At Schwab’s IMPACT 2020, Kim Laughton, President, Schwab Charitable discusses the value of charitable giving during this year of unprecedented uncertainty.
Total charitable giving is trending up. According to Laughton, total charitable giving reached roughly $450 billion in 2019. This year’s pending election uncertainty, positive tax and market environment, and well as increased need, makes 2020 an especially great year for clients to give.
Over the last few years, The Tax Cuts and Jobs Act, enacted in 2018 and the CARES Act (The Coronavirus Aid, Relief, and Economic Security Act), enacted in March of 2020, have brought major changes to the way individuals file taxes. The Tax Cuts and Jobs Acts simplified the tax filing process through raising the standard deduction, but also retained the charitable deduction for those who itemize.
For those that plan on taking the standard deduction, but have considered itemizing, Schwab Charitable recommends a strategy called “bunching or “concentrated giving.” This means giving a greater amount to charity every few years, itemizing those gifts, and then taking the standard deduction the other years.
The CARES act (The Coronavirus Aid, Relief, and Economic Security Act) also offers additional tax incentives for cash donations in 2020. For those who take the standard deduction, donors may claim up to $300 for cash contributions. In the face of increased market volatility and uncertainty surrounding the U.S. election, Laughton encourages advisors to initiate the charitable conversation before year end. Helping clients identify opportunities to give more to the causes they care about through the benefit of “bunching their giving” or leveraging retirement assets, can help advisors build deeper, long-term relationships.
Schwab Charitable is an independent public charity aimed around making it easier for donors to give. Through Donor Advised funds, contributors can donate both cash and appreciated securities for a tax advantage. With low account minimums relative to private foundations, this strategic and tax-efficient way of giving is accessible to the every-day-investor.
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