Will you donate less to Charity?

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ruralavalon
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Re: Will you donate less to Charity?

Post by ruralavalon » Mon Dec 25, 2017 12:03 pm

We will not change our charitable contributions, that was never influenced by the tax code.
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badger42
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Re: Will you donate less to Charity?

Post by badger42 » Mon Dec 25, 2017 12:07 pm

We've pre-funded the next 4-5 years via a DAF, and will just bunch deductions after that assuming current tax laws (so we'll have a huge deduction 2-3 times a decade, then spread things out via the DAF)

I bet the last two weeks of 2017 have been really good for anybody who can setup a DAF quickly! (e.g. Schwab Charitable)

FrankLUSMC
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Re: Will you donate less to Charity?

Post by FrankLUSMC » Mon Dec 25, 2017 12:21 pm

My take on this subject is:

Secular society may donate less because of the tax change driven by deductions. Front loading donations with DAF is not useful to all taxpayers.
Tax law reverts back in 2025 and deductions will come back into play.

Those who give tithes or offerings to their church (or worship venue) will continue as normal.

inbox788
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Re: Will you donate less to Charity?

Post by inbox788 » Mon Dec 25, 2017 12:31 pm

ruralavalon wrote:
Mon Dec 25, 2017 12:03 pm
We will not change our charitable contributions, that was never influenced by the tax code.
The way I see is is totally different. It's amount I'm able/willing to contribute is fixed. If I have $100 cash to donate, that's what the charity gets. If I can get back $30 from taxes, that's another $30 that can go to the charity (plus 30% of the $30...etc). Changes in the tax code that discourage charitable donations are taking monies from charities and being spend by the government. IMO a zero sum game between government spending and charity spending.

We'll just have to see in the next few years how the new tax code impacts the economy and charitable donations. Someone will measure the growth impact, which is likely to be more than 0 and less than 100% of the cost of the projected $1.5/1.7T brandished about. My opinion is that it will be on the lower side of things, and I will be pleasantly surprised if turns out much better. It's highly unlikely, but not impossible to have less than 0 or more than 100% -- interesting to see what situations could lead to these outliers.
Artsdoctor wrote:
Sun Dec 24, 2017 5:00 pm
For us, it has been a way of rebalancing since the equity markets have been on such a tear.
Funny you use the term rebalancing. Are you changing you AA or the investments once they go in the DAF?

One aspect I like about donating appreciated stocks to a DAF, besides the tax breaks and diversification from single stock to diversified index fund, is that doesn't really alter AA. I basically move an equity investment from my taxable account to the DAF. Since I've earmarked the equity investment as a donation, I've already excluded it from my personal AA. Since I'm investing the equities/DAF for charity that doesn't have a specific end date, it's allocated to 100% total market. I figure more time in market even through the ups and downs means it grows more for the charity, and I might market time the distributions a little if I think it's a down time. It's not my money anymore, so I can take bigger risks. :shock:

Anyway, the beauty of using a DAF is that I can make independent decisions regarding AA, tax, and donations that hopefully optimize everything without having to find synergy points.

inbox788
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Re: Will you donate less to Charity?

Post by inbox788 » Mon Dec 25, 2017 1:12 pm

fposte wrote:
Sun Dec 24, 2017 5:39 pm
Well, heck. Thanks for the pointer--these actually are post-tax. I had thought there was some special state magic and they were pre-tax, but apparently not.
Better you found out before, so you make informed decisions, even if it may not alter ultimate outcome.

Any creative accountants think there is potential for "special state magic" to help businesses help employees make more tax efficient donations? If you receive income from work that you donate, you'd have to itemize to write it off. Instead, could you forgo some income that the work donates to a worthy cause? The whole non-profit tax situation turns out to be far more complicated than first glance when you start looking at some details.
http://nationswell.com/teachers-donate- ... colleague/

Carefreeap
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Re: Will you donate less to Charity?

Post by Carefreeap » Mon Dec 25, 2017 2:08 pm

annielouise wrote:
Sun Dec 24, 2017 8:02 am
We put about 5 years into our DAF and will continue our donations from that at the same rate (about 5% of AGI). We will probably take more "gifts" with the donations we do outside the DAF (the kind that give us membership and/or benefits) since we won't be deducted them.

