Nine easy ways to give to your favorite charities

SG Guy — Sun, 22 Nov 2009 16:48:18 +0000

Here’s what you’ve been waiting for. A list of nine ways to give to your favorite charities, and they range from easiest to easy. If it’s difficult, challenging, complex or even sweat-inducing, it doesn’t make the list.

In addition to being easy, donating to charity can be tax-smart – reducing your income, capital gains, and estate and gift tax liabilities.

Download / print out the PDF.

The List:

Category	Ease	Approach	Cost to Create	Revoc-able?[1]
Lifetime Giving	Easiest	Write a check to a charity	Minimal	No
	Easy	Create and donate to a Donor-Advised Fund[2]
	Easy	Transfer an appreciated asset (stock, mutual fund, real estate, etc.)[3] to a charity
	Easy	Contribute tax-free to a charity in 2009 directly from your IRA[4]
Estate Giving[5]	Easiest	Name a charity as beneficiary of an IRA or other retirement plan, life insurance or annuity[6]	Minimal	Yes
	Easiest	Name a charity as “pay-on-death” beneficiary of a bank account[6]
	Easy	Name a charity as “transfer-on-death” beneficiary of a brokerage or mutual fund account[6]
	Easy	Add a charity in a bequest under your will	Moderate
	Easy	Add a charity as a beneficiary under your revocable living trust[6]	Moderate

[1] Each of the listed estate giving approaches is revocable. That means you can change your mind during your lifetime by changing the underlying paperwork.

[2] A donor-advised fund is an investment account administered by a charity or investment organization. A donor opens a donor-advised fund by making a contribution, and receives an immediate income tax deduction. The donor no longer controls the funds contributed, but can recommend grants to charities of their choice.

[3] By donating an appreciated asset, you avoid any capital gains taxes you would pay when you sell it during your lifetime – a tax-smart alternative to selling the asset and donating cash.

[4] Normally, IRA withdrawals are taxable income. Until December 31, 2009, however, you can withdraw and donate tax-free from your IRA, if you are at least age 70 ½. The check should be paid directly from the IRA account to the charity.

[5] Even though it’s called “estate giving” (because the gift happens when you die), you have to act during your lifetime to use these approaches.

[6] This approach also avoids probate. Probate does not apply to lifetime giving.

The Smarter Giving Guy » estate giving

Nine easy ways to give to your favorite charities