Insights + Resources

Charitable Contribution Limits

Jul 3, 2019

Giving a Gift
What are the limits for Donor-Advised Funds and Private Foundations?

Among the big changes in the 2017 Tax Cuts and Jobs Act (TCJA) were new limits on standard and itemized deductions. These limits and restrictions created new hurdles when planning deductions with tax advantages in mind. An exception was charitable deduction, which remains an option for high-income individuals looking to create a donation for the charity of their choice.

When making a charitable donation, two avenues to consider are donor-advised funds (DAFs) and private foundations (PFs).

Donor-Advised Funds and Private Foundations.

Public charities establish DAFs as a philanthropic vehicle; the donor can allow the donation to potentially grow over time and advise on grants from the fund (assuming compliance approval), all while having an immediate tax benefit for that initial contribution. Private foundations offer total control in terms of the grants you’ve made and their distribution.

In contrast, a private foundation tends to be larger in size (sometimes in the millions of dollars) in comparison to DAFs (which can be set up with as little as $5,000) and generally represent a larger and less-flexible method of charitable giving.

How much can you give?

There are different tax considerations to keep in mind. Your limit in contributing to a private foundation is 30% of your adjusted gross income (AGI) in the year you make that donation. On the other hand, the same limit for a DAF is up to 60% of your AGI.

What about long-term appreciated marketable securities? Your limit to a private foundation is 20% of AGI for the year of the donation. For a DAF, it’s 30% of AGI.

Advantages to Consider.

There are advantages to both private foundations and donor-advised funds, both in terms of tax deductions and the control that you may exercise over the use of the funds.

However, you should also be aware that the I.R.S. is on the lookout for those who may use the flexibility of donor-advised funds to create improper distributions, which may, for instance, directly benefit a donor’s family. For this reason, among others, it’s best to have several conversations with a tax and financial professional, who can both assist you in the creation of any such entity as well as help you manage your charitable giving. Our team of trusted financial advisors in Charlotte, NC would be happy to discuss details further with you today.

Tags: ,

More Insights

Sep 18, 2019

Do you have an extra $33,000 to $100,000 to spare this year? How about next year, and the year after that? Your answer to these questions is probably “no.” What could possibly cost so much? Eldercare.  According to the AARP Public Policy Institute, a year of in-home care for a senior costs roughly $33,000. A year … Continue reading “Your Extended Care Strategy”

Sep 16, 2019

“Why is my portfolio underperforming the market?” This question may be on your mind. It is a question that investors sometimes ask after stocks shatter records or return exceptionally well in a quarter. The short answer is that even when Wall Street rallies, international markets and intermediate and long-term bonds may underperform and exert a … Continue reading “Your Diversified Portfolio vs. the S&P 500”

Sep 13, 2019

During your accumulation years, you may have categorized your risk as “conservative,” “moderate,” or “aggressive,” and that guided how your portfolio was built. Maybe you concerned yourself with finding the “best-performing funds,” even though you knew past performance does not guarantee future results. What occurs with many retirees is a change in mindset – it’s … Continue reading “Your Changing Definition of Risk in Retirement”

Sep 11, 2019

Addressing the potential threat of long-term care expenses may be one of the biggest financial challenges for individuals who are developing a retirement strategy. The U.S. Department of Health and Human Services estimates that 69% of people over age 65 can expect to need extended care services at some point in their lives. So, understanding … Continue reading “Understanding Long-Term Care”

Sep 9, 2019

The American family with a child born today can expect to spend about $233,610 to raise that child to the age of 18. And if you’ve already traded that supercharged convertible dream for a minivan, you can expect your little one’s college education to cost as much as $198,000. But before you throw your hands … Continue reading “Getting a Head Start on College Savings”

Insights + Resources >
We are preparing the questionnaire, please let us know through the contact page if you want to be notified when it's available.
Thank you.

Epic IMPACT Quarterly Newsletter

To Receive Our Quarterly Impact Newsletter:

 
Your privacy is important to us. We will not rent or sell your information.

Epic Market Commentaries

To Receive Our Market and Economic Commentaries

Your privacy is important to us. We will not rent or sell your information.

7 Steps for Investing with Impact

 
Your privacy is important to us. We will not rent or sell your information.