Foundations: Bunch Your Gifts in 2017

Philanthropy

BY JACOB OGLES SRQ DAILY MONDAY BUSINESS EDITION MONDAY DEC 25, 2017

For many philanthropists, the major time for giving comes not on Christmas Eve but in those last days before a new year. And with significant changes to the tax code expected next year, many are wondering how to approach donations in the final days of 2017.

“People should take full advantage of the current tax code with deductions for charitable giving,” says Roxie Jerde, president of the Community Foundation of Sarasota County. 

She notes that donations of such things as appreciated stocks help donors avoid paying a capital gains tax on those gifts, and based on the uptick in the stock market in 2017, now is a great time to take advantage of that dedication.

Greg Luberecki, director of communications for the Gulf Coast Community Foundation, made the same observation, and also suggested philanthropists consider using donor-advised funds, which allow someone to give a gift and claim a tax deduction this year, but give the money to a charity of choice on their own schedule through grants from the fund.

Regarding changes in the coming tax code, foundations leaders have been studying the coming increase in standard deductions with certain anxiety about what it will mean for giving, mostly because there will be less incentive to itemize donations to claim specific deductions. Both Luberecki and Jerde say they have discussed “bunching” donations, basically giving larger donations at less frequent intervals, to maximize tax benefits while still giving at the same levels to their chosen charities.

“Let’s say you give $5,000 a year to a nonprofit,” Jerde says. “You may want to double what you give, or bunch your giving, to take advantage of the known tax law, and then you have banked your giving for next year so the nonprofit won’t be affected. Basically, you give big to take advantage, and then give every other year.”

Luberecki says donor advised funds can help here as well. “if the donor has the means to make a significant gift this year into a donor advised fund at Gulf Coast, she or he can itemize the deduction and then pay out portions of that gift to the charities they support each year, for as many years as they want,” he says.

While such tactics may create anxiety within nonprofits who like to see money flow in each year, it makes sense on the donor side to maximize tax benefits.

Luberecki says many donors anticipate their taxes going down with changes just approved to the tax code. That’s more incentive to give now. “Some donors say they are looking at giving more this year while they are in a higher tax bracket,” he says.

The other thing to remember if you’ve waited until this week to write your checks? Make sure to keep in mind when the giving counts for 2017. If you hand deliver donations or use a private deliver service, Luberecki says, the gift doesn’t count until it’s in the hand of a charity. But if you send a check by mail with the check dates and the envelope postmarked before Dec. 31, it counts as a gift made in 2017. “Because the 31st is a Sunday this year, you may want to make sure you get them postmarked on Saturday,” he says.

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