‘Tis the season: Why tax time is often the best time to get serious about your charitable plans

Tax season offers some finality to the prior year in that we finally know if we owe or are due a refund. For the 2021 tax year, the IRS processed 88 million refunds averaging $3,039 each.

 

At the same time, filing a 2022 tax return often comes with finalizing quarterly tax estimates for 2023, which many people use to build a framework for current-year spending.

 

Fortunately, charitable giving ranks high on many “how to use your refund” lists. Whether you have “bonus” money in the form of a refund, or gain some peace of mind by knowing your upcoming tax obligations, giving intentionally and strategically always helps that gift go further.

 

Lean into intentionality

 

Many donors give to the same causes annually, with causes tied to faith, health and community ranking high among charitable giving trends. Recently, gifts involving food or home insecurity, natural disasters and international conflicts have become increasingly popular. 

 

Most important is to give to causes that are near and dear to you and for which you can see the ways your giving is contributing to meaningful, positive change in the lives of people in our community. And if you can add to your current list of beneficiary organizations to achieve meaningful impact, all the better. 

 

The Community Foundation of New Jersey is a knowledgeable source of ideas, best practices, and data-driven approaches to helping you measure your impact. Our team can be especially helpful if you have a cause in mind but may not immediately have an organization name or local chapter to support. Our team has vetted and even pre-qualified many worthy organizations, and as a bonus, offers security against sending gifts to scammers or bad actors who often start or perpetuate their deceit by using familiar-sounding names of well-known organizations or websites.

 

Level up your strategy

 

Once you’ve identified budget targets for your charitable giving and have a strong sense of the causes you’d like to support, structuring your gift for maximum impact and tax savings should be a top priority. 

 

If you already have a donor advised fund at the Community Foundation, you know that this vehicle has many benefits, including ready access to our staff of experts; the convenience of jumping online to support favorite causes from your fund; the ability to maximize a gift with accompanying tax benefits; and even the opportunity to schedule a gift to coincide with the occasional matching campaign hosted by a favorite charity. With full tax deductibility in the year of the contribution, donor advised funds are an ideal way to “mentally offset” current year tax estimates that become known in April. If you don’t yet have a donor advised fund at the Community Foundation of New Jersey but are considering it, this may be the perfect time to jump in. 

 

With these tips in hand, and with the help of the Community Foundation, you can better plan for the tax year ahead, knowing that causes important to you, whether legacy or new, will benefit from your generosity.