Three methods for charitable giving

Michelle Buria, CFP®, MPAS®, Senior Director of Choreo, LLC, says now is a good time to consider the charitable giving piece of your financial plan.

She said as we transition into fall, nonprofit organizations will start giving campaigns. And she has three methods to consider

Method No. 1: Direct Giving

“That’s really where you write a check or go online, make a payment. You feel good, the charity appreciates your donation. And you may get a tax deduction,” Buria said.

However, her tips are not tax advice and she encourages people to meet with your personal tax adviser.

Method No. 2: Qualified Charitable Distributions

“If you have an Individual Retirement Account or an IRA, once you reach the age of 72, you have to start taking a Required Minimum Distribution, RMD,” Buria said.

Money taken out of an IRA is considered income and is therefore taxable.

“If you are charitably inclined, you can used the Qualified Charitable Distribution method or QCD that takes money from your IRA and it goes directly to a charity,” she said. “And if you do that, then it counts as your RMD for the year and you also do not pay tax on that money coming out of the account.”

Method No. 3: Donor-Advised Fund

“So Donor-Advised Fund is really a method you want to consider perhaps if you have a larger chunk of money,” Buria suggested.

It’s a way to set money aside for charity without having to know who, how much, or when you want to give.

“So you can open up a Donor-Advised Fund. It is an account. Deposit the money. It is considered a charitable contribution the year that you make that deposit,” she said. “And then you can invest it, and it grows tax-free.”