Is there a smarter way to give this year?
Beth had donated to her favorite charity for many years. The mission was near and dear to her heart — it was her way of being involved, though her schedule and, later, her health never allowed her to volunteer or meet the people her gifts served directly.
When she retired, her income decreased. It bothered her that she could no longer support the ministry at the same level she once had. Her arthritis didn’t permit her to volunteer. But she kept writing her check every month, even as it grew smaller.
Then she attended an estate planning class — and heard something for the first time in years that made her feel like she could give a larger gift again.
The financial planner explained that Beth didn’t have to give from her income. She could support the mission more generously from her wealth than she ever had while writing checks.
Having worked for 35 years, Beth had quietly accumulated assets in stock and a retirement account.
She simply hadn’t thought of them as tools for giving. She realized that she had options, and even within a limited income, Beth could still support the mission she loved.
Beth discovered the power of wealth-based giving
Beth learned she could give generously, reduce her taxes, and continue to grow her savings — all at once. Two strategies stood out.
She could give stock and avoid capital gains taxes. Years earlier, Beth had purchased Apple stock. The financial expert explained that if she donated the appreciated shares directly to charity rather than selling them first, she could avoid capital gains tax. As an added bonus, the charity would receive the full market value.
This also gave her the choice to use the cash she’d normally have given as a check, to repurchase shares at the current price, and reset her cost basis for the future.
She could also give a Qualified Charitable Distribution (QCD). Beth found out a few other details about her individual retirement accounts. She learned she could make a qualified charitable distribution from her individual retirement account (IRA) directly to the charity, tax-free.
For Beth, this meant she could support her charity and lower her taxable income in the same transaction.
So, how does giving out of income vs. giving out of wealth work in the real world?
Say Beth wanted to make a $5,000 gift to the charity.
Option 1 — Write a check: She gives $5,000 in cash. Beth may be able to claim a tax deduction, but then she’s out $5,000 in cash that she may need for unexpected expenses.
Option 2 — Donate appreciated stock: Beth decides to transfer Apple shares worth $5,000 that she originally purchased for $500. She avoids capital gains tax on the $4,500 gain. But her charity receives the full $5,000 in value. Then, if she wishes, Beth can then use $5,000 in cash to repurchase shares at the current price, resetting her cost basis going forward.
Option 3 — Donate from her retirement account using a Qualified Charitable Distribution (QCD): Another option that Beth has is to work with her financial advisor to transfer funds from her retirement account directly to charity. This allows her to make a distribution and share her wealth without impacting her current income, which could be a substantial tax savings.
Option 4 — Donor-Advised Fund (DAF): For donors who have opened a Donor-Advised Fund, they can reach out to their fund administrator and request a grant to the charity.
The result of all four options mean Beth can support her charity at a higher level, possibly reduce her tax bill, and ensure that her income is stable.
Beth also realized the importance of securing her legacy
Beth also began thinking beyond her lifetime. She had children and convictions. She worked with her financial advisor to make sure she could take care of herself as she grew older, give gifts to her children, and support her charity in the future.
She decided to make an intentional plan for her assets and direct her wealth toward the people and causes she valued the most.
She set up a will and made sure that the charity was listed as a beneficiary on some of her retirement accounts.
Beth added a single sentence to her will, naming her charity as a beneficiary. It cost her nothing today, changed nothing about her current finances, and guaranteed that her values and the mission she believed in would keep bearing fruit and changing lives in her memory.
Many friends of Care Net find themselves in Beth’s position.
As this year draws to a close, can you make a gift using one of these options?
During November and December many people reflect on the past year.
As you review your finances, would you prayerfully consider a gift of stock or a retirement distribution that will support Care Net in the coming year?
With the advice of your financial advisor, you may be able to use some of these practical options to reduce taxes, support Care Net, and keep your day-to-day income secure.
When you give out of your wealth — not just your income — you ensure your values and the causes you believe in will keep shaping the future for generations to come.
You can also make a lifetime of difference for women and babies in south central Wisconsin by adding a single line in your will.
I give and bequeath to Care Net Pregnancy Center of Dane County ___% of my total estate (or $___). Our EIN # is 39-1472091.
If you mention Care Net in your will, will you let us know? We’d like to thank you and recognize you as one of the donors who have given a gift that will last for lifetimes.
Together, we can ensure Care Net is equipped to support moms, dads, and babies throughout Dane County in 2027 and beyond.
For more information on donating stock or other appreciated assets, please speak contact Sara at SaraP@CareNetDane.org or Patricia at PatriciaM@CareNetDane.org or call 608-259-1606.
Please Note: Tax laws affecting charitable giving change frequently. Care Net Pregnancy Center of Dane County does not offer tax-planning advice. Please consult your financial advisor or tax professional to determine how these strategies apply to your specific situation.