End-of-the-Year Giving: How to Make a Difference for Your Family and Community
As the year winds down, it’s a great time to reflect on your financial goals and the possibilities ahead for you, your family, and the organizations that matter to you. At On Purpose Financial, a key part of our mission is to help clients establish and maintain financial security, which often leads to a bigger conversation about how they can help others in meaningful ways. End-of-the-year giving can be a powerful way to make an impact not only for others but also for your long-term financial plans. Here are some ideas, encouragement, and practical tips to help you plan your charitable giving and family gifts before the year closes.
Financial Health First: The Foundation of Generosity
Once we help our clients feel secure in their own financial well-being, we often find they have a newfound energy to ask, “How can I now support my family and the causes that matter most to me?”
This is a crucial point—many people have more capacity to give than they realize, whether it’s now or as part of their estate. When your immediate needs are covered, giving becomes a way to extend your financial plan’s impact, not just for tax benefits, but for leaving a legacy and making a difference.
End-of-the-Year Giving Tips
With the calendar year-end approaching, now is the perfect time to evaluate your charitable giving options. Here are a few strategies to consider that may also offer some tax benefits.
1. Check Your Required Minimum Distributions (RMDs)
If you’re over 73, you may have to take required minimum distributions from your retirement accounts. But if you don’t need the funds for personal expenses, consider donating some or all of that distribution to charity. This can help you avoid the tax hit on those withdrawals while benefiting a cause you care about.
2. Give Appreciated Assets
Instead of giving cash, consider donating shares of stock, mutual funds, or other investments that have appreciated in value and hold unrealized capital gains. When you donate these assets directly to a charity, you can avoid paying capital gains tax, and the charity receives the full value of the asset.
3. Utilize a Donor-Advised Fund (DAF)
A Donor-Advised Fund allows you to make a charitable contribution now, take the immediate tax deduction, and decide later which charities will benefit. It’s a flexible way to manage your giving and allows you to be strategic about when and how your gifts are distributed. This can be useful when you have a large amount of income in one year, but wish to spread gifts over multiple years.
Giving to Family: Navigating Gifting and Taxes
Generosity doesn’t just extend to charities—many people look to make financial gifts to their family members, particularly at year’s end. Here are some ways you can give to your loved ones while considering your financial and tax situation:
1. Cash Gifts Under the IRS Threshold
For 2024, you can give up to $18,000 per individual ($36,000 for a couple) to family members without triggering the need to report the gift to the IRS. This is a great way to help family members financially without affecting your tax situation.
2. Transfer Appreciated Assets
Just as you can give appreciated assets to charity, you can also transfer stocks or mutual funds to family members under the same $18,000 threshold. Married couples can “split the gift,” effectively doubling the exclusion. This is a valuable tool for family wealth planning as well as helping a child or grandchild get a start with building their own financial security.
3. Plan for Responsible Giving
A common concern we hear from clients is, “If I give my grandchild $18,000, will they use it wisely?” If you’re uncertain whether your family members are ready to manage large gifts responsibly, consider alternative ways of gifting that have built-in restrictions. For example, you can contribute to a 529 college savings account, give them the funds to start a Roth IRA, or set up an investment account they can’t easily access until later. These vehicles ensure your gift will be used for long-term benefits rather than immediate spending. You can also make a gift directly to their college or university for their tuition or educational expenses, which also won’t count toward your annual giving threshold.
4. The Gift of Experience and Time
Because we are a financial institution, we often think first about giving money and assets. However, don’t forget about the option of giving those you love experiences that allow you intentional time together to share values, make memories, and learn more about one another. As you consider your end of the year giving, what can you make possible for those you love?
Leaving a Legacy: Giving Through Your Estate
Another approach to giving is through your estate planning. Many people find that estate gifts allow them to make a bigger impact than they could during their lifetime. Whether it’s leaving a financial gift to family members or a portion of your estate to a charity, planning ahead ensures that your wishes are carried out and that your legacy endures.
Helping You See the Possibilities
At On Purpose Financial, we believe in helping our clients see greater possibilities for their financial lives. Once we support you in securing your own financial health, we open the door to bigger conversations about how you can impact the lives of those around you—both your family and the organizations that matter most.
If you’re considering year-end giving, whether it’s to a favorite charity, to loved ones, or as part of your estate planning, now is the time to explore these opportunities. Reach out to us at On Purpose Financial, and together, we’ll help you navigate the best strategies for maximizing your impact.