There are so many ways to make a difference for causes that mean the most to you, like lifting the burden of everyday expenses off families facing childhood cancer through Pinky Swear Foundation.

Did you know there are also many ways to give that provide tax benefits for making donations to charity?

Here are three tax-friendly ways to make a difference and the pros and cons of each.  

Giving through donor-advised funds 

Put simply, a donor-advised fund (DAF) is a charitable investment account. You are essentially donating to the account and then requesting grants to your favorite charities, like Pinky Swear Foundation. 

Pros of giving through a DAF: 

• Predictability – The federal income charitable tax deduction occurs when you contribute to the account, not when you request grants to the charity of your choice. This means you will know how your taxes will be impacted sooner. 

• Growth – Your money has the potential to grow tax-free in the account, allowing you to make a greater impact for the non-profit you support.  

• Convenience – You can contribute cash, stocks, and a variety of other assets to a DAF, making it easy by avoiding potentially complex processes of donating stock or more unique assets directly to charities. 

• Flexibility – With a DAF, you still maintain the flexibility of deciding the amount and frequency of funds you grant to charities.  

Cons of giving through a DAF: 

• Remembering to donate – In order for a non-profit to receive the funds from the DAF you intended to donate, you need to fill out a grant request. Since the DAF often happens at a different time than the grant request, it can be easy to forget to do the grant request later on. Giving on a regular cadence can help with this – and charities like Pinky Swear will always benefit from predictable giving.  

• Delay in funds – There may be a delay from when you request the gift to when the non-profit receives the donation. It is always best to alert an organization when you have requested a grant so that they are aware of the amount of funds on the way.  

Learn more about giving through a donor-advised fund.

Donating Appreciated Stock 

Pros of donating appreciated stock: 

• Value – You will avoid capital gains taxes on the increased stock value when you donate stock that has been held for more than 12 months – allowing you to receive its full fair market value for tax deduction on the date of the gift. 

• Maximization – When you give stock, you are transferring the stock to the charity, not selling it. This allows you to maximize your impact by making a greater gift than you could have if you sold the stock and donated the funds, where you would have faced a capital gains tax. 

Cons of donating appreciated stock: 

• Preparedness – Not every organization is equipped to receive stock donations. It is always best to connect with organizations to learn what types of gifts they can accept. Pinky Swear Foundation does accept gifts of appreciated stock! 

Learn more about whether a stock donation is the right move for you.

Individual Retirement Accounts gifts 

If you are 70 ½ years or older, you can give up to $100,000 annually from your Individual Retirement Account (IRA) directly to charities like Pinky Swear Foundation. 

Pros of giving through an IRA: 

• Savings – You don’t have to pay income taxes on funds given from an IRA up to the $100,000 annual limit.  

• Satisfaction – Qualified Charitable Distributions (QCDs) can satisfy all or part of your required minimum distribution from your IRA that would otherwise be taxable. 

• Impact – By making your gift this year of up to $100,000 from your IRA rather than after your lifetime, you can immediately see the impact of your dollars at work. 
  
  Also, the maximum limit is based on the individual, not the household. If your spouse is also over 70 ½ and has an IRA, they can also give up to the $100,000, helping to make an even greater difference for the community your favorite non-profit serves. 

Cons of giving through an IRA: 

• Age – Because this opportunity is only for those 70 ½ or older, it does not apply to everyone.  

• Separation – When you give from an IRA, you are not able to claim a separate charitable contribution on your tax return. However, the IRA withdrawal to make your gift will be tax-free. 

Learn more about giving through your IRA to Pinky Swear. 

No matter how you choose to support families facing childhood cancer through Pinky Swear Foundation, you are making an incredible impact on kids and their families when they need it most.  With any giving, but especially DAF, stock, and IRA gifts, Pinky Swear Foundation recommends that you consult with your financial advisor first.

Have any questions about tax-friendly giving or other ways to provide financial support to families facing pediatric cancer? Contact the Pinky Swear team at giving@pinkyswear.org.