Giving Vehicles
CHI Memorial Foundation is a registered 501(c)(3) charitable organization and all contributions are tax deductible to the full extent of the law. The Foundation operates under the legal entity Memorial Health Care System Foundation, Tax Identification 62-1839548. There are many different ways to give with potential tax benefits. CHI Memorial Foundation can accept gifts in the following ways: Cash, appreciated assets, donor advised funds (DAF), IRAs, insurance, and other potential vehicles. The Foundation accepts pledges, payable over 3 years. In some cases pledges can be paid over a 5 year period. Please consult your financial advisor or accountant to determine the best gift vehicle based on your tax situation.
1. Gifts of Cash
When you donate cash to a public charity, you can generally deduct up to 60% of your adjusted gross income.
2. Gifts of long-term appreciated assets
Capital gains taxes are eliminated when you contribute long-term appreciated assets directly to a charity. Instead of selling the assets yourself and donating the after-tax proceeds. When you assume 20% for federal long-term capital gains taxes, plus a 3.8% Medicare surtax, this leads to a potential increase of 23.8% of both your tax deduction and your charitable contribution.
3. Gifts of Stock
If you have stock has increased in value from the time of purchase, you can avoid paying capital gains tax by donating the security to a qualified charitable organization. When an appreciated security held for at least a year is donated to a charitable organization, its fair market value may be itemized as an income tax deduction. The resulting tax savings could be factored in to make a larger donation. 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 $10,000 do not require an appraisal. If your stock has risen in value since purchase, donating it directly is preferable, but if it has lost value, it may be more advantageous to sell it first and then donate the proceeds, so the giver can take the tax loss.
4. Donor Advised Funds (DAFs)
A donor-advised fund is a private fund administered by a third party and created for the purpose of managing charitable donations on behalf of an organization, a family, or an individual. CHI Memorial Foundation is able to accept donor advised funds.
5. IRA Contributions
Money from an individual retirement account (IRA) can be donated to charity. If you have reached the age where you need to take required minimum distributions (RMDs) from your traditional IRAs, you can avoid paying taxes on the money by donating it to charity. A distribution from a traditional IRA normally incurs taxes since the account holder didn’t pay taxes on the money when the money was paid in. But account holders aged 70½ or older who make a contribution directly from a traditional IRA to a qualified charity can donate up to $100,000 without it being considered a taxable distribution. The deduction effectively lowers the donor's adjusted gross income (AGI).
6. Blending Gifts
Making a gift of appreciated securities typically eliminates long-term capital gains exposure, you are limited to 30% of your adjusted gross income (AGI) for deducting contributions of long-term appreciated securities. This is sufficient for most people, but there are some years when you might benefit from a larger current year deduction. In those select situations, you may choose to supplement a charitable gift of securities with a charitable contribution of cash. This strategic combination of giving is an opportunity to reduce your taxable income.
7. Considering Multiple Years of Earning
If your income is particularly high this year, perhaps as the result of a year-end bonus, or you’ve sold a business, benefited from an inheritance or otherwise, consider that charitable contribution deductions may be carried forward for up to five years. You are required to claim the maximum deduction possible in the current year—the deductibility limits are 60% of AGI for cash and 30% for long-term appreciated securities—but you can then carry forward any unused charitable deductions for up to five more years. These carried-forward deductions must be used to the extent possible in the next tax year and are considered after any current year charitable contribution deductions. There is power in front-loading in a high-income year.
Please contact us for more information on how to use these giving vehicles or to learn about other ways to give.
Jake Johnson
Telephone: (423) 495-4387
Jacob.johnson902@commonspirit.org