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As many of us take stock of the last year and look ahead to 2023, we do so with either anticipation or trepidation. This article focuses on methods for creating a charitable giving strategy.

Despite a very difficult economy, investors made a significant global philanthropic impact, donating billions of dollars to charitable causes worldwide. However, as we approach the end of the year, the globe is still fraught with difficulties. Increases in interest rates and inflation have coincided with heightened market volatility. Natural catastrophes, the war in Ukraine, and other devastating events have resulted in ongoing human misery. As a result of this, charitable organizations are in greater need of our help than ever before.

While we all try to make sense of these difficulties, your decision to donate to a good cause could not come at a better time. However, you may maximize the impact of your charitable contributions by finding ways to stretch your money further. After all, we’re still in 2022, so there’s plenty of time for major adjustments.

Where do you even begin?

People often put off making choices when they’re unsure about the outcomes. You may be wondering, “in what condition will the world be in 2023”? The long-term impacts of inflation, and the behavior of financial markets combined with the inherent uncertainty of our current climate makes for a worrisome economic and environmental outlook. But while those conditions may be reasons for pause for some people, we believe it represents reasons to take action now.

Those who wish to make a difference in their local communities might do it in a variety of ways. It’s common for donors to emphasize the worth of their “time, talents, and fortune” while discussing the impact of their contributions. It’s possible to make a difference by lending one’s time and expertise to charitable organizations in the form of volunteering or board membership. If you have marketable talents you may want to contact your favorite charity to see how you might “give” your time and expertise to help them achieve their goals.

While donations may offer a tax break, they can also be used for purposes beyond only monetary gain. Keep in mind that the value of your offerings is equal to that of your contributions. Even though you lost money last year, you may still have assets of significant worth because of the current market. Instead of handing over cold hard cash, it may be wider to donate private equity, hedge fund interest, shares of C companies, real estate, LLCs, etc., all of which are examples of illiquid assets. Donor-advised fund providers, such as those we use through our custodian, are allowed to accept illiquid assets, but not all organizations can. To be sure you’re taking full advantage of the tax benefits of charitable giving, talk to your wealth manager about your portfolio.

Galleon’s mission is to help investors and the general public maximize the impact of their charitable contributions, thus we provide a number of useful resources to that end. Our dedicated website, Charitable Accounts, provides unbiased useful information for investors seeking more information.

In an era when many charities are struggling with greater costs and increased demand, our Charitable Accounts also provides data about donating during times of inflation and provides advice on how to make a difference.

Galleon Wealth Management has several suggestions for giving back as the year winds down

A tax deduction may often only be claimed for contributions made to organizations that meet the requirements of Internal Revenue Code section 501(c)(3). If you want a tax break, itemize your deductions instead of using the standard deduction. You should only fill this out if the total of your itemized deductions is more than the standard deduction.

There are income and donation caps, but over the next 5 years, you can deduct any donations you make that exceed those caps. You can reduce your taxable income further by employing tax-saving strategies such as giving valuable assets instead of cash or making the minimal needed distribution to designated organizations. Donations made in 2022 must be received by the IRS by December 31 to be eligible for a tax deduction; however, if your gift is not cash, the procedure can be more complicated, so you should get started as soon as possible.

Once you’ve decided how much to contribute and what kinds of assets to donate, you may want to consider how to gift, and whether or not to utilize a donation vehicle. Private foundations, donor-advised funds, and charitable trusts are just a few examples of the many giving vehicles available, each with its own set of advantages and disadvantages. Keep in mind that many of the contribution tools on offer may be utilized in tandem with one another as you weigh your selections.

Whichever course you take donating assets should be planned out in advance to ensure tax efficiency and the greatest possible long-term impact on the causes you care about.

To learn more and get advice on developing and implementing a charitable giving strategy, contact us at 1-844-GALLEON.