How COVID-19 will spark change among charitable giving

Katharine Perry in Wealth Management 7 December, 2020

Over the last few months, and especially the last few weeks of the year, we have seen a notable uptick in charitable giving efforts – both from the standpoint of individuals wanting to support causes near and dear to them, and in maximizing tax-efficient strategies before year-end.

2020, however, has been an interesting year and we expect that COVID-19 will not only change charitable tactics this year, but for years to come. You see, this unprecedented year has undoubtedly shifted the mindset of many – we see neighbors who have been furloughed, struggling to financially support family, we see the schools in our community trying to support stay-at-home learning by providing children with the technology they can’t otherwise afford, we see local businesses caught in limbo with ever-changing restrictions, trying to break even and keep employees on payroll.

We believe charitable giving will be on the rise this year. 2020 has shed light on the needs of our communities and sparked a passion in individuals like never before. People want to be there to help, to make a difference, or to have an impact.

So, how can one do that? Below are strategies to consider today, tomorrow, and further down the road.

Over the next few weeks:

Now, more than ever, charities need support. Over the next few weeks, leading up to the holidays, consider writing a check to your favorite charity. Another way to support causes is to make a donation on behalf of a family member in lieu of a traditional, material gift to them this year.

Additionally, if you have an investment account, you can gift securities (stocks or mutual funds) to a charity, which opens up another avenue aside from sending money or a check.

Lastly, if donating to a charity isn’t financially in the cards this year, take time to vet causes that are important to you, and consider what you can do next year to support local or national efforts.

Over the next year:

While the next 3-4 weeks is crunch-time for charitable giving, there are strategies you can put in place over 2021 that will create just as much of a meaningful impact.

If you are above the age of taking required minimum distributions (RMDs), talk to an advisor about setting up a Qualified Charitable Distribution (QCD), a taxable distribution from an IRA that is paid directly into a charity.

Or, consider a Donor Advised Fund (DAF), which once set up, allows you to annually (or whenever you want) make authorized contributions to a charity, or charities, of choice. Think of this as charitable giving on auto-pilot. It’s a vehicle that you can set up now so you have less to think about as we head into 2021 holidays and beyond.

Over the long-term:

While a DAF is something that has benefits across your lifespan, you can also create the fund to be as flexible as you want, meaning it has the capability even after you die to make donations on your behalf. From a long-term legacy planning standpoint, this will allow you to continue supporting the charity across generations.

Additionally, when working on an estate plan, work with an estate attorney to set up a charitable trust, which can be set up in two ways:

1). You can live off the money now and then whatever is left upon your passing is donated.

2). You can choose at what point you want to donate (now or when you pass). This is a strategy you would want put into motion with a legacy mindset.

Whether it’s donating this year, establishing tax-efficient strategies over the next few months, or even tactics that will have an impact decades from now, 2020 will set a new tone of how and why people choose to support causes.

Reach out to Fort Pitt if you have questions relating to charitable giving strategies, and check out our recent webinar where we outline the ins and outs of the ideas discussed in our blog.

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