Tips on Charitable Giving
The Charitable Checking Account℠ Service: Finding Your “Light Bulb” Moment
vice president, Development
You know the feeling - that unforgettable “aha” moment of realization when discovering a solution to a dilemma. For many Dayton Foundation donors, opening a free Charitable Checking Account℠ (CCA) was their light bulb moment in helping to solve their charitable giving and tax reporting needs.
Think of it as a personal checking account for giving. You deposit money into a CCA, receive an instant tax deduction, and then direct the Foundation to send contributions to any 501(c)(3) IRS-approved charities you choose - locally, nationally and even internationally. You make the decisions, and The Dayton Foundation does the work. There’s no minimum cost to set up or use a CCA, and no minimum balance is required.
But what about situations when you want to do something other than just write a check? Consider these three examples.
1. “I want to create a nonprofit, but I don’t know where to start.”
Serving the greater good can be accomplished in many ways, but starting a charity can be costly and an administrative nightmare.
Under the Foundation’s charitable tax-exempt status, you can solicit tax-deductible donations for a CCA, then award grants to organizations that meet your charitable intent. Once the CCA’s balance has grown to $25,000 or more, you may move the assets into an invested fund through the Foundation where it will earn interest while growing the principal for long-term use.
The CCA Service also is a good option for existing nonprofits that want to start or grow an endowment and may not have the capabilities to accept complex gifts, such as stocks or other non-publicly traded assets. The Foundation can do this, plus we provide a tax receipt to the donor at the time the gift is received. We also accept gifts online via credit card.
2. “I had a great financial year, but I know my taxes are going to be sky high.”
For individuals who need tax deductions and make regular gifts to charity, the CCA Service is an excellent option. You can park assets in a CCA in one year, then disperse to charitable organizations at a later date. It can be especially effective if you have highly appreciated securities. By transferring the securities to The Dayton Foundation before they are sold, you gain the asset’s full value for charitable purposes, avoid paying long-term capital gains taxes on the increased value and deduct the full amount based on the current fair market value.
3. “I want to establish a private foundation to perpetuate my family’s charitable legacy.”
Private foundations are a great community asset, however they also have a multitude of administrative requirements and expenses. Unlike private foundations, CCAs are not required to spend five percent annually. Also, tax returns and the record keeping required by the IRS are handled by The Dayton Foundation.
You can name your CCA as a beneficiary in an estate plan and designate family members or friends to serve as advisors to distribute grants to charity on your behalf. Plus, you can give grants anonymously, if you prefer, or in your family’s name.
If you haven’t used the Charitable Checking Account Service, I recommend that you give it a try and discover your “light bulb” moment in making charitable giving easier. To learn more, contact me or Joe Baldasare, chief development officer, at (937) 222-0410.
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