Changes in Charitable Contributions

There have been some significant changes in the tax law that can change the way you make your holiday charitable contributions.

First – if you or your parents or grandparents are over age 70 ½, you have a one time opportunity (which expires this December 31) to rollover funds up to a maximum of $100,000 from an IRA directly to a charity without tax. This rollover can include a required minimum distribution. The results? No deduction for the charity contribution but even better – no taxable income on the distribution, and a reduction of assets for estate tax purposes. I hope Congress extends this wonderful benefit into 2008!

Second – There are new record-keeping requirements for cash contributions. According to the IRS – you cannot deduct a cash contribution, regardless of the amount, unless you keep a bank record of the contribution (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written communication from the charity. This means no more spare change in the bucket for Salvation Army. Those buckets will have to be filled with checks in order to be deducted.

There’s no question about it. Americans are a giving people. But this year charitable contributions are down significantly according to a Wall Street Journal On-line/Harris interactive poll. Only 17% say they contribute for the tax-write-off while only 55% believe their contribution will make an impact.

Americans are starting to hold their charities to a higher standard.  A high percentage felt that charitable organizations waste money, pay their directors too much, and don’t do a very good job of running their programs and services.

People like Bono, Bill & Melinda Gates, and Warren Buffet are making their charities more transparent about their use of funds and the impact they have had on reducing poverty, mortality rates and increasing education. We should demand more accountability, too.  (See

Coaching Question – Do you see the effectiveness of your charitable contributions?

Leave a Comment

You must be logged in to post a comment.

This site uses Akismet to reduce spam. Learn how your comment data is processed.