Top 10 Charitable Giving Tips

Top 10 Charitable Giving Tips by Jill Gary Hughes '79, MBA, J.D.

Amongst our staff, we have many years of experience working in charitable giving. We've pooled our collective knowledge and distilled it into 10 easy tips, just for you!

1. Preserve cash.

Consider giving assets other than cash, such as marketable securities, valuable personal property, real estate and closely-held stock.

2. Avoid or defer capital gains taxes.

In selecting a noncash asset to give, take advantage of the additional tax benefit of giving an appreciated asset. The benefit arises because you receive a charitable deduction and avoid paying capital gains tax on the property transferred to charity. Interested in another stream of income? Noncash assets can also be converted to an income stream for you or loved ones by giving the assets to Rice to fund a charitable remainder unitrust.

3. Age has its advantages.

If you are at least age 70 1/2 and own an IRA, make a tax-free IRA Charitable Rollover or Qualified Charitable Distribution from your IRA and satisfy your minimum required distribution, if you have one.

4. Leverage your employer's generosity.

If your employer offers you a match for your charitable gift, you can double (or more) its impact on Rice.

5. Bunching can be beneficial.

Because the standard deduction has increased to $12,400 per individual taxpayer, you no longer may need to itemize your deductions. If you are close to the line, you can consider increasing your charitable contributions to cover this year and next so you itemize on this year's tax return.

6. Explore other giving platforms.

If you have a donor-advised fund or a family foundation, authorize grants from either one of them to benefit Rice.

7. Deferral provides flexibility.

A revocable deferred gift to Rice (such as a gift in your will or living trust or a beneficiary designation on your retirement plan or life insurance) ensures that you have the use of your assets for as long as you need them while enabling you to ultimately support an area of Rice that is important to you.

8. Capitalize on the difference between "good" assets and "bad" assets.

Construct your estate plan to give assets that have built-in, unpaid income tax obligations ("bad" assets) to charity and the other "good" assets to individuals. For example, make Rice the beneficiary of your before-tax retirement accounts and direct assets like your home, non-retirement brokerage accounts and other assets to your children or other individuals.

9. Take advantage of low interest rates to transfer wealth now.

If the total value of your assets exceeds the estate tax exemption ($11.58 million per individual for 2020), a charitable lead annuity trust can reduce and almost eliminate the estate and gift tax associated with transferring assets to other beneficiaries. A charitable lead annuity trust makes annual payments to a charity like Rice, and once the trust ends, the assets that were given to the trust are returned to you or your heirs.

10. Utilize available resources.

For options that fit your giving, cash flow needs, and tax and estate plan goals, visit with a member of the Rice gift planning team. We can phone or Zoom with the best of them! Call us at 713.348.4624 or email [email protected].