How to Make the Most of the Type and Timing of Your Charitable Gift

Posted March 2024

Let’s imagine three prospective donors who would like to make a gift to our organization but wonder about the timing.

The first one says that he intends to leave a significant charitable bequest to us in his will, and he seeks wording for this bequest. Upon learning of his charitable interests and the approximate amount of his intended bequest, one of his advisors proposes the following option:

Because he is capable of making a large charitable gift while he is living without affecting his lifestyle, why doesn’t he make all or a portion of his intended charitable gift now rather than at the end of his life? If he includes a charitable gift in his will, he can imagine what his gift will accomplish. But if he makes an outright gift now, he can see his gift in action.

This prompts him to start making sizeable gifts each year to support our work, and the experience is immensely satisfying to him because he sees firsthand the difference his gifts are making.

The second potential donor wants to arrange her gift now, but she considers it prudent to retain control of her capital in case it is needed for changing circumstances. She decides to include a bequest to us in her will. Alternatively, she could name us as a beneficiary of remaining retirement-plan funds. Her gift is arranged now, but it is not delivered to us until sometime in the future—and only if she has not changed her mind in the meantime.

The third prospective donor, like the man in the first scenario, irrevocably transfers an asset at the present time. However, her gift, unlike his, is not available for charitable purposes until some future time—which could be at the end of her life or after a period of years. Meanwhile, she and/or another beneficiary that she may name receives income. This arrangement is called a life-income plan, and it appeals to those who are willing to commit an asset provided they can sustain and even possibly increase current income.

The first question regarding timing your gift is when we will benefit. If you want to see your gift in action and you will not need a certain asset, make an outright gift. If you want to arrange a gift now but retain control of your asset, provide for a charitable bequest or beneficiary designation. If you want to ensure a future gift to us and receive income for life or a term of years in the meantime, arrange a life-income plan.

Whatever you decide about when we can use your gift, be mindful of the following timing rules pertaining to the charitable deduction that most often apply.

If you want your gift to be deductible for this tax year, the gift must be completed by December 31. In the case of a gift by check mailed to us, the check must be dated and the envelope postmarked no later than December 31.

In the case of an online cash transfer, the amount must be charged to your account by December 31—though your actual payment of the charge can be made later.

If you transfer securities from your account to ours, the date of the gift is when the securities are credited to our account.

If the securities you transfer have appreciated in value, remember that to deduct the current fair-market value, you must have owned the securities for more than one year.

For a gift from your IRA not to be included in your taxable income and to count towards your required minimum distribution, you must be aged 70½ or older at the time of the gift.

There are numerous other rules pertaining to the deductibility of a gift—and, in addition to the timing of the gift, they may depend on the type of asset given and the kind of gift. Your financial situation, giving history, and personal objectives will also affect the timing of any charitable gifts you arrange. We would be pleased to have a discussion with you about the optimal timing for a gift you may be considering.


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