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updated: 12/13/2019 2:37 PM

Charitable giving strategies for business owners

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  • DENICE A.GIERACH

    DENICE A.GIERACH

  • MICHAEL R. SITRICK

    MICHAEL R. SITRICK

 

Privately-held businesses can make a big difference in their communities and for the causes they care about most by utilizing charitable giving strategies that maximize impact as well as benefits. And now, the participation of privately-held businesses in the local giving sector is more important than ever. When it comes to giving, most businesses believe they get back much more than they give.

Unsure where to start? Consider these strategies to maximize the impact of your giving:

1. Cash Donations:

Cash donations qualify for the maximum allowable income tax deduction.

2. In-Kind Donations:

Sometimes businesses have extra inventory, vehicles or other machinery they are no longer using, which can be donated to a charity. This is particularly useful if the donated item is something the organization needs and will use, such as a vehicle to transport clients, furniture for a homeless shelter or working computers.  Some businesses may own a vacant parcel of property on which the charity could build.

Services, such as advertising space or legal guidance, can also be donated in-kind. Be sure to collect acknowledgments from the recipient for these contributions.

3. Employee Volunteer Program:

Many individuals in the current workforce are looking for ways to participate and make a difference in their communities. More often, over the last five years, they've looked to their employers for opportunities. Businesses can encourage employees to use company time to volunteer at a pre-selected organization or a charity of that employee's choosing. Businesses might encourage employees to serve on an organization's board or offer to match employee contributions for a sponsored event. Companies may receive public acknowledgement for their time or gifts, but these programs also result in positive morale, new skills, and community engagement among employees.

4. Stock and Other Business Interests:

Contributions of privately-held business interests can make highly tax-efficient gifts. You may receive a charitable deduction for the full fair market value of the donated assets and avoid capital gains tax that would be incurred if the asset was sold. Many times, prior to the sale of the business, the business may gift some shares of the company, which may allow a tax deduction, thereby lowering their tax in the year of sale. Gifting such assets has requirements and rules that must be followed. Consult your advisors.

5. Donor-Advised Funds:

Community foundations, such as the DuPage Foundation, have local knowledge of community needs and the expertise to help donors achieve their charitable goals. This includes the ability to set up a corporate donor-advised fund that can be contributed to by your employees, and granted to not-for-profits recommended by you. Additionally, business owners may want to utilize a donor-advised fund for personal finances to maximize individual tax benefits.

With so many opportunities to give, one advantage of giving through your local community foundation, like the DuPage Foundation, is flexibility. The DuPage Foundation offers a variety of tax-effective ways for you to make charitable gifts and accepts gifts of cash, appreciated assets, retirement assets and closely-held business interests, private foundation grants and transfers, and distributions from wills and trusts. For more information on year-end charitable giving opportunities, contact the DuPage Foundation at (630) 665-5556 or mike@dupagefoundation.org.

The DuPage Foundation will be open until 5:00 p.m. on Tuesday, December 31 to help you. Together, we can achieve more than any one of us could alone.

• Michael R. Sitrick, JD, CFRE, is vice president of advancement for the DuPage Foundation. Denice A. Gierach, JD, CPA, of The Gierach Law Firm, is a member of the DuPage Foundation board of directors.