Provided by Antwyne DeLonde, Account Vice President, Peak Wealth Management Group, UBS Financial Services Inc.
Now is an undoubtedly great time to give. The CARES Act has recognized the desire of individuals, foundations and businesses to support nonprofit organizations. Through the Act, donors can enjoy new added tax benefits for their giving.
However, before you donate, there are several important financial steps that you must consider to ensure your money is being directed to the individuals and causes that you desire to support and are interested in helping.
1) Do your due diligence
Make sure your hard-earned money is going to the right place and is being directed to the cause you are passionate about. Before donating to any nonprofit, look up the organization's Form 990. Every charitable organization, political organization, and nonexempt charitable trust is required to file a Form 990 with the IRS. This form is intended to provide the government and interested members of the public with a snapshot of the organization’s activities for that year, and the IRS requires an extensive amount of information from each organization that can then be reviewed by the public. Some of this information includes an organization's mission statement, the expenses and revenues for the organization’s three largest program services, general accomplishments, total revenue and expenses, balance sheets and financial statements -- all critical information an individual should be aware of before donating. Most states rely on the Form 990 to perform charitable and other regulatory oversight and to satisfy state income tax filing requirements for organizations claiming exemption from state income tax.
To find an organization's Form 990, visit IRS.gov or a reputable charity assessment organization.
2) View your donation as an investment
With any investment, there is a purpose -- whether it is to grow money, save for retirement, start a business, etc. Your mindset with a donation must be viewed as such, as well. Investments are made carefully and your donations should as well. The goal of your donation is to have your money directed to an organization that will make a meaningful impact on the individuals and particular groups it represents. If accomplished, this will undoubtedly give you personal satisfaction and guarantee a more meaningful experience for you.
3) Consider the use a donor-advised fund
A donor-advised fund (DAF) is a giving vehicle established at a public charity. DAFs can be a tax-efficient way to donate stock or other appreciated assets. Sometimes described as “savings accounts for charity,” DAFs let you donate assets into an account that can grow—tax free—until you’re ready to grant the assets to the charities of your choice. You can designate as many or few recipients as you like, and since you don’t have to give a specific amount each year, you can schedule the gifts at your own discretion. DAFs are administered by third-party charities that usually charge modest administration and management fees, and may require a minimum level of assets (say, $25,000) be placed in the fund at the outset. One of the key benefits of DAFs is your ability to donate assets that have grown in value over the years and might otherwise be subject to capital gains taxes. These may include publicly issued stock, private stock, real estate or other complex assets. You may claim a deduction for the full amount of the gift in the current tax year, and then decide at your own pace how to distribute gifts.
4) Donate appreciated stock
Consider making a more significant impact by donating long-term appreciated securities directly to charity. Compared with donating cash, or selling your appreciated securities and contributing the after-tax proceeds, you may be able to automatically increase your gift and your tax deduction.
Antwyne David Delonde is an Account Vice President at UBS Financial Services. He can be reached at antwyne.delonde@ubs.com.
UBS Financial Services Inc. and its affiliates do not provide legal or tax advice. Clients should consult with their legal and tax advisors regarding their personal circumstances.
Antwyne DeLonde is a Financial Advisor with UBS Financial Services Inc., 307 International Circle, Suite 440, Hunt Valley, MD 21031. Any information presented is general in nature and not intended to provide individually tailored investment advice. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of UBS Financial Services Inc. As a firm providing wealth management services to clients, UBS Financial Services Inc. offers investment advisory services in its capacity as an SEC-registered investment adviser and brokerage services in its capacity as an SEC-registered broker-dealer. Investment advisory services and brokerage services are separate and distinct, differ in material ways and are governed by different laws and separate arrangements. It is important that clients understand the ways in which we conduct business, that they carefully read the agreements and disclosures that we provide to them about the products or services we offer. For more information, please review the PDF document at ubs.com/relationshipsummary.
