Stretching Your Charitable Dollars

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Why is this year-end different from all the other year-ends? Well, the truth is, it’s not. Unless, of course, it is. As with every other great question of our times, the answer then is: “It depends.”

We all know that more people focus on their charitable giving in December than any month. Why? Because for those of us who itemize and use the charitable deduction to reduce our tax bill, getting a bigger refund or lowering the check we write to the Treasury in April can be powerful motivators.


But this year, people are asking, “How will tax reform affect me?”

The truth is, no one knows. Tax rates may go down, but fewer Americans may be able to deduct their charitable contributions if the standard deduction is doubled and certain other deductions, such as state and local tax payments, are eliminated.


So, many people wait. But waiting doesn’t seem to be an option this year — or any year, for that matter. Not when the people who will benefit from our charitable support can’t afford for us to wait.

Judge Learned Hand famously wrote: “Nobody owes any public duty to pay more taxes than the law demands.” So it follows that anything that we can do to lower the cost of our charitable giving is as American as apple pie, right?

Here are a few tips to help you decide how much and how effectively you can give in order to stretch your charitable dollars and support the causes most dear to you.

>> Give as much as possible before year-end to maximize the benefit of your charitable deduction.

>> Consider contributing to or creating a donor- advised fund (such as the ones offered at The Associated) before year-end from which you can recommend grants to your favorite charities in future years. Not only will you save on taxes, you can even establish these funds for children or grandchildren to help teach them about the value of giving.

>> Give stock that you have held for at least a year that has appreciated in value. You will receive a tax deduction for the current value and avoid any capital gains tax.

>> Defer income as much as possible to next year. This might include deferred compensation, bonuses or other income where you may be able to choose to take it in January instead of December.

The end of the year can be very hectic for us all. Don’t wait until the last minute, but if you do, get those checks postmarked by midnight on Dec. 31.

Wishing you all a less taxing and prosperous year-end.

Michael Friedman is senior vice president of Philanthropic Planning and Services at The Associated: Jewish Community Federation of Baltimore.

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