Unique challenges emerged for philanthropy in 2024:
- High interest rates and inflation continued to impact both donors and nonprofits most of the year.
- Nonprofits had to compete for donor attention during a noisy presidential election year.
- Charitable giving reached $557.16 billion but declined 2.1% annually when adjusted for inflation.
- Donors responded to local, national and international relief efforts related to flooding, hurricanes and ongoing conflicts in Ukraine, Israel and elsewhere.
Despite these political, economic, and social factors, San Diego Foundation (SDF) donors and partners continued to give to and through SDF at high levels. In our fiscal year ending June 30, 2024, donors granted more than $114.5 million to over 2,300 nonprofits and contributed $111 million to SDF charitable funds.
Thank you for your generosity.
As data in the San Diego Economic Equity Report and State of San Diego Latinos Report reveals, ongoing support is critical to addressing inequities in our region.
With the 2024 Giving Season upon us and IRS tax deadlines drawing nearer, here are eight tax-smart charitable giving strategies for you to close out the year. Don’t hesitate to contact our Donor Services Team to assist in your philanthropy during the Giving Season at (619) 814-1332 or donorservices@sdfoundation.org.
8 Giving Strategies for the Giving Season
1. Give Cash
Giving cash, usually in the form of a check or wire transfer, to a nonprofit organization or your donor-advised fund (DAF) enables you to claim a tax deduction of up to 60% of your adjusted gross income (AGI) in any one year when you itemize tax deductions. You can carry forward contributions exceeding that limit for up to five subsequent tax years.
2. Donate Appreciated Securities
Direct gifts of long-term, appreciated securities, including publicly traded stock, publicly traded bonds, and mutual fund shares, to your DAF offer important advantages.
The full fair market value of your gift is deductible as a charitable contribution up to 30% of your AGI each year when you itemize deductions. You can carry forward contributions exceeding that limit for up to five subsequent tax years.
Also, you eliminate the capital gains tax you would incur if you sold the assets and donated the after-tax proceeds, which could increase your amount available to donate by up to 20%.
In the example below, “Sally” has $100,000 in long-term appreciated stock, with a $10,000 cost basis.
Assuming a 35% income tax rate and a 15% long-term capital gains rate, the DAF allows Sally to avoid tax on her $90,000 gain and give more to charity ($13,500).
Conversely, if you decide to sell depreciated securities at a loss, you may choose to donate cash from the sale of those securities and claim a tax deduction of up to 60% of your AGI from your cash donation.
3. Add a Planned Gift to Your Estate Plan
Did you know that giving back can last a lifetime and beyond?
Many SDF donors revisit their estate plans with their professional advisors during Q4, which often presents an opportunity to consider establishing a planned gift during the Giving Season.
SDF legacy funds provide lasting benefits for donors, families and causes that matter.
By setting up a legacy fund, you can direct the lasting change you want to make in our region and beyond. Legacy gifts come in all shapes and sizes – and from a variety of assets, including:
The best part? If you already have a DAF with us, you can simply amend your existing fund agreement and work with us to ensure your DAF is named in your estate plan as the gift you wish to make upon your passing.
4. Donate Complex Assets
In addition to publicly traded securities, SDF accepts gifts of complex assets, including real estate, business interests, privately-held stock and more.
We specialize in simplifying the process of converting complex assets into charitable contributions. We accept asset gifts that many other nonprofits and commercial brokerage firms do not have the ability or the experience to accommodate.
5. Give a QCD from Retirement Assets
Introduced in 2006, Qualified Charitable Distributions (QCDs) help offset the Required Minimum Distribution (RMD) income tax burden from taxpayers and encourage charitable giving.
The law allows a taxpayer age 70.5 and up to donate up to $105,000 total to one or more charities or eligible initiatives directly from a taxable individual retirement account (IRA) instead of taking their RMD. Because RMDs typically count as ordinary income, they could push you into a higher income bracket, negatively impacting your retirement benefits and income taxes. Donors can also direct a one-time, $50,000 QCD to a charitable remainder trust or charitable gift annuity as part of the 2023 SECURE Act 2.0 legislation.
QCDs have become a popular way for donors to support causes they care about while offsetting RMD income taxes.
Although QCDs cannot be gifted to DAFs, you can gift QCDs to SDF strategic initiatives or align your giving with the Fifty & Forward Campaign target areas: Education, Children and Families, and the Environment.
They provide many potential benefits and may be a suitable giving strategy if you:
6. “Bunch” Charitable Donations
The 2017 Tax Cuts & Jobs Act nearly doubled the standard deduction for most taxpayers, which has resulted in more taxpayers opting for the standard deduction rather than itemizing, costing taxpayers the ability to write off charitable donations.
If you and/or your family fall into this category, you can still get a tax benefit by “bunching” – or doubling up – your charitable donations in 2024.
Let’s assume a couple typically donates $6,000 to charity each year and this year, they have the following expenses:
The total of these items is $25,500 — less than the $29,200 standard deduction for couples in tax year 2024. So, they claim the standard deduction and will not itemize. In other words, they will deduct $29,200 regardless of the $6,000 they donated to charity.
Instead of donating $6,000 in a single year, this couple could consider “bunching” its donations by making two $6,000 donations, for a total of $12,000 in 2024. And, make no donations next year in 2025.
Using the same example above, an additional $6,000 (totaling $31,500) would put this couple over the standard deduction, and they would itemize. Next year, they might not itemize.
The same “bunching” strategy would be repeated every other year. Only the timing of the donations changes. The amount of support stays the same over time.
7. Combine Tax-Loss Harvesting with a Cash Gift
In this market, you may have publicly traded securities that have declined in price below their cost basis (purchase price). If you sell those securities at a loss, capital losses can offset capital gains from better-performing securities and/or up to $3,000 of ordinary taxable income. This process is called tax-loss harvesting.
Donors who itemize their deductions can then claim a charitable deduction for donating cash from the sale proceeds. If capital losses are greater than capital gains and after reducing $3,000 of ordinary income, the net remaining loss may be carried forward to offset capital gains or ordinary income in future years.
8. Align Your Giving with SDF Fifty & Forward Campaign Priorities
As San Diego Foundation celebrates its 50th anniversary, consider aligning your giving with SDF donors through the Fifty & Forward Campaign, the most ambitious fundraising and grantmaking campaign in our history.
With your help, SDF will grant $500 million to realize our region’s greatest opportunities in three targeted areas: Education, Children and Families, and the Environment – and raise $1 billion to help shape our community’s future.
While these priority areas represent three of San Diego’s most pressing needs, the campaign provides flexible opportunities for you to align your giving in a way that reflects your values.
This Giving Season, consider the power of aligned giving to create a better future for all who call San Diego home.
Learn more and get involved at SDFoundation.org/50.
Year-End Contributions and Grants
Click here to view critical dates to ensure that your contributions and grant recommendations are received and processed by December 31, the IRS deadline for yearly tax deduction eligibility. For some assets, these dates fall in November.
Grants from your SDF fund must be made by December 19 at 12:00 p.m. to be processed this calendar year.
Our team is here to help you find organizations that align your priorities with impactful work in our communities. Contact our Donor Services Team at (619) 814-1332 or donorservices@sdfoundation.org to speak to us about year-end giving.
