Keystone Global Partners

Forward-Thinking Wealth Management For Tech Founder

6 Ways to Maximize Your Giving Strategy

Written By: CALVIN LO

Wondering if you’re best prepared for the upcoming giving season?

Before you know it, the holidays will be here and in order to minimize stress and maximize your gifting abilities, it’s important to keep in mind a few details that you may or may not be aware of.

If you’re not sure how your finances match up with your upcoming year-end giving strategy, now is the time to prepare yourself by making your lists and checking them twice. Organization is key in order to properly give this holiday season. Follow the five tips below to maximize your charitable giving strategy in 2019.

1. Do Your Research

By using sites such as Guidestar or Charity Navigator, you can learn more about the groups you’re interested in offering donations to.

The organization you’re involved with should also be able to provide registration information including 501(c)(3). You may also use the tax-exempt organization search tool available on the IRS website to obtain specific information as well.

2. Bundle Your Donations

As deductions have increased over the years, you may choose to save money over time and donate every few years as opposed to each year, consecutively. By doing this, you may receive your itemized deductions over the limit one year and take the standard deduction the next.

If you’re interested in accomplishing this, you might consider a donor-advised fund, which allows you to make a charitable donation and immediately receive a tax break. You’ll then receive recommended grants from the fund to your preferred charities over time.

3. Donate Appreciated Stock

By donating stocks or other appreciated assets, such as artwork or antiques, you might reduce capital gains tax on investments.1

In particular, high-income earners might consider a non-cash donation specifically because of the tax advantages they may be awarded. Even those who have what they might consider to be small holdings could benefit by making a donation of appreciated investments this holiday season.

4. Private Foundation or Donor Advised Fund

Consider setting up a Donor Advised Fund or a Private Foundation that is funded with appreciated stock. Both Donor Advised Funds and Private Foundations could allow you to take the tax deduction in the year in which an exit happens and then decide later when and where to donate.

Many of our founder clients will fund these vehicles during the tax year in which a liquidity event happens by donating a portion of their appreciated stock. Rather than selling the stock, paying capital gains tax, and then donating the remaining cash, you can take the tax deduction equal to the fair market value of the stock you contributed.

This is a powerful way to get a tax deduction in the year of your liquidity event, maximize your charitable donation power, and decide at a later time the philanthropic organizations you’d like to support. This is just one of the many ways you can make an impact and start building your legacy, all while creating a financial strategy that sets you up for success.

5. Utilize Your IRA

If you’re a retiree over the age of 70, you might consider transferring money from your IRA to a qualifying charity. These distributions can be a tax-efficient way of meeting any required minimum distribution. Additionally, there’s no need to itemize your deductions in order to benefit.

According to the National Association of Enrolled Agents, you may distribute up to $100,000 per year per taxpayer. This increases to an acceptable $200,000 for married couples if they both have IRAs.2 Although this strategy has existed for some time, it only recently became a part of the permanent tax code.

6. Speak with your advisor

Before making any significant charitable contributions, make sure to have a conversation with your wealth advisor or CPA in order to understand the potential impact on your estate and taxes.

It’s important to set personal reminders, at least annually, to re-evaluate your financial and personal priorities and update them if need be. Your interests and priorities are bound to change over time and so will the causes you choose to support. Being aware of these fluctuations is key and maintaining a thoughtful attitude is what makes the holidays meaningful.

1 https://www.cof.org/content/analysis-ira-charitable-rollover-extension

The information and opinions provided in this material are for general informational purposes only and should not be considered as tax, financial, investment, or legal advice. The information is not intended to replace professional advice from qualified professionals in your jurisdiction.

Tax laws and regulations are complex and subject to change, and their application can vary widely based on the specific facts and circumstances involved. Any tax information or advice in this article is not intended to be, and should not be, used as a substitute for specific tax advice from a qualified tax professional.

Investment advice in this article is based on the general principles of finance and investing and may not be suitable for all individuals or circumstances. Investments can go up or down in value, and there is always the potential of losing money when you invest. Before making any investment decisions, you should consult with a qualified financial professional who is familiar with your individual financial situation, objectives, and risk tolerance.

Will you help me solve any and all financial problems I may encounter?

Yes, and it’s likely we’ve helped others solve similar problems as well such as business sales, QSBS, tax minimization, estate, 401(k) plans, IRS audits, family deaths, disability, real estate, debt, social security, Medicare, health insurance, college, gifting, and most other financial issues.

What types of clients do you specialize in?

We work specifically with tech founders.

What services do you provide?

A relationship with Keystone involves comprehensive financial planning around retirement, insurance, estate planning, tax planning, and investment management.

How do you help clients implement their financial plans?

We firmly believe that even the best financial plan is of little value until it’s implemented. To help you achieve your goals without feeling stressed or overwhelmed by the noise along the way, we will work together to make the necessary decisions then we take care of the execution.

Are your recommendations truly in my best interest?

As an SEC Registered Investment Advisory firm, we are held to a fiduciary standard, which legally requires us to do what is in our clients’ best interests. This differs drastically from some of our competitors who are only held to the “suitability standard,” meaning that our competitors can make recommendations that are suitable but may not be in the clients’ best interests. Our commitment to an honest and ethical culture has allowed us to build deep, trusted relationships with our clients.

What are all the different ways you get paid?

We are only paid via one management fee. We believe this allows us to have an unbiased framework to select the best investments for you and to give you advice tailored to your needs, not ours. We believe compensation drives behavior, and the way someone is paid influences the work they do. Many financial firms have complex fee arrangements; we do not.

Why would I choose you as my advisor and not do it myself?

There’s certainly a possibility that if you put enough focus and energy into it, you could do it all yourself. But like everyone else, your time is limited and most people prefer to focus on family or business. We’re here to free up your time while leveraging our wealth of experience in addressing concerns, presenting solutions, and working toward your financial goals.

What are the benefits of working with an independent advisor compared to a bank or large advisory firm?

Our independent and conflict-free approach allows us to find the best solutions for our clients. This gives you the advantage since larger firms might be compelled to make specific recommendations, sell proprietary products, or may be restricted in the advice and services they offer. We offer guidance customized to your needs and goals which is a personalized level of service, care, and attention larger firms just can’t provide.

Do you use proprietary funds?

At Keystone, we do not use proprietary products. We do not receive commissions or backend fees from any third parties. We do not earn compensation for recommending one fund vs. another. We believe this allows us to have the most unbiased framework to select the best investments for you and to provide advice tailored to your needs, not ours.

Where do you keep my money and how can I see it?

For your convenience and safety, we use Charles Schwab as the custodian for the majority of our client assets. Schwab administers more than $7 trillion dollars and we selected them to care for yours as well based on a variety of criteria including safety of assets, financial strength, and ease of use. As custodian, Schwab holds your funds and provides direct reporting to you. Your funds will be held in accounts under your name and can be viewed anytime online at Schwab.