Tips for Year-End Giving

As we approach the end of another year, the spirit of generosity takes center stage, prompting individuals and families to reflect on charitable causes that resonate deeply with them. The giving season represents a pivotal moment for donors, offering the chance to amplify the impact of their contributions. Still, it is also the closing of the fiscal year, and therefore an opportunity to make sure giving strategies align with overall financial plans and that tax benefits are not left on the table. 

Greater Houston Community Foundation is committed to empowering donors with practical, actionable tips for year-end giving, enabling you to make a significant impact and enjoy the benefits of your generosity.

By developing a comprehensive giving strategy before the year ends, you can ensure that your charitable contributions not only make a meaningful difference but also align seamlessly with your broader financial objectives. 

Continue reading for our year-end giving tips, or contact Greater Houston Community Foundation today to get started. 

Key Insights

• Strategic planning for year-end donations can enhance impact.
• The giving spirit around the holidays and the tax benefits of end-of-year donations fuel the giving season. 
• You can donate many noncash assets, including stocks, real estate, and business interests.
• Donations must be made to IRS-designated Qualified Charitable Organizations, like Greater Houston Community Foundation.
• Donor advised funds are a powerful tool that can help you receive immediate tax benefits while maintaining flexibility in the timing and allocation of your donations.

Table of Contents

• What is year-end giving?
• Tax benefits or year-end donations
• Tips for effective giving
  • Plan your donation strategy
  • Give to qualified organizations
  • Utilize donor advised funds
  • Consider alternative gift types
• IRS rules for year-end gifts
• Partner with the Foundation

What is the purpose of year-end giving?

Year-end giving embodies the spirit of generosity, and this November, as we celebrate Philanthropy Month, we want to highlight the profound impact that high-impact philanthropy achieves in partnership with our dedicated donors. In addition to turning the sometimes intangible warmth and gratitude of the holiday season into actionable change, using the holiday season as an opportunity to practice family philanthropy, and passing your values on to the next generation, can be extremely powerful. 

A global movement that takes place on the Tuesday following Thanksgiving, Giving Tuesday is one of the most well-known and widely marketed events associated with year-end giving. Participating in Giving Tuesday is a great way to kick off your giving season, as many organizations offer matching programs and other incentives to multiply your impact. 

Tax benefits of donations

The other main driver of the giving season is tax benefits. While the giving spirit is as real as ever, lowering your taxable income by making charitable contributions before the end of the year can result in a significant reduction in your overall annual income tax liability — a significant motivator for many. 

Simply put: charitable donations to qualified organizations can save you money on your end-of-year tax bill. There is also significant flexibility on what you can donate, making it even easier to support the causes you care about most. 

Tips for effective year-end giving

To maximize the effectiveness of your year-end charitable contributions, both in terms of impact and personal financial benefits, it is important to take a thoughtful and strategic approach. The following are our tips for a successful giving season. 

Plan your donation strategy

Before making your donations, take the time to develop a strategy that aligns with your financial goals. 

1. Talk to your professional advisors about how giving can benefit your tax planning. For starters, ask how far away you are from the standard deduction and consider “bunching’ charitable gifts in one year to maximize benefits.
2. Identify the causes that matter to you the most. 
3. Research and vet qualified organizations making an impact in these areas.
4. Decide, with the help of giving professionals or advisors, which assets make sense for you to give. 

Give to qualified organizations

Remember, your gift will only entitle you to a charitable gift deduction if you give to Qualified Charitable Organizations. 

A qualified organization must be a 501(c)(3) organization dedicated to one of the following purposes: religious, charitable, scientific, literary, educational, testing for public safety, the prevention of cruelty to animals or children, or the development of amateur sports, among others. Additionally, qualified organizations are prohibited from engaging in political advocacy of any kind.

Be careful when making your end-of-year donations, as Qualified Charitable Organizations are not just tax-exempt organizations or organizations with charitable purposes, but organizations specifically designated by the IRS as qualifying for donations. 

Utilize donor advised funds

Donor advised funds (DAFs) are charitable giving vehicles that allow you to make donations, receive immediate tax deductions, and recommend grants to your favorite charities over time. DAFs are powerful and simple giving tools that offer significant flexibility and convenience to donors. 

DAFs allow you to take advantage of tax deductions in the current year, even if the fund itself hasn’t distributed grants to any charities. This can allow you to take advantage of deductions, while still supporting your favorite charities on the schedule that best suits you. 

Continue reading: What is a donor advised fund?

Consider multiple types of gifts

While cash donations are the most common and straightforward way to give, there are a number of other gift types accepted by qualified organizations, like the Foundation. Giving cash doesn’t always make the most sense for donors financially, especially for high-net-worth individuals who have already done extensive philanthropic financial planning.

Some of the noncash charitable gift types that you may be able to donate include:

• Business interests
• Cash
• Closely traded stock
• Coins, jewelry, and art
• Life insurance
• Privately held assets
• Real estate
• Retirement assets
• Stocks, bonds, and securities

Flexibility in gift type can help both you and the organizations you choose to support, as giving with alternative assets can potentially maximize your impact and the financial benefits for the donor. 

What are the IRS rules for year-end giving?

One of the most important considerations to make with your year-end donations is whether they are within the IRS guidelines for charitable contributions. Keep in mind that IRS regulations around charitable giving can be complex, so make sure you check with your tax advisor and any charitable giving partners.

A few guidelines on what makes a donation tax-deductible include:

• Made to a Qualified Charitable Organization
• Amounts do not exceed 60% of your adjusted gross income (AGI). This limit could also be 20%, 30%, or 50%, depending on the gift type and the organizations you support themselves.
• You have the required documentation for your gift. This means bank statements, receipts, W2s, written letters of acknowledgment, or 8283 forms, when applicable.
• Your donation was made by the end of the year (December 31st or earlier), in which you want to deduct it. 

Additionally, if you’re mailing in a year-end donation, you should ensure that your donation is postmarked by December 31st to qualify for a deduction in that year. 

Partner with Greater Houston Community Foundation this giving season

Year-end giving is a wonderful way to make sure that you make an impact where it matters most — but is also a great time to make sure you’re dotting your philanthropic i’s and crossing your financial t’s. Charitable giving is, after all, a two-way street for the communities being impacted and the donors working in them. 

By planning your donation strategy, considering alternative gift types and vehicles, and ensuring your gifts satisfy IRS regulations, you can make sure that your contributions are meaningful and strategic.

As you reflect on the past year and consider how you want to make a difference in the future, consider partnering with an organization that can facilitate your giving and magnify your impact. Greater Houston Community Foundation works with your existing advisors to integrate forward-thinking, strategic giving into your financial, estate, and legacy plans. Call the Foundation today at 713-333-2210 or reach out directly to get started. 

More Helpful Articles by Greater Houston Community Foundation: 

• The Relationship Between Estate Planning and Charitable Giving
• Corporate Social Responsibility and Why It Matters
• Elevating Philanthropy for High-Net-Worth Individuals and Families
• How to Give Back to Your Community
• Tips for Disaster Giving

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