3 biggest challenges to making a charitable gift

Jeremy Arkin, Director of Gift Planning, explains the most common giving roadblocks (and possible solutions!)

Every day, I have the great fortune of working with people who want to change the world for the better. There are many ways to do that, of course, and most of the folks I work with hope to have a positive impact through philanthropy – by donating their hard-earned resources for a greater good.

But giving money away isn’t as easy as it sounds! Making a donation can touch on other issues and be somewhat of a challenge. In this post, I’ll highlight the three most common challenges that donors face and some possible solutions.

Challenge #1: “I don’t know how much money I’m going to need as I grow older, so I can’t make a gift now.”

My father used to tell me, “The best thing about having money is not having to worry so much.” As people begin thinking about retirement, even early in their career, they recognize how important it is to build a nest egg for later.  

Luckily, you can establish a planned gift now that will benefit charity in the future, after you have passed away. The money remains available to you if you need it. Plus, you can provide that charity gets only what is left of your estate after children or other heirs receive the inheritance you have planned for them.

This type of gift can be achieved through your will or a living/revocable trust. You can also simply name a charity as the beneficiary of a retirement account; this is often a tax efficient way to support charity because no taxes will be due when the charity receives assets from the account. If you leave retirement accounts to children or other heirs, on the other hand, they will probably owe income taxes on withdrawals from the account (unless it is a “Roth” account).

Another way to support charity while providing for your future is through a “life income gift.” With this giving technique you would transfer assets to a charity (or a special type of trust) now and receive a partial income tax deduction. For the remainder of your life you would receive a payment (either fixed or variable) each quarter. If you establish this type of gift with an appreciated asset, such as stock, you may avoid having to pay capital gains taxes when the asset is sold.

Challenge #2: “Most of my wealth is tied-up in investments, so I’m not comfortable writing a check to charity at this time.”

Think for a moment about all of the assets you own (your home, retirement accounts, savings accounts and other investments, etc.) and consider how much they are worth. What asset do you have the least of? For many of us, our smallest asset is our checking account. Yet when we make a donation to charity, we assume we should write a check, making this asset even smaller.

Duke University, like many charities, is able to accept gifts of non-cash assets. The most common? Stock. If the stock is publicly traded and not “restricted,” it’s usually quite simple to transfer. If you’ve owned that stock for longer than one year, you will receive an income tax deduction based on the fair market value and avoid paying capital gains tax on the appreciation. Be sure to visit our website to learn more about donating appreciated stock or other assets to Duke.

Challenge #3: “I know that charitable giving can have tax advantages, but that seems so complicated.”

Call us! Our team can help you explore the charitable giving options available to you. We can also work with your financial advisors – financial planners, attorneys and accountants – to find the charitable solution that is best for your specific situation.  

TAGS: Charitable Giving Strategies retirement account designations bequests

About the author

Jeremy Arkin

jeremy.arkin@duke.edu

With more than 15 years of experience in gift planning and development, Jeremy helps alumni find ways to support Duke that complement their larger personal and financial goals. He understands the ins and outs of giving techniques that involve tax, retirement and estate planning. He also develops strategies for donating complex assets such as real estate and private business interests. When he’s not at work, Jeremy attempts to channel Ron Carter and Ray Brown while playing his double bass.