Charitable Contributions

Dec 2018


We are now in the home stretch for 2018 and it’s the time of year that many people are making their last minute charitable contributions. When it comes to making charitable contributions, here are a few things you should keep in mind.

If you are over 70½, particularly if you do not itemize your deductions and most people in 2018 will not, a great way of making charitable contributions is to use your minimum required distribution. The advantage of this is that you avoid the tax on the amount of your distribution that you give to charity.

If you are not 70½ and thus, not required to take minimum distributions from your retirement account, a good strategy if you are going to make charitable contributions is to use appreciated securities. By using appreciated securities, you still can deduct the full fair market value of the charitable contribution; however, the advantage is you avoid paying the tax on the gain that you had in that security. Therefore, as opposed to just writing a check to a charity, by using appreciated securities such as a stock or a mutual fund, you get an additional tax benefit.

Whether you write a check, give appreciated securities, or even use you minimum required distribution, it is important that before you give to a charity you do your homework about that charity. Unfortunately, there are charities that are nothing more than scams. In other words, the money doesn’t go to accomplish a charitable purpose but rather, goes into the pockets of the lowlifes. In addition, you have legitimate charities that unfortunately are poorly run and thus, a significant amount of the money doesn’t go to accomplishing the charitable purpose but rather, to marketing and salaries. As far as I’m concerned, when you give your hard-earned money to a charity, you want to make sure that the money helps that charitable purpose. Therefore, it is important that you do your homework on a charity before you give your money.

Two places that make it easier to check on a charity are or Both these websites have a wealth of information about charities. My advice is that you go on these websites before you donate money to make sure that not only the charity is legitimate, but that it’s using its money for a charitable purpose.

This time of year the crooks are out in force either by calling you or sending you an email to solicit charitable contributions. Many of these emails look very professional and their name sounds like they are legitimate charities; unfortunately, they are not. The crooks know that this time of year people put their guards down and thus, those people are more apt to be scammed. I cannot stress enough that every charity you give to, you should at a minimum, visit the aforementioned websites to make sure the charity is legitimate.

For those of you who may not have the time to properly research a charity and still get your charitable contribution in this year, you should consider potentially opening a donor-advised trust. In a donor-advised trust you can put your money into this trust and get your charitable contribution, but you don’t have to allocate the money to an individual charity until you have had the proper time to review it. Donor-advised charitable funds have become very popular, and you can establish them at a number of places such as Fidelity and Schwab.

As Americans we are the most generous people on earth. Unfortunately, the crooks know that and try to take advantage of our good nature. We can’t let them do that. Therefore, as you get ready to make your year-end charitable contributions, make sure you spend the time to research the charity and make sure that your money will go to accomplish the charitable purpose that the money was intended for.

Good luck!



Rick is a fee-only financial advisor.  If you would like Rick to respond to your questions, please email Rick at