'Tis the season of giving -- to family, friends and a million worthy charities. We do half of our charitable giving between Thanksgiving and Christmas. So after exploring the many ways you can give to charity without spending a dime, I thought I'd explore another part of the equation: How many ways can you give all your money away?
OK, you probably won't want to give it all away. But if you're thinking about giving some money to a worthy organization, you might want to investigate some of the less common ways to donate. You could always write a check, but that's so 20th-century.
As an alternative to a one-time donation, many charities now arrange periodic donation programs, often available through their websites. In the typical arrangement, donors give a fixed amount each month, charged to a credit card. This could be an attractive method for anyone who wants to regularly support a cherished cause or for someone who can fit only a small donation into the monthly budget. It's often up to the donor to decide how long to continue the monthly contributions.
If you're making a cash donation, you can make your money go further by asking your employer whether it will match some or all of your contributions. Larger companies may be more likely to offer such programs, but it can't hurt to ask your employer about the opportunities for stretching your donation dollar. Find out the rules and restrictions before making your donation to ensure that you qualify for the charitable bonus.
One new option for charitable giving, made possible by this year's revision to the pension law, lets anyone lets anyone age 70 1/2 or older make a tax-free contribution this year and next year straight from an IRA to a charity. The donation can be as high as $100,000.
The money bypasses the IRA owner and goes straight to the organization, so the donor avoids realizing the income or paying taxes on it. That's a financial bonus for the donor, because you don't have to claim the distribution as income or pay taxes on it. The opportunity essentially allows you to give more than you might have otherwise.
If you have a pile of assets outside your IRA that you might want to donate, you can give stock or property directly to the charity of your choice. Instead of selling the property or stock and realizing the capital gains, you can often avoid realizing the capital gains and paying the associated taxes by donating the shares directly. In most cases, you can also deduct the full current value of your shares, just as you would do had you donated cash.
One donation method that can get you something in return for your gift is a charitable gift annuity. It's essentially an agreement between you and a charity in which you give the charity a certain amount of money or stock and the charity agrees to make regular payments to you or anyone else you choose.
This can be a very flexible and complex arrangement. It still entitles you to a certain amount of charitable deductions, and it requires a long-term commitment to the charity of your choice. Not all organizations have the means to set up the annuity, so you'll want to talk to the charity's gift advisors.
If you're not so flush as to have a massive IRA or a huge pile of assets just waiting to be donated, you probably have some unused stuff hanging around the house. Your goods may mean cold, hard cash to charities that run resale shops, and your donation could mean a deduction from your taxes. New rules (that pension law, again) require that your donated stuff be in good condition to qualify for the tax break. Make sure to get a receipt.
You might even think about donating that old beater of a car you've been planning to replace. Recent changes to the tax laws regarding vehicle donations make this idea a little tricky. In most cases, you'll get to deduct the amount of money that the charity gets when it sells your vehicle. If you think you could do better, consider selling your vehicle or your stuff and donating the cash proceeds to the charity of your choice.
An endless variety of trusts and estate-planning techniques offer other creative ways to give to your favorite charity. If you're considering a sizable donation through any of these means, you'll want to research the charity thoroughly, talk to the organization's fundraising officials, and probably talk to a financial or tax advisor. It will take a little homework, but you'll feel good for making the contribution.
If you're in search of a worthy cause to donate to creatively, consider the five charities chosen for this year's Foolanthropy drive. The Motley Fool will be donating an extra $10,000 to the charity that garners the most donations. The other four will split the proceeds from the "My 2 Cents Campaign," which adds $0.02 to the pot for every post on the Fool discussion boards in December. There's even a dedicated discussion board for all things Foolanthropic. How's that for creative donation?