Depending upon what you donate, there are different tax benefits. This can have a huge effect on how much you can give today and in the future. Your financial advisor can work with you to compare the tax savings and investment growth potential of different donation strategies and determine whether it’s more advantageous for you to donate cash, insurance (including segregated funds) or securities (including stocks, bonds or mutual funds).
Here are examples of how you can make more of an initial $50,000 donation by taking advantage of the tax credits and investment growth potential available with a charitable giving fund.
Donating Cash or Insurance
A $50,000 cash donation would result in a tax credit of $22,500. The out-of-pocket cost to you of the donation is only $27,500. Over 10 years, the fund could grow an initial $50,000 donation to $79,787 and all of the growth is tax free.
Donating Securities (in-kind)
You donate securities in-kind that have increased in value. Originally purchased for $35,000, they are now worth $50,000. This would result in a tax credit of $22,500. There’s no tax on the capital gain of $15,000. By subtracting the $22,500 tax credit from the original purchase price for the securities means that the out-of-pocket cost to you of the donation is only $12,500.
For more information about planned charitable giving speak to your financial professionals.