Is 2017 the Year to Give Appreciated Assets?

Year End Giving Blog Post Graphic

The uncertainty surrounding potential changes to tax law, particularly as it relates to charitable giving, has our attention.  As we move closer to a decision, we feel it is important to share how the possible outcome could impact you.

Both the House and Senate passed bills that make major changes to our tax laws.  They are working to reconcile the bills with the objective of having new legislation signed by December 25.  There is the likelihood that 2017 may be the last year for many of us to benefit from the income tax savings that charitable giving has traditionally provided. 

For charitably inclined people who itemize, now may be a good time to consider accelerating your charitable gifts into the year 2017 by establishing a donor advised fund with a gift of appreciated assets. If the new laws are enacted, that leaves only a few weeks in 2017 to take advantage of tax provisions that may  expire. While your financial planner, accountant and other professional advisors will always advise your personal situation best, we want to encourage you to explore the possible benefits of making bigger gifts with appreciated assets this year. 

 Here are three of the most important things to know about gifts of appreciated assets and setting up donor advised funds:

1. What is an appreciated asset?

An appreciated asset is an investment, including stocks, bonds and mutual funds, worth more today than when it was purchased. Appreciated assets that have been owned for more than 1 year can be gifted directly to nonprofits.

2. What’s the tax advantage?

By donating appreciated assets directly, rather than by selling them to make a cash donation, you can claim a tax deduction for the full fair market value of the assets without owing any capital gains tax on the sale.

For example, say you invested $30,000 in a mutual fund in 2012. Since then, your investment increased in value and is now worth $50,000. If you donate the mutual fund to a nonprofit, the nonprofit will receive the full value of your gift ($50,000), you will get a tax deduction for the fair market value of your gift, and you won’t pay long-term capital gains taxes on the $20,000 gain.

3. How can I take advantage of this option?

Gifts of appreciated assets are more complex than cash donations, so some-but not all-nonprofits can accept this kind of contribution. This is where using gifts of appreciated assets to establish a fund at Grand Rapids Community Foundation is a great option. For active philanthropists, a donor advised fund may make sense this year if your assets have appreciated quickly, but you need more time to decide how to give. Donor advised funds act as a charitable savings account and allow you to claim the full tax deduction this year, but recommend distributions to your favorite nonprofits at anytime in the future.

If you are considering a gift of appreciated assets or would like more information about setting up a donor advised fund, let's get together to discuss how we can help you. We are known for our relationship based approach and would be pleased to speak with you. Contact a member of our development staff by calling (616) 454-1751.

Marilyn Zack, vice president of development

Shaun Shira, planned and major gifts director

Jonse Young, director of philanthropic services

Jenine Torres, development officer