While this year is coming to a close, there is still time to make an impact! The end of the year is one of the greatest seasons of generosity. Individuals feeling the holiday spirit give generously, helping nonprofits meet their year end goals. Making donations before the new year can also be helpful to those donating as they may receive tax benefits and of course, know that they are helping their neighbors in need.
Read further to learn more about the significance of year end giving, the different avenues you can give through and how you can help your community thrive through donating.
What is the Significance of Year End Giving?
For many nonprofit organizations, the end of the year will raise the most funds out of any other part of the year. According to Nonprofits Source, around 30% of annual giving happens in December with approximately 10% of annual giving taking place on the last three days of the year. Looking at these statistics illustrates why there is such an emphasis on fundraising and giving as the new year approaches.
But, why does this happen? This trend is not nonprofit-led, but is actually driven by donors. While there isn’t any one reason why donors give, there are a few common reasons you can see during the holidays.
One of the greatest motivators is the holiday season itself. Generosity drives many individuals because they are already purchasing gifts for friends and family and also want to make an impact on those in need.
Another reason more donors tend to give around this time of year is because they have a better understanding of their finances. There are a number of variables that can happen throughout the year, so people may have more flexible funds than earlier on if they were anticipating larger expenses. Plus, as tax season approaches, charitable giving can provide donors with benefits as well.
Avenues to Give
There are a number of avenues to donate to nonprofits and charities. Below are a few examples for year end donations.
Traditional Giving Avenues
Cash and in-kind donations can be seen as traditional giving avenues. When people think about donating, they think about writing a check, making a gift online or donating needed items to a nonprofit. These are straightforward and effective ways to give and make a difference in your community.
Appreciated Stock
Appreciated stock donations are a little more complex than the traditional giving avenues listed above, but these donations can have a great impact on the recipient and the donor. These benefits include: a larger donation to the organization, potential tax savings and potentially avoiding capital gains tax.
According to Brian Beers’ article, “Can I Donate Stock to Charity?,” at Investopedia, if an individual’s stock has gained value since purchasing, they can donate the security to a qualified charity and avoid paying capital gains tax. These tax savings could then be used to make a greater gift to the organization.
You should also consider the differences between publicly traded shares and private company stock. Beers explains that for “publicly traded shares, the fair market value is the average of the high and low price on the transfer date. For private company stock, which is not traded publicly, donations with an estimated value below $5,000 do not require an appraisal.” If a donor wants to give publicly traded shares to a nonprofit, they will need to fill out the Internal Revenue Service (IRS) Form 8283.
If you are considering donating appreciated stock to a nonprofit, your first step should be to connect with the organization to see if they can accept it. Many nonprofits have the capabilities to accept a donation of appreciated stock, but it is best to ensure they have the ability first.
The nonprofit may have their own form for you to submit your information with to receive the donation. If you are transferring the stock between your personal account and the organization’s, you will need to work with your brokerage firm and the recipient, as Beers states in his article.
Donate through Traditional IRA
Another way to donate and receive tax benefits is by giving through your traditional IRA. This only is possible for those who are over 70 ½ and are needing to start thinking about their required minimum distributions (RMDs). Scott Tucker discusses how making a qualified charitable distribution (QCD) can benefit your selected charity and provide tax benefits in his article, “When RMDs Loom Large, QCDs Offer a Gratifying Tax Break,” at Kiplinger. He goes on to explain how “once you turn 70 1⁄2, the QCD rule allows you to instruct your IRA administrator to direct transfer up to $100,000 annually to one or more eligible 501(c)(3) charities.” Since the money is going directly to a qualifying charity, that income will not be taxed.
Check out Kiplinger’s article, “Required Minimum Distributions (RMDs): Key Points for Retirement and Tax Planning,” to learn more about RMDs and how they affect your taxes and impact the ways you donate.
Help Your Community Thrive through Year End Giving
You can make an impact before the new year to help your community thrive. There are a number of avenues in which you can give. For more information on different ways to give, take a look at TrueNorth’s gift planning site.
If you have specific questions regarding your particular situation, it’s always best to reach out to a financial professional.
Generate Generosity to Change Lives
Join caring supporters like yourself when you make a gift this year. TrueNorth’s Generate Generosity campaign provides opportunities for community members to give back and transform lives. Our goal is to engage 100 donors by the end of 2024, and we need your support!
“As this year comes to a close, we celebrate all of the good work we were able to accomplish with the support of donors and volunteers. But we also recognize that there is more work to be done, says Mark Kraus, TrueNorth’s Community Liaison and Development Director. “Our kids need role models and hope, our older adults need connection and purpose and our families need guidance and encouragement. We hope you join us in our Generate Generosity campaign and help us reach our goal.”
When you choose to generate generosity, you are committing to guiding our neighbors on their paths to resilience. Your support will build and sustain vibrant communities where all our neighbors have the support necessary to live and thrive. Generate generosity today and ensure the well-being of our community.