Now is a great time to work with your clients to plan their charitable giving for 2023, and there are several options beyond writing a check. Sometimes, utilizing other assets can have the dual advantages of maximizing tax benefits for your client and their family while allowing them to give more to the organizations they support. This ensures their donations have the greatest impact in the community while also providing your clients with the most tax advantages possible.

While cash is easy to donate, it may not be the right option for all situations. Below are some examples of non-cash assets people can donate that will benefit their favorite nonprofits and their tax planning.

Charitable IRA Rollover

If your client owns an Individual Retirement Account (IRA), a charitable IRA rollover (also known as a qualified charitable distribution, or QCD) is a tax-savvy way to use their retirement assets during their lifetime to make charitable gifts.

If a person is 70½ or older, they can donate up to $100,000 per year from an IRA directly to a charitable organization, including a fund at the Omaha Community Foundation. Beginning in 2023, people who are 70½ and older may elect, as part of their QCD limit, a one-time gift up to $50,000, adjusted annually for inflation, to a charitable remainder unitrust (CRUT), a charitable remainder annuity trust (CRAT), or a charitable gift annuity. The donation is excluded from their taxable income and counts toward the required minimum distribution if they are required to take one.

The charitable IRA rollover operates separately from the percentage rules that limit the tax benefit of individual charitable giving. So, if your client is inclined to give more than the standard deduction, this rollover is a great option. You may find that the rollover provides greater tax savings than cash donations because your client’s adjusted gross income will be lower.

In addition, if your client names a nonprofit as a full or partial beneficiary on their IRA or other retirement accounts, neither the client nor their heirs will pay taxes on that portion of the distribution.

Real Estate

Donating real estate is another fantastic way to support causes and nonprofit organizations. It is also one of the most financially beneficial types of gifts for donors.

As with gifts of other long-term appreciated assets, donating real estate to a charitable organization, such as a donor advised fund (DAF) at the Omaha Community Foundation, is generally deductible at the property’s fair market value at the time of the gift and avoids capital gains taxes. That means the charity will receive more value from the property donation than if the donor sold the property then donated the proceeds.

A real estate donation can also support nonprofits for years to come with a charitable remainder trust (CRT). The trust produces income for your client during their lifetime, then the remainder goes to a charitable organization of their choice named as the beneficiary. Naming a DAF at the Omaha Community Foundation as a beneficiary has a variety of benefits: the ability to support organizations directly from the fund, working with the Foundation to leverage our deep knowledge of the community and its needs, and building a lasting legacy your client’s family can continue to participate in.

The income tax deduction takes place when the property is transferred into the trust based on the present value of the assets that will eventually go to the charity.

Business Interests & Stocks

Business owners can also take advantage of tax-wise charitable giving. If your client plans to sell a business, pass it to the next generation, or holds long-term, highly appreciated stock, they should consider donating some of the closely held or publicly traded stock to their favorite nonprofit organization.

Donating stock outright avoids capital gains tax. The transaction results in more dollars to support causes than they would have had if they had sold the asset, paid capital gains, and given the remaining proceeds to charity.

This is the perfect time of the year to discuss with your clients how to enhance tax planning while supporting their community.