Giving appreciated stock to charitable organizations is certainly a highly-effective tax strategy. During years when highly-appreciated stock is in short supply, however, implementing this strategy may be easier said than done.
This is when donor-advised funds come in especially handy. Now is the time to think about charitable giving if you regularly added to your donor-advised funds throughout the market’s long bull run. If you intend to ride out today’s market conditions in your personal portfolios, this year’s bear market doesn’t mean your year-end charitable giving has to take a hit. You can use your donor-advised funds to support your favorite organizations, sometimes even at levels consistent with prior years.
Similarly, this may be a year to consider contributing cash to a donor-advised fund instead of donating highly-appreciated stock (which has been the go-to gift for so many of the last several years). Gifts of cash could reduce the burden on your personal stock positions that may have fallen in value dramatically, giving these positions more time to recover value and, at some point in the future, be contributed to a donor-advised fund at a higher value (thereby resulting in a higher tax deduction for you).
Now may also be a good time for you to consider using your cryptocurrency in creative ways to meet your charitable giving goals. If you are holding cryptocurrency, you may have come to the conclusion that it does not necessarily provide the protection against inflation you thought it would. You could, for instance, sell your cryptocurrency at a loss and contribute the cash to your donor-advised fund. Then, you can keep an eye on the cryptocurrency market and decide when – or whether – to wade back in.
Finally, if you have not yet established donor-advised funds at the community foundation, you may want to consider doing so now. Not only does a donor-advised fund help organize your charitable giving, but over the long term it can also protect your ability to support favorite charitable organizations even when market conditions are rough.
Our team is always happy to help you maximize both the philanthropic and financial elements of your charitable giving strategies. We look forward to hearing from you.