This Insights article was contributed by Bill Sewell, treasurer and president-elect of the Cape Fear Literacy Council Board.
In his autobiography Up From Slavery, the great American educator, Booker T. Washington recalls he learned as a young man “that those who are happiest are those who do the most for others.” Throughout the ages, this has been a recurring observation; helping others can bring us joy.
Americans are generously helping others here in our country and around the world. The website CharityNavigator.org reports that an estimated $390 billion was given to charitable causes in 2016. While it’s heartening to read of the generous giving, there are still many causes that need the ongoing support of our gifts.
When we individually or collectively give to support a cause, we feel good about it. When our employer or an organization we're involved with gives to help others, we feel good about it. Many contributions are given anonymously and that is admirable.
It's also encouraging when we see and hear of the companies, individuals and organizations contributing to non-profits and making a difference. Those gifts show that the givers believe in the cause, believe in the effectiveness of the non-profits to which they contribute, and show that the givers are committed to making lives, communities and our world a better place.
While a loving and caring heart may lead us to give, it’s important to put a lot of brain power and thought into effective giving. The heart may lead us to give. The brain can lead us to research and identify and give to those organizations that make the most of our gifts. After we’ve identified the issues we care about and found the non-profits that are doing the most impactful work, we need to consider the most effective way to make that gift.
If you plan to make sizable gifts relative to your adjusted gross income, it’s important to consult with your tax advisor as there are limits as to how much you can deduct. Your total charitable deduction can't exceed 50 percent of your adjusted gross income (AGI). But there are other rules that may apply and in certain instances a higher limit may be allowed.
Giving cash is simple and straightforward. You must provide proper documentation of the gift.You give a dollar and the non-profit gets a dollar, but there are more tax-effective ways to give.
Donating shares of appreciated securities is a very tax-effective way to donate to a non-profit. If you’ve owned the appreciated security for more than one year, you can deduct the fair market value of the donated asset and avoid the capital gains tax on the appreciation. The non-profit gets the full benefit of the gift as it pays no capital gains tax when it sells the stock.
When considering what stock to give, consider gifting stocks that have appreciated the most and consider gifting stocks that make up a large portion of your portfolio. This allows you to effectively rebalance your portfolio without incurring capital gains taxes.
If you are over 70.5 years of age and taking required minimum distributions from an IRA you can take advantage of the Qualified Charitable Distribution rule. This rule allows you to give up to $100,000 to charity directly from your IRA without counting the distribution as taxable income. It’s essential that the distribution be made directly to the non-profit in accordance with the IRS rule. Work with your financial advisor, tax advisor and the non-profit to explore this strategy.
There are many other very effective strategies that will help you and the non-profits you support to “do the most of others,” both with gifts made today and gifts made in the future through charitable bequests, trusts and life insurance. Be open to exploring those strategies with your advisors and with the non-profits you support as you work to make the most of your gifts.
Bill Sewell has worked in the financial services profession since 1980 and came to Wilmington in 2104 to manage the BB&T Scott & Stringfellow complex that includes offices in Wilmington and Morehead City. Prior to moving to Wilmington, Bill and his wife Potter lived in Raleigh for 21 years. He has been actively involved in non-profits throughout his life serving in volunteer, board and leadership positions with The Boy Scouts of America, Note in the Pocket, Lost Sheep Outreach Ministry, Our Lady of Lourdes Catholic Church, the A.E. Finley YMCA, The Carolinas Chapter - Raleigh Office of the Cystic Fibrosis Foundation, and other community service organizations. He currently is a member of the Board of Directors of The Cape Fear Literacy Council, serving as Treasurer and is slated to serve as President in the upcoming year of 2018. During the course of his 37 year career Bill has been recognized for his leadership in the industry and contributions to the community, but he considers his most important accomplishment to be one he shares with his wife, Potter (married since 1982); it's their enduring marriage and their four fine sons – Hayden, Brian, Sean and Kevin
Yasmin Tomkinson came to the Cape Fear Literacy Council as a volunteer tutor in 2002. It was a great experience, and she was very pleased to join the staff in 2004. She is now the Executive Director and enjoys working with adult learners and the volunteers who help them reach their goals. Yasmin studied Education and American History at Vassar College and got an MBA with a concentration in Non-Profit Management from Boston University. She worked for education-focused non-profits in rural Utah, Los Angeles, Baltimore, and Boston before moving to Wilmington.
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