Estimated charitable giving in 2017 totaled $410.02 billion, surpassing the $400 billion mark in a single year for the first time. According to Giving USA 2018: The Annual Report on Philanthropy for the Year 2017, a robust stock market and a strong economy led to a 5.2 percent overall increase in giving across the four source areas: outright gifts from individuals, bequests, foundations, and corporations.
Similar to 2016, outright contributions from individuals led all giving, amounting to $286.65 billion, an increase of 5.2 percent. Combined with $35.70 billion in charitable bequests, individuals accounted for 79 percent of total charitable giving in 2017, far outpacing giving from foundations and corporations. Despite this, all giving areas saw increases in 2017. The largest increase of 8 percent was seen by corporations, whose giving spiked to $20.77 billion in response to disaster relief and an increase in pretax profits.
"The increase in giving in 2017 was generated in part by increases in the stock market, as evidenced by the nearly 20 percent growth in the S & P 500," said Amir Pasic, Ph.D., the Eugene R. Tempel dean of the Lilly Family School of Philanthropy, the entity that conducted the Giving USA 2018 study. "Investment returns funded multiple large gifts, most of which were given by individuals to their foundations, including two gifts of $1 billion or more.
But it's not just the most affluent who are giving -- the average household gave $2,271 in 2017, raising contributions to organizations across almost all sectors, most notably in giving to foundations, health, education, human services, environment, and animal welfare. Giving by non-itemizing individuals grew 3.3 percent while giving by itemizing individuals grew 5.6 percent.
Although recent policy developments may have played some role in 2017 giving trends, most of the effects of the newly enacted federal tax law have not yet been seen. Regardless of whether you choose to itemize, here are a few tax-wise strategies to consider:
Make an Outright Gift of Appreciated Assets:Giving appreciated assets that you have held for a year or longer may provide you with savings on both income and capital gains taxes while allowing you to support the causes that matter most to you. Charitable gifts of stock and mutual funds are most common, but all types of securities work in addition to gifts of real estate, life insurance, and closely-held business interests.
Create or Add to a Donor-Advised Fund (DAF):This strategy may generate tax savings while streamlining your charitable giving. Create a DAF with a gift of cash, securities, or other appreciated assets. If your estimated income tax deductions are not large enough to warrant itemizing, consider increasing your charitable gifts to reach the threshold. By "bumping up" your charitable gifts and directing them into a DAF, it may become favorable to itemize and receive a tax deduction for your giving this year and recommend grants to your favorite charities on your timetable, while taking the standard deduction in future years where it does not make sense to give as much or itemize.
70½ or Older?Give from Pretax Assets by Making a Qualified Charitable Distribution (QCD) from Your IRA: IRA owners who are 70½ or older can contribute up to $100,000 from their IRAs ($200,000 per couple) to qualified charities each year. These contributions will count toward your annual required minimum distribution (RMD). The gifts will not entitle you to a charitable income tax deduction, but you will not have to pay taxes on the withdrawals. Unfortunately, donor-advised funds and most private foundations are ineligible to receive QCDs.
For more information about these and other charitable giving strategies, contact the DuPage Foundation (www.dupagefoundation.org) at (630) 665-5556.
• Michael R. Sitrick, JD, is Vice President for Advancement for the DuPage Foundation.