How to give away your money
In the new political reality, we are seeing the end of millions of dollars in subsidies to global charities and organizations that feed and vaccinate the most vulnerable. We are witnessing educational institutions close due to massive federal employee layoffs, and funding cuts to medical institutions are threatening vital vaccine and cancer research.^2 And it only seems to be the beggining. Fortunately, as the tax law is as such now, those who are able can still donate to important causes. Here are a few tax-savvy ways to do it.
If you have taxable investments, you can gift them to a donor-advised fund (DAF)^1 and take an immediate tax deduction as well as remove the capital gain of that investment from your account. The DAF will immediately sell the investment and send the proceeds to your charity of choice and at your time of choice.
Those with an IRA and who are at least 70.5 years old can initiate a Qualified Charitable Distribution (QCD). For example, if you don't need your required minimum distribution, you can have the funds sent directly to the charity of your choice, allowing you to avoid the tax on the distribution.
A foundation nonprofit can be set up for those who have significant assets and who might like to set up an intergenerational legacy or have much greater flexibility in gifting to organizations or people around the world. Only here can you hire staff and pay them salary from the foundation account as well as create a mission that's unique and special to you.
A charitable trust can be created if you have significant assets and would like to donate to that trust. You can direct it to receive income for life while taking the deduction of the entire gift now. For example, a charitable remainder trust would allow you to donate the house you live in but also give you life estate to the house. At death, the house would then be given to the charity but you would take the deduction now.
You can make a noncharitable gift to any person for up to $19,000 per year, or $39,000 when including a spouse. Amounts above this, you would have to file a gift tax return but you can apply this to your lifetime estate credit or pay the tax of the gift in the year of the gift.
For non-stock related gifts, for amounts over $5,000 including cryptocurrency or other real property, you will need an official appraisal to go with your tax reporting. As always, consult a tax advisor before initiating a major gift.
As we continue to monitor the reshaping of the US and the world, it's important to remember that you have a voice. What you invest in, who you gift to, and what you buy as a consumer can send a message of resiliency. Collectively taking action will make a far bigger and quicker impact.
At Eureka Wealth Management I help my clients monitor their finances as it relates to the new political reality. I also manage investments and provide tax and estate strategies. Call for a free initial consultation at (760) 537-0791 or book online at eurekawealthmanagement.com.
^1: DAFs include Fidelity Charitable or Daffy
^2: List of organizations at risk of cut: https://www.nytimes.com/interactive/2025/01/28/upshot/federal-programs-funding-trump-omb.html