Tips for Maximizing Charitable Giving
Jeff Schnitz |
December 13, 2017
It’s the season for giving. At SVB Private Bank, our clients often ask how they can maximize their impact when making charitable donations. We've collected the most common questions to provide you with some general tips to make the most out of your charitable giving. As always, remember to consult your tax advisor to discuss your individual giving.
- Can I donate publicly traded stock? Ask the charity if they accept contributions in the form of publicly traded securities. If structured correctly, you may be able to contribute the full value of the shares without paying capital gains on any appreciation, and take the full value as a tax deduction. This strategy helps the charity and you. Instead of simply selling highly appreciated stock and donating the cash, which would trigger capital gains taxes, you both get the maximum benefit.
- How big of a deduction can I take? Under current tax law, itemized charitable deductions are limited to 30 percent of your adjusted gross income per tax year, and unused deductions can be carried forward for five years.
- Can I give private securities or fund interests? These transactions are more complicated. Private securities, carried interest and restricted stock are all potentially eligible for donation with careful tax and legal planning. You’ll likely need to obtain a qualified valuation for the securities being donated along with consideration of voting and ownership rights. Larger charities and donor advised funds generally have the capacity to accept these assets.
- What is a donor advised fund? This may be a good solution if you want to match contributions to high-income years for tax purposes, while maintaining flexibility on giving strategies. When you contribute to a donor advised fund, your contribution for tax purposes is tied to the year it was donated, but your grants can be made over several years and to multiple charitable organizations. You also get the benefit of not having to pay capital gains tax when you donate highly appreciated securities. The shares are sold within the fund and the resulting proceeds are managed according to your directions.
- How do I choose a charity? There are several free online services that allow you to look up information about specific charities, such as, which manage their expenses to less than 20% of income. Examples include MyPhilanthropedia.org, CharityWatch.org, GiveWell.org, and GuideStar.org. For donors to be eligible for tax deductions, the charity they contribute to must be a tax exempt nonprofit organization under section 501 (c) 3 of the IRS regulations.
- What are other ways can I help? Consider donating your time and knowledge. Many charities today are focused on providing mentors and internships to provide underrepresented groups access to business, education and cultural opportunities they may not otherwise get. Consider contributing your knowledge, skills and network connections. These are valuable too, and can make a large impact in your community.
As you consider your own charitable giving plan, we are happy to work alongside your tax advisor to help maximize your charitable giving to provide the biggest impact.
About the Author
Jeff Schnitz is Head of Wealth Advisory for SVB Private Bank. Jeff and his team tailor unique, comprehensive wealth advice and works with others in the Bank to find banking solutions that meet the needs of technology professionals and investors.
Before joining Silicon Valley Bank, Jeff co-founded Exos Partners, a startup investment advisory and broker dealer firm. At Exos, he oversaw all aspects of the day-to-day business, including service, operations, compliance/regulatory and technology platforms. Prior to Exos, Jeff spent 13 years in a variety of key positions with Merrill Lynch, including Director of National Advisor Training and Regional Business Manager, where he created and executed strategic measures in the areas of client affinity and service, product and risk management solutions, and strategic business growth.
Jeff received his master’s in business administration from Santa Clara University and a bachelor’s degree in urban studies and planning from University of California, San Diego.
The individual named here is both a representative of Silicon Valley Bank as well as an investment advisory representative of SVB Wealth Advisory, a registered investment advisor and non-bank affiliate of Silicon Valley Bank, member FDIC . Bank products are offered by SVB Private Bank, a division of Silicon Valley Bank. Products offered by SVB Wealth Advisory, Inc. are not FDIC insured, are not deposits or other obligations of Silicon Valley Bank, and may lose value.
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