax benefits and prefund future gifts.”

Opening a DAF is an accessible option for donors, whether you are an experienced philanthropist or new to this journey. By contributing to a DAF, you can obtain a full tax deduction before year-end. Then, you can distribute the money to the nonprofit organizations of your choice over time.

There are several advantages to establishing a DAF at the Rancho Santa Fe Foundation; there is no up-front cost, the recommended minimum amount to begin is $20,000, and administrative fees are market-competitive. As a community foundation, we provide the additional service of being a local philanthropic partner and resource for charitable giving.