Year End Giving Tips

CFSI is here to be your partner, resource and steward in philanthropy. To help you at year-end, we’ve provided some things below you’ll want to keep in mind as you think about your 2018 charitable goals and how to make those happen.

Timing

If you are planning to make an end of year contribution to the Community Foundation, you should know that ordinarily, a charitable contribution is deductible in the year when it is made; and in general, a contribution is deemed “to be made” when the donated property is delivered to the charity. But for gifts made by check, stock, credit card or certain other means, special rules apply. If you want to be assured of a 2018 tax deduction for your gift, please be aware:

Gifts by Check

The “Mailbox Rule” applies – a gift by check is complete when the check is mailed or otherwise unconditionally delivered to the charity (assuming that the check ultimately clears in due course). So please be sure that your envelope is postmarked on or before December 31, 2018. However, the same rationale does not apply to checks sent by overnight mail! If you send a contribution by check through private overnight delivery services, the gift date will be the day the charity receives the delivery, not the date it is mailed.

Stocks

The gift date for a gift of stock depends on how you hold the security. In order to maximize tax advantages for a gift of long term appreciated securities, it is critically important that the securities themselves be transferred to the charity. If you sell the shares and give the proceeds to charity, you will be liable for capital gains tax on the sale.

  • Physical stock certificate: If you hold physical stock certificates, you should sign a stock power (a legal form authorizing the transfer of ownership) for each certificate contributed and deliver the stock power and the unendorsed certificates to the charity. Although you may simply endorse the stock certificates themselves, for security reasons, it is preferable to use a stock power separate from the certificate because an endorsed certificate can be negotiated by anyone who is in possession of it. For this reason, if you want to mail a gift of stock certificates, you should send the unendorsed certificates in one envelope and the signed stock powers in a separate envelope. A stock power can be obtained from most brokers or financial institutions. Care should be exercised to make certain the signature on the stock power is properly certified. The date of gift for a contribution of securities is the date the charity receives physical custody of the documents or, if mailed, the mailing date.
  • “DTC” or “book entry”: Instruct your broker to transfer the shares to the charity’s account – DTC makes the appropriate entries to transfer ownership to the charity. The date of the gift for a DTC transfer is the date when the shares actually enter the charity’s account, which usually happens within three days. For DTC instructions to make a stock gift to CFSI, please contact Melany Wessels as (812) 948-4662.
  • Mutual fund shares: A gift of mutual fund shares is considered complete when the shares are received in the charity’s account. The transfer of mutual funds as a charitable gift must be completed by the mutual fund company at the direction of the donor. Since each mutual fund company will have its own process, forms and procedures, it can take a significant amount of time to make a charitable gift of mutual funds. You should check with your mutual fund company soon for the appropriate process and the approximate timeframe if you are planning a year end contribution. Be sure that your mutual fund company understands that the shares themselves are transferred to charity and that shares are not to be sold with the proceeds forwarded to charity.

Gift by Credit Card

A gift charged to a bank credit card is deemed to be made in the taxable year of the cardholder when the charge is made, not the year when the cardholder reimburses his or her bank. However, IRS guidance creates some uncertainty about the gift date if the gift is made in one calendar year and the transaction is posted in the following year (as might happen with a December 31 gift). You may want to plan ahead a few days if making a year-end credit card donation to avoid this uncertainty. Make your gift to CFSI here.

IRA Charitable Rollover If you are age 70½ or older, it’s possible to make tax-free distributions to charitable organizations (up to $100,000 per year) from your Individual Retirement Account (IRA). This is a simple and smart way to give because the money you direct to charity is excluded from your ordinary income for federal income tax purposes, and the amount counts toward the your required minimum distribution for that year! The Community Foundation can accept IRA rollover distributions and help you accomplish more than you might have thought possible. Give us a call to find out more. 812-948-4662.

Need to make a gift but not sure what to do with it?

Make your 2018 charitable gift now and decide where to give it later. One of our more popular types of funds, a donor advised fund, will allow you to make your tax deductible gift now and then distribute grants from your fund to your favorite causes, nonprofits, church or alma mater in future years.

Questions?

Please contact us at (812) 948-4662 if you have questions about the Community Foundation or need help with your year end giving. Need information on how to create or add to your fund with using your will, living trust, IRA, insurance beneficiary designation, or for a charitable remainder unitrust? We can help you do that as well.

This outline is intended as a general overview of the topics and should not be relied upon for estate planning or tax advice without the assistance of a qualified tax advisor.

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