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Financial
Sep 10, 2021

Giving Strategically

Sponsored Content provided by Jason Wheeler - CEO, Pathfinder Wealth Consulting

This article was authored by Kayla Johnson, Financial Planning Associate.

With the K-shaped recovery being a hallmark of the pandemic, and the effects of COVID having vastly different ramifications for the poor and the wealthy, many people, women in particular¹, are increasingly curious about how to share their resources in tax-efficient ways.
 
Charitable giving isn't just for folks who have buildings etched with their name, they're also for generous, everyday folks who want to better the world around them. After almost two years of a seemingly nonstop negative news cycle, there are great people in our community who find themselves eager to help. 
                                           
There are three groups of givers – modest givers, retirees, and those with highly appreciated securities – and some considerations each should heed:

  1. The CARES Act created an above-the-line charitable deduction for cash donations. So, more modest givers who don't itemize their deductions should utilize the $300 deduction - it's up to $600 for married couples. 
     
  2. For retirees, the options expand. Folks aged 70½ or older can gift up to $100,000 from their IRAs each year regardless of if they take the standard deduction or itemize. If you're charitably inclined, this is a smart way to reduce future required minimum distributions (RMDs), lower current and future taxable income, and preserve other assets for beneficiaries which are not subject to the new SECURE Act's 10-year distribution rule2. 
     
  3. Gifting appreciated stock is a fantastic option for folks with concentrated and/or highly appreciated assets. Stocks held in a taxable account, that would otherwise be subject to capital gains taxes if sold, can instead be donated to charitable organizations. This strategy is beneficial for all parties - most importantly, the charity receives the full benefit of the gift (charities don't pay taxes), the donor reduces risk in their portfolio and reduces potential tax liability, and the donation can be deducted. In fact, for 2021, taxpayers can deduct charitable donations of up to 100% of their adjusted gross incomes. There are a few limitations with this allowance, so be sure to work with a financial professional for guidance on your personal situation. 
     
  4. Using donor-advised funds (DAFs) is an excellent way to "bunch" charitable donations at once even if you're not ready to hand the donation over to organizations yet. You can deduct 100% of your donation (cash or securities) to the DAF in one year and make the contributions over several subsequent years. These tend to be great methods of giving for folks with a large taxable event in one year, such as the sale of a business or a sizeable inheritance. 
Looking back on the ramifications of the pandemic and all the other needs around the world, the necessity for resources is great. For people who want to make a difference in a smart way but don't know where to start, the CERTIFIED FINANCIAL PLANNERTM Professionals at Pathfinder Wealth Consulting can help. We'll take inventory of what you have, helping prioritize your needs and the needs of your family first, and then help you think creatively about ways to support the people and causes that resonate with you. If you want to leave a legacy in your community, give us a call at (910) 793-0616 or visit our website at www.pwcpath.com. We are here to guide you forward. 
 
1 https://www.wsj.com/articles/the-gender-gap-in-charitable-giving-1454295689
2 https://www.congress.gov/bill/116th-congress/house-bill/1994/text
 

Jason is a wealth advisor and founding partner of Pathfinder Wealth Consulting. He has been in the financial services industry since 1999. Jason was born in Dayton, Ohio, but grew up in Eastern North Carolina. He graduated magna cum laude from the University of North Carolina Wilmington in 1999 with a BS in finance and an MBA in 2003. Rob Penn, Jason’s business partner, hired him in 1999 and the two began a successful business relationship, highlighted by the formation of Pathfinder Wealth Consulting in 2005. Jason’s passion for the business begins with helping our clients, working with select families to accomplish their personal and business goals. Jason’s role also includes managing the overall firm, leading its growth initiatives, and enhancing operations. Jason resides in Wilmington with his wife, Ashley, and their daughter, Merritt. Ashley is a speech-language pathologist and owns Therapy Connections, Inc., a pediatric speech therapy company. Currently, Jason spends most of his free time with his family doing anything kid-related. He also plays average golf as often as possible, waits patiently for his invitation to Jedi training, and hopes that maybe this year he'll have more time for surfing, boating, fishing, and all the water activities that the family loves. Jason considers himself a lifelong learner and is always ready to try a new activity, travel to a new spot, or delve into a new subject. This article was authored by Davis Byrd, Financial Planning Associate.

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