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To Your Wealth Michael P. Haubrich, CFP December, 2004 Gifting Strategies |
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This year on the
day after Thanksgiving, I did something I’ve never done before on that
day. I went shopping. I confronted the daunting lines at Best Buy
with holiday cheer, trying my best to calculate the length of the wait. My optimism faded quickly, however, when I
stopped estimating at two hours and realized how very little money I’d end up
saving in the end. Funny thing about
having that much downtime to spend with little more to do than make
occasional idle conversation with others in line, it gives you a whole lot of
time to think. In that line that
snaked its way through music and movie releases, through vacuum cleaners and
coffee makers, through stoves and microwaves, my thoughts inevitably turned
toward the idea of giving gifts at the holidays and the fleeting and all too
temporary joy they bring. Once the
paper is torn from the carefully wrapped items and thrown into the trash
heap, the momentary joy is pretty much forgotten amid the rest of the holiday
rituals. I also pondered the wisdom of
one of my grandmother’s favorite sayings…”if you give unconditionally, you
will receive more than you can imagine.” This notion of
“giving to get” is often punctuated during the holiday season and the looming
year-end. As a financial planner, I
often am called upon by my clients to work with them on developing strategies
for charitable giving. The wrapping
never really gets torn off gifts of this nature and the impact is lasting,
both for the recipient and the giver. But just as you
considered the warranty programs offered by the electronic stores, it’s
important to consider a few things when making your charitable
donations. For example, there are many
different ways to donate to charities.
In addition to cash, gifts can also include things like stocks, life
insurance, real estate and volunteering time.
Additionally, gifting can be accomplished through public, private or
community foundations, as well as planned giving options such as annuities or
charitable bequests. In developing a
strategy for charitable giving, donors should focus on the causes they are
most passionate about. Specific
organizations can change their focus and the causes they support today and
over time may no longer align with the donor’s original intent. For sizable gifts, a community foundation
represents a vehicle that supports the donor’s near- and long-term intent and
the grants screening committee process ensures that future gifts also support
the donor’s purpose. The same may not
always be true of gifts made directly to specific organizations. Be sure to check out Racine Community
Foundation if this is of interest to you. Their web site is Besides bestowing
a gift that supports your passion, making a charitable donation may help to
reduce your estate, income and capital gain tax liabilities. Each type of
donation can have distinct financial or tax implications, so it’s best to
work with your financial planner to develop a gifting strategy that best
suits your situation. You’ll need to
make sure that your charitable donations are appropriately accounted for on
your income taxes. An organization
that is tax-exempt does not automatically mean that your contribution is tax
deductible. Tax exempt simply refers to the fact that the organization does
not pay taxes. On the other hand, tax
deductible refers to your ability to claim that donation on your itemized tax
return. Tax advantages of
charitable giving may not be as great this year as they have been in the past
due to fewer people itemizing, lower income tax rates and the increased
exemption limit on estate taxes.
However, we are a giving nation and donations to charitable causes
continue to rise. Be sure to work
with your financial planner to assist you in ensuring that your charitable
gifting strategy is consistent with your objectives and can truly be a gift
that lasts long after the holidays have passed. |