Charitable Giving in Times of Economic Turmoil

“I know my support is needed more than ever during these tough economic times, and I want to help – but I must be especially careful these days regarding my financial security.”

Many donors share that view, and it’s easy to understand their feelings. Fortunately, there are special gift techniques that can work well, even when the economy is ailing. Knowledgeable donors understand that how they give and what they give are of vital importance in arranging their philanthropy. In most cases, the assistance you provide will be much greater than the after-tax cost of the gift to you. Perhaps a gift from which you retain a lifetime income makes sense. Such an arrangement can let you switch from stocks to a fixed income without loss from capital gains taxes. Charitable gift annuities, described in detail in the following article, offer just such an opportunity.

It’s also possible to magnify your support when you use appreciated securities, held more than one year, to make your gifts. Of course, many investments have gone down in value in recent months, but “buy and hold” investors may own stocks purchased in past years that are still highly appreciated. You can deduct the current fair market value of your stocks, not just your original cost, and you’ll avoid capital gains taxes, as well. The same favorable rules apply to gifts of real estate or stock in a closely held corporation.

The current “bear market” opens up a different gift opportunity. If you own stock that has gone down in value, you might sell the stock and contribute the proceeds. You’ll receive a gift deduction plus a capital loss deduction. Please contact us if you are interested in making a gift of investment assets.

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