APRIL 2021
THE BIG FOUR:
CURRENT GIFTS TO SCOUTING
Now that the election is behind us, we have a reasonably good look at the state of charitable gifts – at least for now. For most donors, the previous four best giving options are STILL the four best options for those who want to invest in Scouting. Of course, all donors should visit with their own advisors to discuss any such gifts.
1. Gifts of appreciated property. Non-cash gifts of appreciated property – gifts of assets such as stocks and securities – are often highly effective ways to maximize a gift with “pre-tax” dollars. Gifts of non-cash assets owned by the donor for more than one year will: a) avoid the capital gains tax, and b) produce a charitable tax deduction for the fair market value of the stocks or property. Even donors who don’t itemize may benefit from pre-tax gifts of assets compared to after-tax gifts from cash flow.
There are many types of non-cash gifts that continue to be important and effective: gifts of land, art, rental property, collectibles, copyrights, and many others. Donors should discuss them with their own advisors; some have specific guidelines for transfers and deductions.
2. Cash gifts with special 2021 rules. For donors who want or need to make gifts of cash, there are some special benefits in 2021. Normally, donors who itemize may deduct cash gifts up to 60% of their adjusted gross income (AGI). For 2021, this limitation is removed. This year only, outright gifts of cash are deductible up to 100% of a donor’s AGI. Donors considering this should discuss it fully with their advisors. Also, donors who do not itemize now get an above-the-line charitable tax deduction of $300 ($600 married, filing jointly).
3. Direct transfers from IRAs. Donors age 70½ and older may still make direct charitable transfers totaling $100,000 a year from traditional IRAs without being taxed on the withdrawal. These are qualified charitable distributions (QCDs). Also, for donors age 72 and older who must take annual Required Minimum Distributions, QCD’s will count towards those distributions. This makes QCDs particularly effective for donors who do not itemize or do not currently need extra income from their IRAs. It also helps reduce the size of the IRA, a possible benefit to the estate.
NOTE: Because of the necessary lead time, donors who want to use QCDs for year-end gifts should contact their IRA plan administrator early in December to request them.
4. Donor Advised Funds – charities in 2020 saw a huge increase in gifts from donor-advised funds held by Schwab, Vanguard, community foundations, the BSA Foundation, and many others. Assets held in a donor-advised fund have already been given away, so distributions are not “new” or out-of-pocket gifts for donors. Donors just need to contact their fund administrator to designate part of their advised fund to the council. Many funds allow this to be done online or simply by email request.
WHAT’S GOING TO CHANGE BEFORE YEAR-END?
The short answer is, who knows. We have no idea how easy or difficult it will be to get tax law changes through Congress. Based on what we’ve heard, we can at least expect attempted tax law changes such as:
1) limiting itemized deductions and increasing capital gains tax for taxpayers making more than$400,000;
2) increasing the top income tax rate from 37% to 39.6%;
3) increasing the estate tax rate to 45%; and
4) repealing the step-up basis for estate transfers. There is also a big change slated for 2025 that could be accelerated by Congress: greatly reducing the lifetime gift and estate tax exclusion, from $11.7 million per person down to the 2017 level of $5 million.
As always, our best recommendation to donors: discuss all charitable gifts and tax decisions with their own personal advisors. The best news of all is that the primary motivator for most donors is to support the mission and create Scouting legacies, not generate tax benefits.
Thank you, and please contact the BSA Office of Development or your own council advisors with any questions.
Boy Scouts of America Office of Development
www.bsafoundation.org
Contact: colin.french@scouting.org
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