It?s better to give than receive. It?s great if a tax break is involved.
The holidays are traditionally the time when people decide to give back to their school, church or favorite charity. It?s also a time for donors to think about how to get the best tax deduction for their gift.
“This is our busiest time of the year,” said Ann Boyce, president of the T. Rowe Price Program for Charitable Giving. “The end of the year is really when people are making their charitable giving decisions.”
Boyce oversees T. Rowe Price?s Program for Charitable Giving, a national, donor-advised fund managing about $70 million.
To participate, individuals make tax-deductible contributions to the program, which are invested and can grow over time. The tax deduction occurs when the money is placed in the fund, and the donor can decide at any time to have money from the account distributed to public charities of his or her choice.
“Participation is increasing all the time,” Boyce said. “People still are not fully aware of the advantages of donor-advised funds.”
Contributions to charitable organizations can be deducted up to 50 percent of adjusted gross income, said Phil Carrasco of Hagerstown-based Cornerstone Advisors.
“When people do give money, they want to do it in a tax-smart way,” Carrasco said.
Instead of cash donations, people can also give gifts in the form of stocks and mutual funds. “It?s pretty common. Cash isn?t necessarily the best way to do it,” Carrasco said.
Americans gave about $295 billion to charitable causes in 2006, up from $283 billion in 2005, according to theGiving USA Foundation at Indiana University?s Center on Philanthropy. Individuals gave $200 billion, with corporations and foundations giving the remainder.
The average American gave about 2 percent of income, according to the Giving USA Foundation, as giving has become a cultural norm.
“A lot of people feel the holidays have become a little bit overcommercialized,” said J. McCray, board member and treasurer of the Alternative Gifts of Greater Washington, a nonprofit that promotes and sponsors charity gift events. “They want to do something meaningful.”
