Give More by Giving Wisely

By Randy Kroll, Partner

It’s that most wonderful time of the year, a time to exercise abundant generosity in gift giving within our families, to our friends and neighbors, and especially, to community organizations that help those facing life crises or challenges.

But hold off on contributing to your favorite charities until you consider this approach for making what could be the biggest and boldest contribution of your lifetime.

Given how well the stock market has done in 2020, chances are you have one or more stocks that performed extremely well – maybe Apple or Amazon, for example, each up 68 percent year-to-date. Before the clock strikes midnight on December 31 next week, contribute that stock to a donor-advised fund you either already have, or can set up with a local community foundation such as the Minneapolis Foundation, St. Paul Foundation or National Christian Foundation. Charles Schwab, Fidelity and Vanguard allow for such charitable accounts also. A donor-advised fund usually requires an opening balance of at least $10,000 and allows you to direct spending of those funds to the charity or charities of your choice.

By doing this instead of selling the stock and donating the proceeds, you avoid paying capital gains tax, while your donation may be eligible for a tax deduction of 100 percent of the stock’s value to offset your personal income in 2020 (and possibly for five additional years if you already maximized your deductions this year).

Then, after the dust of 2020 has settled, request a meeting with up to three of your favorite charities to learn how they faced this year’s challenges, what their biggest needs are and how they plan to be stronger by the end of 2021. Discover how you can make a transformational impact and then activate your donor-advised fund with meaningful contributions.

If you are enamored with or emotionally attached to the stock you donated in 2020, buy it back. It will be more affordable because of the tax-savings you experienced related to the contribution of an appreciated asset in 2020; you will reset your basis in the stock, without paying tax on it; and you will gain the joy of giving from your abundance.

We are all aware of the surging needs within our communities due to Covid-19’s impact on the economy. We know there is plenty of opportunity to make a difference. And this approach allows us to increase the extent to which we can help financially.

For more information, contact Platinum Group’s Randy Kroll. He can quickly provide foundations for you to choose from to set up a donor-advised fund and talk more about this concept in general. Also contact your CPA for a quick proforma analysis to project how this option impacts your 2020 taxes.