My experience as a tax accountant is that many people think they get a tax advantage even if they aren't actually itemizing. They also think the donations make a bigger tax difference than in reality. So, I believe it will make a difference for charitable giving overall. I also think the 1% who "don't give to charity much because I pay too much in taxes" - I'm way too lazy this morning to find a link to the article - still won't give more to charity in spite of lower taxes because that was a just a convenient excuse. But, then, I am crazy cynical and pessimistic.
I'm not finished reading through the thread but your comment made me chuckle. We donate to charity because we believe in the cause/work the charity does. The fact that the donation was tax deductible was just a bonus. I'm too lazy to do the math but I'm pretty sure that mathematically it's NEVER made sense to do a donation to get the deduction.

I've tried to explain the concept to my MIL, a former assistant deputy director who was pretty high up in the Federal Government food chain and who should be able to figure out the math (STEM PhD). But she is so hell bent on not paying taxes that she'll spend a dollar to avoid paying $.25 in taxes. I shake my head at the irony of the reluctance of someone who spent 30 years as a Federal government employee and who has benefited over the last twenty years of a $100k+ federal pension to paying federal taxes. My fast and loose calculation is approximately $5M in inflation adjusted direct salary/pension benefits. Wow!

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Artsdoctor
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Re: Will you donate less to Charity?

Post by Artsdoctor » Mon Dec 25, 2017 6:51 pm

inbox788 wrote:
Mon Dec 25, 2017 12:31 pm
Artsdoctor wrote:
Sun Dec 24, 2017 5:00 pm
For us, it has been a way of rebalancing since the equity markets have been on such a tear.
Funny you use the term rebalancing. Are you changing you AA or the investments once they go in the DAF?

One aspect I like about donating appreciated stocks to a DAF, besides the tax breaks and diversification from single stock to diversified index fund, is that doesn't really alter AA. I basically move an equity investment from my taxable account to the DAF. Since I've earmarked the equity investment as a donation, I've already excluded it from my personal AA. Since I'm investing the equities/DAF for charity that doesn't have a specific end date, it's allocated to 100% total market. I figure more time in market even through the ups and downs means it grows more for the charity, and I might market time the distributions a little if I think it's a down time. It's not my money anymore, so I can take bigger risks. :shock:

Anyway, the beauty of using a DAF is that I can make independent decisions regarding AA, tax, and donations that hopefully optimize everything without having to find synergy points.
So equities have been marching upwards for years now. Consequently, the equity portion of my portfolio has become bloated. The way I rebalance is to make sure dividends are directed where they're needed most (meaning, the equity dividends go into bond funds, for example), that appreciated equity fund shares are donated to our DAFs, and if things are really out of whack, I'll sell equities into bond funds.

I donate the equity fund shares with the lowest cost basis to the DAFs, and if I have to sell shares to rebalance into bond funds, I'll sell the shares with the highest cost basis.

Within the DAF itself, I maintain a more conservative asset allocation than in my own investment portfolio. I view the DAFs as completely separate entities since the money is really no longer mine.

MathWizard
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Re: Will you donate less to Charity?

Post by MathWizard » Mon Dec 25, 2017 6:54 pm

No. My reasons for giving have nothing to do with taxes.

I just won't be able to bunch anymore. I haven't figured out whether a DAF would be
worth the trouble, and have very little time to set one up.

MtnBiker
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Re: Will you donate less to Charity?

Post by MtnBiker » Sat Jan 20, 2018 9:27 pm

carolinaman wrote:
Sun Dec 24, 2017 1:57 pm
I plan to continue giving the same. For the first time this year, I did QCDs, primarily because they give me some space to do Roth conversions without increasing my Medicare B premiums. In the future we will be doing QCDs and standard deduction.
After doing some retirement planning using the RPM spreadsheet, it seems to me that the new tax law encourages charitable giving via QCDs (for those over the age of 70-1/2). While it is now harder to itemize, your charitable contribution via QCD gives an above-the-line deduction, plus you get the benefit of the expanded standard deduction.

It looks like 2018 will be my last year to itemize. My present plan is to do one "mega-bunch" charitable contribution this year to cover the next five years of donations until reaching the land of RMDs and QCDs.

Deontic
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Re: Will you donate less to Charity?

Post by Deontic » Sun Jan 21, 2018 4:20 pm

Pragmatically, generous cash donations during the working, deductible years has been replaced in retirement with generous time donations to non-profits.

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