Novemeber 6, 2023

10 Helpful Tips for Year-End Giving

Plan ahead for year end giving

It is hard to believe, but 2023 is quickly drawing to a close! As you prepare for your year-end giving, here are 10 things to keep in mind:


1. Talk to your tax advisors. Your advisor is a critical part of your year-end giving process, so consult with them before making any type of substantive year-end charitable gift. They can help you determine how your proposed gift might affect your estimated tax liability and your existing estate plan.

2. Charitable gift annuities can help you make a legacy gift while receiving income during your lifetime. By establishing a CGA, you can make an immediately tax-deductible legacy gift to a charity of your choice (or to a fund at MCF established to benefit that charity) while retaining the right to receive quarterly or annual annuity payments during your lifetime. Any amount remaining in your CGA after your lifetime will be transferred to the charity or fund you selected.

(You can also establish a CGA to benefit MCF’s Priority Fund, Community Impact Fund, or any of its field of interest funds.)

3. Qualified charitable distributions from your individual retirement account are still tax-free. Anyone age 70 1/2 or older may receive QCD treatment for certain transfers of up to $100,000 from their IRA directly to a qualified charity (or to a qualifying fund at that charity). Transfers qualifying as QCDs are not included in your taxable income and reduce the balance of your retirement account (on which you and your heirs will ultimately pay tax). While contributions to a donor advised fund typically do not qualify for QCD treatment, contributions to other types of funds at MCF (for example, nonprofit endowment funds, field of interest funds, donor designated funds, MCF’s Community Impact or Priority funds) may qualify.

NOTE: Before making a transfer from your IRA to a qualified charity, be sure to confirm with your advisor that the transfer meets the requirements to be treated as a QCD. Certain transfers, such as those from an ongoing SEP or SIMPLE IRA, typically do not qualify as QCDs.

4. Use a qualified charitable distribution to create a charitable gift annuity.New this year, the SECURE 2.0 Act allows you to make a one-time transfer of up to $50,000 in QCDs to a CGA. Take advantage of this new opportunity to create a CGA benefiting a nonprofit (or fund) of your choice.

NOTE: CGAs created using QCDs receive different tax treatment than CGAs funded with other assets. If you are considering this option, please make sure to consult with your tax advisor.

5. Gifts of appreciated securities may provide an increased tax deduction. If you have stocks or other securities that are worth more than you paid for them, and you’ve owned them for at least 12 months, consider giving those to charity. Doing so may allow you to avoid capital gains tax and take a charitable deduction for the securities’ full fair market value. Your deduction for donations of appreciated stock or securities to public charities is limited to 30% of your AGI each year, but you can carry over any excess deductions for up to five additional years.

NOTE: Since gifts of appreciated securities can take some time to process, you will want to coordinate the gift with the recipient as soon as possible to ensure the transfer of these securities can be completed by year end.

6. Gifts of appreciated real estate may also provide an increased tax deduction. Giving appreciated real estate to charity can provide a tax benefit similar to a transfer of appreciated stock or other securities. However, like stock gifts, real estate transfers can take some time to complete, so planning ahead is important.

NOTE: If you are interested in making a gift of real estate to charity, you should coordinate with the recipient organization as soon as possible to confirm it will accept the property, and to complete the process necessary to transfer the property by year-end.

7. “Bunching” your giving can maximize the benefit of your itemized deductions, resulting in greater tax savings. The standard deductions for 2023 are $13,850 for single individuals and married couples filing separately, $20,800 for heads of household, and $27,700 for married couples filing jointly. Because these standard deduction amounts are relatively high, you may want to ask your advisor if bunching your charitable giving into the years you itemize your deductions would reduce your overall tax liability.

8. Take time to learn about the organizations working in areas you’d like to support. If you have an area of interest or ideas about a specific organization you’d like to support, MCF’s Greater Madison Nonprofit Directory can help. It provides a comprehensive online guide to charitable organizations in our region. You can sort broadly by area of interest, organization size or location. You also can use it to learn more about a specific organization’s financial health, programs, operations and impact.

9. If you want to retain flexibility in the causes you support, consider establishing a donor-advised fund. If you are planning for a charitable tax deduction this year and want to retain the flexibility to distribute gifts to charities later or over multiple years, a donor-advised fund may meet your needs. You can find out more about establishing a donor-advised fund with MCF here.

10. Be aware of the year-end giving deadlines. If you do choose to make a gift before year-end, timing is important. Mailed gifts must be postmarked by December 31, and any gifts made by credit card must appear on your credit card statement prior to December 31.

To allow adequate time to process transfers of stock and mutual fund shares, MCF recommends that you initiate these transfers by December 7. Distribution requests from existing MCF funds must be made no later than December 15. You can find the complete list of our year-end giving deadlines here.

Bonus Tip: If you need any information, or have any questions, about the options available for giving at MCF, contact us! Working with a philanthropic advisor at MCF gives you access to our knowledge of the local nonprofit community and opportunities to make a difference in ways that matter to you. We can also help you and your advisor think strategically about the tools you can use to make gifts during your lifetime or through your estate.

This material has been provided for informational purposes only, and should not be relied on for tax, legal or accounting advice. The information included was accurate when we published the blog. Check with your tax advisor before making any gifts to ensure you are aware of any changes that may have occurred after this blog was published.