Tips and perspectives for charitable giving at year’s end
At a glance: Vanguard Charitable’s new president offers charitable guidance to close out 2021
As we approach the end of 2021, I’ve been reflecting about what the last 12 months have brought.
On a personal level, they’ve brought an incredible new privilege and responsibility: the chance to lead Vanguard Charitable, an organization I’ve been with for 16 years, and to follow the amazing example set by my predecessor, Jane Greenfield. I’m thrilled and humbled to continue to deliver for our donors and for the charitable sector as a whole.
More broadly, the past 12 months have also brought continued hardships in our communities and across the nation and world as the pandemic and its ripple effects linger. We’ve also seen the impacts of Hurricane Ida, the crisis in Afghanistan, the earthquake in Haiti, wildfires in the western U.S., and more. In the philanthropic world, we’ve learned the importance of responding generously in the moment while at the same time preparing for the next crisis.
Because I believe an informed donor is an even more impactful donor, I wanted to share the following for you to consider as you think about your year-end charitable giving. After all, 2021 isn’t over yet, and there’s still time to make an even bigger difference.
What should you do? Focus on what you know.
Uncertainty can sometimes cause people to delay their giving decisions. While people want to make a difference and give more, they’re facing an unpredictable environment. They wonder what the world will look like in 2022—including what changes (if any) will be made to the country’s tax policies. My advice? Focus less on what you don’t know and more on what you do know.
- You know you can give back in more ways than one. There are many ways to conceive of giving. We often hear our donors tell of the value of their “time, talent, and treasure.” Volunteering, serving on a board, or offering other expertise in support of charities are wonderful ways to make a difference. For those with a skill that may be in demand—think graphic design, accounting, or social media management—consider reaching out to your favorite nonprofit to see how you may be able to “donate” your skills to further their mission.
- You know the “current state” when it comes to taxes. For those looking to donate financially, the Build Back Better Act recently passed in the House preserves the primary incentives for charitable giving that are already in place. While the bill is subject to change, you should feel reasonably confident that the tax incentives for charitable giving you’re accustomed to will remain for the rest of this year.
- You know the markets have been strong, so you likely have appreciated assets. Despite economic uncertainty, the markets have shown great resiliency and strength. In such an environment, some people may not realize that what you give may be just as important as how much you give. Consider donating appreciated securities rather than cash to both receive the charitable tax deduction and forgo paying capital gains (if your appreciated assets have been held for more than one year). Review your portfolio with your Vanguard advisor (if you’re a client of Vanguard Personal Advisor Services®) and maximize your charitable gifts in the most tax-effective manner. And if your most appreciated asset is illiquid, note that you can even donate illiquid assets, such as private equity, hedge fund interests, C corporation stock, real estate, LLCs, limited partnerships, and more. While not all charities can accept these assets, a donor-advised fund provider like Vanguard Charitable can.
- You know philanthropic guidance is available should you want it. At Vanguard Charitable, we’re focused on making sure our donors and the broader public are supported in meeting their giving goals. We’ve prepared a new collection of tools and diagnostics to help you reflect on your giving practice and see how you can get even more out of it.
- Our Tax Savings Calculator will give you an idea of how much you’ll save based on the amount of charitable giving you’re planning on doing.*
- Our charitable personality quiz will help you learn what kind of giver you are, and what resources may be most helpful.
- NAVi, our groundbreaking Nonprofit Aid VisualizerTM, has been updated to help you tackle the most pressing charitable needs of the moment by putting unprecedented data at your fingertips.
Leverage a giving vehicle
Once you figure out how much you’re giving and which assets you’re donating, you might want to think about how you should give—specifically whether you should leverage a giving vehicle of some sort. There are a few different types of giving vehicles—private foundations, donor-advised funds, charitable trusts—and they differ in terms of features and costs. While comparing and contrasting your options, keep in mind that many giving tools can be used together.
A giving vehicle is one great way to make your giving budget go further. The purpose of a giving vehicle is simple: to transfer assets to charitable causes in a carefully planned way that makes financial sense for you and maximizes your charitable impact by increasing the amount you’re able to give over time.
What to consider when choosing a giving vehicle
Note: If you’re planning on using a giving vehicle, make sure you pay close attention to the fees. It’s important to remember that the lower the fees, the more money will be available to donate to the charities you admire. At Vanguard Charitable, our donor-advised fund comes with the lowest all-in fee in the industry. That translates into a lot of extra dollars that are available for the causes you care most about.
At year-end, as we consider the existing and emerging needs in front of us, I’m reminded that philanthropy changes the world, one life at a time. But it takes effort from all of us, working thoughtfully and with the end goal in mind, to reach all the lives we can.
*The information provided is not intended to be relied upon in lieu of tax or legal advice. Consult with a tax advisor or attorney for information related to your specific situation.
We recommend you consult a qualified tax advisor about your individual situation.
Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.