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Why Charitable Giving Should be Part of Financial Planning
Americans are among the most generous people in the world. Our commitment to supporting charities and worthy causes with both financial resources and volunteerism is unsurpassed. This year, Americans are on track to potentially break records with their charitable giving.
By applying the same thoughtful approach to philanthropy as we do to investments and savings, we can truly maximize the impact on causes that are meaningful to us.
Much of America’s wealth is in non-cash assets, such as private business interests, publicly traded stock, or real estate. As a regular part of your financial planning process, you may consider selling a portion of your appreciated assets to help diversify your portfolio. You might also move some of these assets out of your taxable estate in an effort to reduce the financial impact to your heirs.
Selling non-cash assets that have appreciated in value will usually generate capital gains taxes. To help offset those taxes, consider donating a portion of them directly to charity by using a donor-advised fund, for example. By donating appreciated assets to a donor-advised fund versus selling them first and donating the proceeds, you can receive both a same-year income tax deduction and potentially eliminate capital gains tax, which can mean even more resources going to the charities you support.
Contributing non-cash assets to a donor-advised fund can also reduce the administrative burden to charities that may not necessarily have the same resources to accept them directly. Once the assets are liquidated and the fair market value proceeds are deposited into your account, you will have the flexibility to make charitable grants at any time.
Tax-smart, flexible giving through a donor-advised fund will enhance your financial planning and significantly increase the impact of your philanthropy.
On behalf of Schwab Charitable, thank you. Our donors are making an even bigger impact on the lives of others through their commitment to giving wisely.