End-of-Year Charitable Giving, Tax Deduction Deadline Nears

Tips For Charitable Giving: Research Nonprofit Organizations; Understand Current Laws To Maximize Tax Deductions

Seattle #1 in online giving  

SEATTLE, Dec. 28, 2012 /PRNewswire-USNewswire/ -- End-of-the-year charitable giving to favorite nonprofit organizations is on the to-do list for many King County residents this week, inspired by a spirit of generosity as well as a feeling of uncertainty as Congress debates the future of the charitable tax deduction.

The average person makes 24 percent of his or her annual donations between Thanksgiving and New Year's Eve, according to research from the Center on Philanthropy.  There is speculation that that may increase this year, as people step up their giving in preparation for a potential change in the charitable tax deduction.  Congress is debating whether to eliminate or limit the tax benefit for charitable donations as part of the broader "fiscal cliff" negotiations.

"Generosity, the holiday spirit and year-end tax planning are a powerful combination in philanthropy," says Norman B. Rice, president and chief executive officer of The Seattle Foundation.  "The uncertainty around the charitable tax deduction may prove to be a catalyst that spikes year-end giving even more than usual."

The Seattle Foundation, which manages more than 700 charitable giving funds for families and businesses in King County, is seeing a steady flow of gifts as we approach year-end, including many in the form of appreciated stock. Under current tax law, donations of long-term capital gain assets, such as appreciated stock, generally qualify for a deduction at the fair market value, enabling donors to avoid capital gains tax on the appreciation. This strategy is appealing for two reasons. Stocks, in many cases, have regained value lost in the recession and given the potential of charitable deduction limits in 2013, it may be a tax-wise and generous gift.

Strategies for End-of-Year Giving

The Seattle Foundation advises people making end-of-the-year gifts to consider the following:

Open a donor advised fund  If you are concerned about the future of the charitable tax deduction, this may address your fears.  A donor advised fund is a charitable giving account that allows you to donate now and secure a deduction for 2012, and make decisions in the future about specific gifts to nonprofits.  The money in your donor advised fund is invested and can grow tax-free, as you recommend when and where gifts are made.  Donor advised funds are available from community foundations, such as The Seattle Foundation, and some national financial services firms. 

"A donor advised fund is the perfect tool for people who want to make a gift by year-end but are uncertain as to how they specifically want their charitable dollars distributed," said Rice.  "It also makes giving much easier, allowing people to focus on their philanthropy free of checkwriting and reporting as we handle all of that."

Research the nonprofits  Seek out organizations that match your specific interests and demonstrate financial health, accountability and transparency, and meaningful impact.  People interested in finding organizations and causes to support have a very useful resource in The Seattle Foundation's website, which offers a directory of more than 1,500 nonprofits serving King County. The site makes available for the first time The Seattle Foundation's internal evaluations of nonprofit organizations, helping you make the wisest decisions possible with your giving dollars.  At the website's "Giving Center," you can search nonprofits to find groups that best match your interests by mission, geography, clients served and other criteria. A search of nonprofits for the topic "housing," for example, can be refined to organizations specifically supporting homeless individuals with special needs on the Eastside.  

Make Unrestricted Gifts  If you are confident in the health and management of the nonprofit organization, then make an unrestricted gift that will allow it to use the funds where they are most needed.  Nonprofits face substantial reductions in government funding and unrestricted gifts to support basic operations, rather than earmarked for individual programs, are critical. 

Focus Your Giving:  Consider making fewer, larger gifts and focusing your giving in one area.  Larger gifts have larger impact, which is important to you as the donor.  More targeted giving also enables you to become more focused, passionate and knowledgeable about the causes you care about.  And from the recipient's perspective, keep in mind that nonprofits have transaction and cultivation costs associated with every gift, regardless of size.

Seattle Ranks #1 in Online Giving

Given our region's standing as a leading technology hub, it's no surprise that Seattle was #1 in Convio's annual ranking of the top ten most generous large cities in online donations during 2011, based on per capita giving.  The 2011 rankings are based on the almost $1.355 billion in total online donations generated through the Convio online services used by nonprofit organizations across the nation.   Seattle held the fourth ranking in 2010.  (Note:  The Seattle Foundation does not use Convio services.)

This is good news for King County nonprofits, who can expect to see a spike in online gifts in the coming days.  Twenty-two percent of all online gifts to charities are made in the last two days of the year, according to Network for Good. 

The Seattle Foundation's web site facilitates online giving to hundreds of nonprofit organizations.  It is also the centerpiece of GiveBIG, the day-long online giving campaign held on May 2, 2012 that asked people to visit www.seattlefoundation.org and donate to their favorite nonprofit organizations.  People made a total of more than 37,000 online gifts totaling $7.4 million for GiveBIG, and those donations were matched by $800,000 from The Seattle Foundation, local companies and philanthropists. The success of GiveBIG boosted online gifts made through www.seattlefoundation.org to $7.7 million up from $3.6 million in 2011. 

"Online giving is growing dramatically here and across the nation," said Rice.  "Donors favor the ease and convenience and it enables people to respond very quickly in times of crisis and national disasters."

Established in 1946, The Seattle Foundation fosters powerful and rewarding philanthropy to make King County a stronger, more vibrant community for all.  It is the oldest and largest community foundation in the region, with more than 1,200 family, business and nonprofit funds and assets of more than $600 million. The Seattle Foundation awards more than $60 million in grants each year. Learn more about the Foundation and visit the Giving Center at www.seattlefoundation.org.

SOURCE The Seattle Foundation