Article by Nicholas Pihl, CFA, CFP | Photo by Susan J. Preston
For many of us, supporting a place we love is straightforward. We renew a membership, make a donation, or give when a particular need arises. Those gifts help Friends of Bosque del Apache support the refuge in many meaningful ways.
But cash gifts are not the only way to give. Depending on your circumstances, there may be other options that are more tax-efficient, better suited to the assets you have, or simply worth knowing about as you think through your charitable giving.
Donate appreciated stock
If you own investments that have grown significantly in value, donating shares directly can be more tax-efficient than selling the investment and donating the cash.
When publicly traded stock with long-term unrealized gains is donated directly to a qualified public charity, the donor may be eligible for a charitable deduction based on the full market value of the gift. They also avoid the capital gains tax that would have been triggered by selling the shares first. For donors who itemize deductions, this can make stock gifts an especially efficient way to support a cause they care about.
For example, imagine someone bought a stock years ago for $2,000 and it is now worth $10,000. Selling it first could create an $8,000 taxable gain. Donating the shares directly, however, allows the full $10,000 value to benefit the charity while avoiding the capital gains tax that would otherwise come with a sale.
Please call us at (575) 202-5970 or email us at membership@friendsofbosquedelapache.org for more information on making a donation of stock to Friends of Bosque del Apache.
Recommend a grant from a donor-advised fund
A donor-advised fund, or DAF, is a charitable giving account that offers some of the flexibility people associate with a private foundation, without nearly as much cost or administration. Donors usually establish a DAF with gifts of cash or appreciated investments. Depending on the custodian maintaining the fund, they may also be able to contribute more complex assets, such as real estate, business interests, or cryptocurrency.
DAFs can be especially useful in high-income years. Such years might arise from exercising stock options, selling a business, or selling an investment property. A contribution to the DAF provides a large charitable deduction in that year, while allowing the donor to decide over time which charities to support. Donors then recommend grants to charities later on, often spreading them out over several years, or even over their lifetime.
One important note: the charitable tax deduction happens when money goes into the donor-advised fund, not when a grant is later made from the fund to Friends. Still, for donors who already use a DAF, it can be one of the simplest ways to support the refuge.
If you already have a donor-advised fund, you can easily recommend a grant directly to Friends of Bosque del Apache using the information found on their Planned Giving Brochure.
Give directly from an IRA through a Qualified Charitable Distribution
For donors age 70½ or older, a Qualified Charitable Distribution, or QCD, can be an especially effective way to give.
A QCD allows money to be sent directly from an IRA to a qualified charity. When handled properly, that distribution is excluded from taxable income. For donors who are already required to take distributions from their retirement accounts, a QCD can also count toward the year’s required minimum distribution, or RMD.
This can be more tax-efficient than withdrawing money from an IRA, recognizing it as income, and then making a charitable gift separately. That is especially true for people who do not itemize deductions on their tax return. Because the QCD is left out of taxable income altogether, it may reduce taxes more effectively than a charitable deduction would, and in some cases may also help with income-based thresholds such as Medicare premiums.
A QCD must be sent directly from the IRA custodian to the charity, and it is subject to annual IRS limits. Donors should coordinate with their IRA custodian and tax advisor to make sure the gift is handled correctly.
Friends of Bosque del Apache provides the information donors will need to donate directly from an IRA in their Bequest Form.
Include Friends in your estate plan
Some of the most meaningful gifts are made not during life, but through a will, trust, or beneficiary designation.
Supporters can include Friends of Bosque del Apache in a will or trust, or name the organization as a beneficiary of a retirement account or insurance policy. These legacy gifts can help preserve the refuge for future generations of birds, wildlife, and visitors.
For charitably minded families, retirement accounts are often worth discussing in particular. Traditional IRA assets are generally taxable when withdrawn by individual heirs, while charities can usually receive them without income tax. Because of that, some people choose to leave more tax-burdened assets to charity and other assets to family. Whether that makes sense depends on the family and the overall estate plan, but it can be a worthwhile conversation to have with an attorney or financial advisor.
Check out Friends of Bosque del Apache’s Planned Giving Brochure for more information.
Match the giving method to the season of life
The best way to support Friends of Bosque del Apache may look different at different stages of life.
A younger donor might set up a recurring membership or make occasional gifts when able. Someone with appreciated investments may benefit from using appreciated stock or a donor-advised fund. A retiree with required distributions from their IRA may find that a QCD is the most natural fit. Someone thinking about their legacy may decide to include Friends in their estate plan.
Whatever your stage in life, with proactive planning, you can give more efficiently and increase the value of your gift, benefitting both yourself now and the future of your favorite National Wildlife Refuge in the process, helping to protect Bosque del Apache for generations to come.