In addition to making donations to Trinity by mail, on-line, or in person, there are other ways that could also be used to make donations. Some of these other methods may provide substantial tax advantages, and could be useful to consider in some circumstances.
Donor Advised Fund: With the increase in the Federal Standard Deduction levels starting in 2018, it may be advantageous for some people to open a Donor Advised Fund (DAF). A Donor Advised Fund can be thought of as a “savings account” for charitable donations. A Donor Advised Fund allows a taxpayer to contribute a significant sum in one tax year to the DAF and then distribute it out that same year or over several years to the charities of their choice, which could include Trinity. This strategy may allow a taxpayer to take a large itemized deduction in the year of the contribution to the DAF, and then take the standard deduction in subsequent tax years, and could lead to overall lower tax payments over those years (this is sometimes referred to as “bundling” of deductions in one tax year while taking the standard deduction in a subsequent year). Another advantage of donating via a Donor Advised Fund is the option to donate anonymously, if you so choose. A Donor Advised Fund is open to taxpayers of all ages. Trinity accepts contributions via DAF. Contact your broker or mutual fund company (Fidelity, T Rowe Price, Vanguard, etc.) to establish a DAF and then contact Geri Trost for Trinity specific details.
Appreciated Securities: The stock market has appreciated significantly in the past couple years. You may hold some appreciated securities and would like to re-balance your portfolio. However, if you sell the appreciated stocks, mutual funds, or exchange-traded funds, you would be liable for capital gains tax payments on any net gains you may have, and thus would not receive the full sum from the sale. Did you know that if you instead directly donate some of these appreciated securities to a non-profit such as Trinity, or use them to fund a DAF, that you can receive credit for donating the full sum without paying capital gain taxes on those securities? It’s a win for the charity (or your DAF) and a win for you! If this sounds interesting for you, download our Appreciated Security Donation Form here.
Qualified Charitable Distribution from IRA: Are you in your 70’s or older and dreading Required Minimum Distributions from your IRA (RMD’s) and all those ordinary income taxes (OIT) that must be paid on traditional IRA withdrawals? Ok, it’s a good thing to have an IRA and so is having something to withdraw! However, you may reduce the OIT that you need to pay by arranging for a Qualified Charitable Distribution (QCD) for some portion (or all depending on your circumstances) of your RMD withdrawal. To use some round numbers, if you were planning on withdrawing $40k in a year from your IRA and contributing $10k to Trinity, you may do a QCD on the $10k to Trinity and completely avoid paying any taxes on that amount. Sorry, you’ll still need to pay taxes on the remaining $30k of the RMD withdrawal unless you have some other qualified non-profits that you were planning to donate to as well (universities, food banks, other charities, etc). But, without the QCD option, you’d need to pay taxes on the entire $40k withdrawal amount, leaving less for you and for your charitable gifts to Trinity and other non-profit organizations. Another win for Trinity and a win for you! 1
1It is worth noting that you may not direct a QCD to a DAF. The QCD goes directly to Trinity or to the charity of your choice. However, you could take a portion of your RMD that would be treated as ordinary taxable income ($30k in the example above) and donate some, all, or more than that amount to a DAF instead. This type of donation could be included in your Charitable Deductions for the tax year the donation was made to the DAF.
Disclaimer: Individual circumstances vary and you should consider your personal situation and consult your tax and/or financial advisor to fully understand all the implications for your specific situation.