Making Year-End, Charitable Gift-Giving Decisions

“No one has ever become poor by giving.”   — Anne Frank

You can count on it. For every holiday greeting card you’ll receive this year, you most likely will get an equal number of traditional “end-of-year” appeals from worthwhile local, national, and international charitable organizations. They hope that they, too, might reap some benefit from this “season of giving.”

As you begin contemplating your year-end, charitable-giving decisions — particularly if you have received a windfall this year from the sale of a business, an inheritance, or the sale of appreciated securities — perhaps this is the year you should give some thought to setting up a charitable gift or donor-advised fund.

Here is how it works.

A donor-advised or charitable gift fund can be established by an individual, a family, or a group using cash or appreciated securities. 

You claim an immediate tax deduction at the time the fund is established and when future gifts are made to increase or replenish the fund. 

You then instruct the manager of the fund to make distributions whenever you choose. There is no deadline to make distributions. The distributions can be made to any domestic charity eligible to receive contributions under the Internal Revenue Code.

You can establish a donor-advised fund at the Central New York Community Foundation with a minimum of just $7,500. The fund can be named whatever you would like (such as the Jones Family Fund) and you will receive an immediate income-tax deduction. 

The Community Foundation will invest and manage the funds until you are ready to suggest donations to your favorite charities. You can distribute as little or as much as you want to the charities of your choice — at a time that is right for you, today, tomorrow, or next year. You can think of the donor-advised fund as an alternative to setting up a cumbersome and potentially costly private foundation. The Community Foundation charges donor-advised funds an annual administrative fee that is the greater of $500 or 1 percent. 

The United Way of Central New York does not offer donor-advised funds. However, the United Way is very willing to work with donors on many other forms of charitable gifts including but not limited to planned gifts, legacies, and bequests. 

There is no question that charitable gift and donor-advised funds are growing in popularity, particularly among wealthier donors, who actively use their funds to support favorite charities and causes, regardless of economic conditions. Summarizing the findings of a recent study of more than 1,000 organizations by the National Philanthropic Trust, the Chronicle of Philanthropy reported that gifts to donor-advised funds grew 23 percent — more than $17 billion — in 2013. That pushed the assets of the charitable accounts to a new high of nearly $54 billion. 

According to the National Philanthropic Trust’s 2014 study, contributions to donor-advised funds reflected about 5.2 percent of all charitable gifts, edging up from the 4.3 percent that the trust reported in its 2013 survey. In 2013, the number of donor-advised funds increased by 5.7 percent to 217,367, compared to the previous year. And, the number of private foundations totaled 84,350 in 2013, up 7.3 percent, according to the Foundation Center. 

Although donor-advised fund assets are dwarfed by the amount of money controlled by foundations, according to the Chronicle of Philanthropy, the wealth of the advised funds grew at a faster clip. Last year, foundation assets grew 5.7 percent, to $615 billion.

While it will be hard to repeat the 2013 growth in charitable gift and donor-advised funds, especially since the charitable tax deduction does not appear to be in jeopardy right now, Eileen Heisman, president and CEO of The National Philanthropic Trust, is confident contributions to donor-advised funds will grow “in the double-digits” this year, barring a large market slump or late-year economic troubles, notes the Chronicle.

Americans are the most generous society in the world, donating well over $300 billion to charitable organizations annually. Some of us give of our time in volunteer efforts. Others give financial support in many different ways, including the donor-advised structure described above. 

As you contemplate your year-end giving, remember the quote above from Anne Frank. In addition, from my own office of stress reduction, keep in mind that one out of every four New Yorkers are eligible for Medicaid benefits, trying to provide necessary supports for the poor and disabled among us. It is a known fact that giving is a form of stress reduction. Therefore, keep the following individuals in mind as you consider your year-end contributions:

- The homeless

- Wounded warriors

- Children without a parent

- The nursing-home resident that hasn’t had a visitor in months or sometimes years 

- Those among us with physical and/or behavioral disabilities

- As always, your favorite charity of choice

Give what you can in terms of time and dollars to those in need. Giving during the holiday season, coupled with a serious diet and weight-loss resolution starting Jan. 1, will certainly reduce your stress and improve your outlook on life. 

Best wishes for a safe and happy holiday season!       

Gerald J. Archibald, CPA, is a partner in charge of the management advisory services at The Bonadio Group. Contact him at (585) 381-1000, or via email at 

garchibald@bonadio.com