Counting the Ways to Give at Year-End

Charitable gifts come in all forms and sizes, and year-end appeals focusing only on gifts of cash might miss valuable opportunities. For example, the IRS reports that for 2016, taxpayers who itemized claimed charitable deductions of about $203.5 billion. Of that amount, more than $73.6 billion came from noncash gifts. It’s important to not only make donors aware of assets they may own that can be given to charity, but also to do so in time for their gifts to be completed by year’s end.

Gifts of publicly traded stock are relatively easy to make, particularly when the shares are held in a brokerage account and can be transferred electronically. A charity’s website should include account information, along with instructions on how stock gifts can be made. It may take a little longer if the donor holds shares in paper form. The donor needs to send the unendorsed stock certificates and the signed stock power form in separate mailings.

Gifts of mutual fund shares, while treated the same as publicly traded stock for tax purposes, may take a significantly longer time to complete. Some other assets, such as real estate and shares of closely held stock, may also take several months to complete and may require a qualified appraisal. In addition to the time needed to conduct Phase I environmental studies for gifts of real property, there is also the time required for the charity to determine if it will accept such gifts.

A charitable gift annuity can be completed fairly quickly, especially when funded with cash or publicly traded stock. A charitable remainder trust, on the other hand, even if funded with cash or securities, takes additional time in order to have the document drafted and the trust funded.

For eligible donors who have checking accounts for their IRAs, gifts of qualified charitable distributions can be made relatively quickly. However, if the payment is to be made from the IRA custodian, it could take additional time.

Keep in mind that the mailbox rule, which treats a check postmarked by December 31 as a gift for the current year, even if not cashed by charity until the new year, does not apply to qualified charitable distributions (QCDs). Not only might the check not count as a gift in the year intended, but the donor may be considered to have failed to take the full required minimum distribution for the year.

Don’t wait until it’s too late

It’s incumbent on the charity to make year-end appeals early enough to allow donors to complete their gifts in a timely manner and to work with donors who are planning noncash gifts that may require additional time. ■

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