Here are five tax-wise giving ideas to get the most out of your year-end donations, with tax day in mind. Each strategy allows you to support the work of Bible translation while providing a significant tax savings.
1. IRA Charitable Rollover
IRA charitable rollovers are easy to do, and are usually the “best way” to give cash, from a tax perspective. If you are age 70 1/2 or older, you can make a qualified charitable gift from your Individual Retirement Account (IRA) directly to Wycliffe. Such gifts go toward satisfying your annual required minimum distribution, and are tax positive as they are excluded from your income and avoid limits on deductions.
2. Gifts of Appreciated Assets
When most people think about making a charitable gift, they give cash from their checking account — to the exclusion of their other assets. A gift of an appreciated, long-term capital gain asset — such as securities, real estate, business interests or tangible personal property — can provide you with additional tax savings. In addition, since such gifts do not come out of cash flow, many people have found their gift can make a significantly larger impact than they ever thought possible.
3. Missionary Partnership Plan
Do you partner with a Wycliffe missionary? The Missionary Partnership Plan (MPP) allows you to make a lump-sum gift to provide support for the ministry of a Wycliffe missionary. Your contribution of cash or an appreciated asset (see above) is eligible for a current-year tax deduction. The gift goes into an interest-bearing account and makes distributions to the missionary’s ministry account of an amount and frequency that you predetermine. Your support from the MPP continues for as long as the missionary is actively serving with Wycliffe, or until funds are exhausted. And you can always make additional gifts into the plan.
4. Charitable Life Income Plans
Are you in need of additional income to supplement your retirement funds? Would you also like to make an impactful substantial gift to Wycliffe? If so, you might consider a charitable gift annuity or charitable remainder trust. You’ll receive a charitable income tax deduction for a portion of the value of your gift and income payments for the rest of your lifetime. It’s a tax-wise way to increase or supplement your retirement income, while supporting Bible translation.
5. Donor-Advised Fund
If you are in need an end-of-year tax deduction but want more time to make thoughtful giving decisions, a donor-advised fund (DAF) is a giving strategy to consider. It’s easy to set up and your gift of cash or an appreciated asset will provide you with an immediate charitable income tax deduction (before year-end) for the asset’s fair market value. For contributions of appreciated capital assets, you can also avoid the capital gain tax. Thereafter, you can take your time in the months to come deciding how to designate your charitable giving; there is no deadline for making distributions.