Financial advisors suggest that donating appreciated stock to charity can be a more tax-effective strategy than cash donations, as it avoids capital gains taxes and allows for a deduction of the stock's market value. With the higher standard deduction, fewer taxpayers itemize, but strategies like "stacking deductions" or using donor-advised funds can help maximize tax benefits from charitable giving.
The SDG Impact Fund, a donor-advised fund focused on supporting the United Nations Sustainable Development Goals, has experienced rapid growth, reaching $10 billion in assets in 2021. The fund's surge in assets, potentially fueled by the rise of cryptocurrencies and digital art assets, has raised concerns among philanthropy and tax experts due to the lack of transparency regarding the source of donations and how the funds are being used. Donor-advised funds have become powerful forces in philanthropy, allowing donors to receive immediate tax deductions while delaying charitable contributions indefinitely. Critics argue that this practice can lead to ethical issues and tax avoidance. The SDG Impact Fund's recent filings raise questions about its purpose and the extent to which its assets are being directed towards charitable causes.
Charitable giving strategies can provide a bigger tax benefit, especially after the Tax Cuts and Jobs Act of 2017. To maximize tax breaks, investors can "bunch gifts" by concentrating them in one year. Donor-advised funds and individual retirement accounts are popular options for tax-savvy donations. Profitable investments from a brokerage account are the best assets to donate to charity, while pre-tax individual retirement accounts are better for those aged 70½ or older.
