Whether it’s the warm spirit of giving associated with the holiday season or the fact that it’s the end of the year—an advantageous time of the year to give, according to IRS guidelines—’tis the season for charitable giving.
“This time of year, about 60% of my calls, client meetings and Zooms are focused on charitable giving plans,” says Joshua A. Scheinker, executive vice president at Baltimore’s Scheinker Legacy Wealth Advisors of Janney Montgomery Scott LLC. “It began in October, but you still have time to give.”
“Giving is really important. It’s how we drive our mission and help cancer patients,” says Tswana Sewell, senior executive director for the American Cancer Society in the Greater Washington, D.C. and Baltimore region. “We definitely see a good amount of donations coming in toward the end of the year—some small, some larger, and lots of new contributors too. Folks are in the giving spirit.”
What are the best practices for charitable donations? We share advice from Baltimore experts about how to donate everything from jingling change to legacy gifts.
Donations through December
In any one calendar year, you can give up to $15,000 under the IRS gift tax exemption regulations. It’s important to track and total your donations through the calendar year. If your donations total more than $15,000, you’ll need to file a gift tax return.
When should you work with a professional wealth advisor?
“Making a charitable donation is a commendable act and a great way to carry out your legacy, supporting a cause that is near and dear to you. If you are planning to make a charitable gift, it’s important to ensure you distribute the funds in a manner that is tax-efficient and aligns with your needs and goals,” says Scheinker.
Making a plan with a professional is the first step, he adds.
“Look at your financial picture first and determine what amount you can gift every year,” says Scheinker. “It’s going to depend on your age, where you are in life, how much you have in mind and what the whole financial picture looks like. But it’s so important to determine a strategy.”
What are two of the biggest motivating factors for working with a financial advisor?
You don’t want to affect your financial plan, and you might not understand all of the ins and outs of tax advantages available to you. Many donors also want to lay a strong foundation upon which to build a legacy of impactful charitable giving.
What are your options for giving?
Many of Scheinker’s clients opt for a donor-advised fund (DAF), an account set up within a charitable organization. Here’s how it works: You can make tax-free contributions and let them accumulate until you decide to make a gift—a grant—to a charity. Scheinker says the year in which the gift is made is when you’d be eligible to receive an income tax deduction.
Folks who hold individual retirement arrangements (IRAs) have a special option available to them.
“If they’re over the age of 72, they have to do what’s called a required minimum distribution (RMD) from their IRA, and this is a tax-free gift. The amount is based on an actuary table,” Scheinker says. “It’s one of the simplest ways for people to give. It’s a great tax savings for them, and many of them want to gift anyway.”
Monetary gifts come into the American Cancer Society through various additional routes.
“We receive gifts from donor-advised funds, charitable trusts and foundations. This year we received a couple hundred thousand dollars in cryptocurrency,” says Sewell.
Motivation behind the money
The nonprofit American Cancer Society is a priority for many donors. Statistics report one in three people will be
diagnosed with cancer in their lifetime.
“Either cancer has touched their life—whether they’re a survivor or it’s touched their family—or they want to have an impact,” Sewell says.
Two primary ways donations directly impact the lives of others include funding the Baltimore Hope Lodge, which
offers free lodging to cancer patients receiving treatment in the Baltimore area, or funding innovative research and treatments such as Tamoxifen, a drug funded by the ACS that’s currently used to fight breast cancer.
She notes that the local ACS chapter is in the midst of a $10 million capital campaign to expand the Baltimore Hope Lodge by 30% since “it’s almost always at capacity.”
Experts agree that you should evaluate the options and ultimately give to charities that mean the most to you personally.
“My client base is very big into gifting to their kids’ schools, The Associated Jewish charities and major organizations like the American Heart Association,” according to Scheinker.
At the American Cancer Society, “we’re touching real lives, the lives of cancer patients, during what’s probably one of the hardest times in people’s lives,” Sewell notes. “In terms of giving to the organization—yes, you’re giving to an organization, but you’re really giving to people experiencing the cancer journey.”
The Happiness Factor
Being altruistic and financially generous “pays off” in a multitude of ways: According to a 2010 Harvard Business School survey of people in 136 countries, people who regularly made charitable donations were the happiest people, worldwide.
People Power: Giving by Individuals Is Up
Charitable giving by individuals, in five of the last six years, has increased. In 2020, this figure stood at $324.10 billion, representing 69% of total giving by Americans, according to the National Philanthropic Trust (NPT).
Where Were These Charitable Dollars Given?
Twenty-eight percent, the largest sector, went to religious causes, 15% went to education, 14% helped human services, 12% were earmarked for grantmaking foundations and 10% helped a public-society benefit.
At the same time, corporate giving dipped to $16.88 billion in 2020, down more than 6% from 2019. And foundation giving increased significantly—by 19%—to $88.55 billion in 2020.
For More Information
Scheinker Legacy Wealth Advisors of Janney Montgomery Scott LLC, 2800 Quarry Lake Drive, Suite 160, Baltimore, MD 21209. 410-580-2686 | 888-526-6391. advisor.janney.com/scheinkerwealthadvisors
The American Cancer Society Northeast Region, 405 Williams Court, Suite 120, Middle River, MD 21220. 800-227-2345. cancer.org
The Baltimore Hope Lodge Capital Campaign: hopeishomebaltimore.org