As an organization that helps people give smarter and maximize the charitable impact of their dollars, the Jewish Community Foundation is here to help donors develop and implement tax-wise giving strategies.
One of the creative techniques that people may use to maximize the tax benefits of their charitable giving is a strategy called “bunching.” With the increase of the standard deduction, there will be a significant decrease in the percentage of people itemizing their taxes. According to The Nonprofit Times, there is likely to be a drop from approximately 33 percent to 5 percent of tax filers itemizing. As a result, many people who previously itemized their taxes will effectively lose the deduction they once received for their charitable contributions. While many people give for more altruistic reasons than the associated tax benefit, everyone wants to give efficiently and maximize their charitable resources. For this reason, financial publications and tax strategists are actively promoting the concept of “bunching” by utilizing Donor Advised Funds.
Simply put, individuals can bunch multiple years’ worth of charitable gifts into a single year (often with additional benefit by contributing appreciated stock), enabling them to surpass the itemization threshold and thereby receive the maximum available tax benefits. This is where the Foundation comes in to make this strategy viable. Donors may contribute those funds into a Donor Advised Fund at the Foundation and receive the deduction in the year the funds are contributed. The Fund may then be used to support multiple years’ worth of giving. Basically, donors stand a better chance of itemizing their taxes in the years that they bunch their contributions, and then may grant, or donate, those funds to the charitable programs and organizations of their choice, according to their own timetable.
The assets in a Donor Advised Fund may be invested and the Foundation handles all the administrative burdens of giving, including check-writing and tracking giving history. The Foundation offers a secure online fund portal and when desired, can help identify giving opportunities that match charitable goals. Since donors have only a single tax receipt from their Foundation contribution, many donors appreciate avoiding the “bunch” of charitable tax statements come tax time. Donor Advised Funds are easy to establish and more than 400 community members currently enjoy their many benefits.
If this strategy is confusing or if the talk of taxes creates a feeling of anxiety, the Foundation’s professional team is available to answer questions with the highest degree of confidentiality. Simply call 913-327-8121 or email with any questions or to make an appointment, or stop by the Foundation office, across from the White Theatre in the Jewish Community Campus.