Unlocking the Power of Purposeful Giving With a Fiduciary Advisor

You’re at the pinnacle of your career, building a substantial income and assets. You’re active, busy, and are motivated to continue growing. While success is rewarding, you desire to also contribute to your community and the organizations you believe in (church, university, hospital, medical research). Many of the families we work with have this goal, particularly when there is so much change in the world.  

You have the unique ability to positively impact the world around you with just a few changes.

Every day, some new challenge and cause would benefit from your support. But charitable giving is no longer about writing a check. It’s about impacting lives and causes that matter most to you and your family in a meaningful and impactful manner.  

You can be a game-changer. 

The question then becomes, how do you simultaneously make the right donations that benefit the beneficiary and your financial well-being?

This comprehensive guide will explore popular charitable giving options beyond one-time cash donations. 

Remember, it’s not just about making a difference; it’s about making the right difference while minimizing your tax liabilities. 

“Charity is not about pity, it is about love.” – Mother Teresa

What is Purposeful Giving?

You get it—there’s a deep sense of joy when you give forward so others benefit from your success. But what if that selfless act could do more for you than just lift your spirits? 

Giving to an IRS-approved charity or establishing a donor-advised fund opens doors to substantial tax benefits that any other strategy cannot reproduce. The government created these regulations to encourage you to donate to nonprofit organizations.  

Without outside donations, it’s possible the Government would have to fund these organizations by charging U.S. payers higher taxes. Everyone wins: Institution/Donor/Government. How do you win? For example, you avoid capital gains taxes when you donate highly appreciated securities to the right nonprofits in a meaningful manner.  

You benefit when you help others.

At Cogent Strategic Wealth, our strategies are focused on charitable donations that enable you to:

• Amplify the impact of your gifts on organizations and causes you want to support
• Diminish or even eliminate capital gains taxes on assets that have substantial appreciation
• Turn philanthropy into a family affair for multiple generations

Imagine your gift as an investment in an organization or cause that keeps giving. Donating an asset to a charitable trust or donor-advised fund can grow in value and set the stage for long-term gifting strategies and benefits. 

Here are some charitable giving strategies to consider:

Donor-Advised Funds: Think of a donor-advised fund as your charitable savings account. You receive an immediate tax deduction when you contribute cash, stocks, or other highly appreciated assets to the fund. The assets in the fund can be invested and grow without incurring any taxes and grant recommendations can be made to send the funds on to other charitable organizations at a later date. 

Best of all, you control how the money is distributed to the organizations and causes you want to support. It’s a flexible way to support your philanthropic interests while enjoying tax benefits now.

Charitable Remainder Trusts: This specialized type of giving enables you to contribute appreciated assets like stocks, real estate, and collectibles into a trust that can sell them without any tax liabilities. You receive an income stream for the trust’s duration, often for the lives of both spouses. 

What sets this apart is the immediate tax deduction and the deferral or elimination of capital gains taxes when the asset is sold. Once the trust terminates, the remaining assets go to your chosen charities. This strategy supports causes t while you receive tax benefits and income.

Direct Giving: You can also choose the cash approach. Make tax-deductible donations directly to the organizations you want to support. It’s efficient and ensures every dollar goes to your intended purpose.

Appreciated Assets: Donating appreciated assets like stocks or real estate directly to the charitable organization can provide multiple benefits:

• You can claim a tax deduction based on the current market value rather than the original purchase price.

• By donating the appreciated asset itself, you sidestep capital gains tax.

Charitable Gift Annuities: Make a gift and, in return, obtain a fixed income for life. The annuity serves two objectives: it enables you to help a cause and provides a steady income. A portion of your initial gift is also tax-deductible.

Corporate Giving: Own a business? Corporate philanthropy options abound, from matching employee donations to sponsoring charitable events in your community.

Impact Investing: Choose to invest in companies or funds that reflect your values. It’s an investment style considering financial return and social/environmental impacts.

Volunteer Time: Your time is invaluable. Many organizations are more than happy to welcome hands-on help.

Charitable IRA Distributions: If you’re 70.5 or older, you can transfer up to $100,000 per year directly from your IRA to a qualified charity without recognizing it as income. This can offer substantial tax advantages and count toward your required minimum distributions annually. Remember to adhere to IRS guidelines to benefit fully from this strategy.

The Cogent Difference

Charitable giving is both a commendable act and a complex financial decision. That’s why working with a fiduciary financial advisor with the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation to optimize your donation is so important.  

Having seen high-earners lose their hard-earned fortunes due to inadequate planning or misguided investments—and having experienced a significant financial setback myself—I knew something had to change. This led me to establish Cogent Strategic Wealth to prevent avoidable financial mishaps for families and people you care about. 

Because you’re not like everyone else, you deserve more than an off-the-shelf wealth management solution. Using evidence-driven investment strategies, we collaborate with you to understand your financial circumstances, goals, and concerns. We want you to feel empowered knowing that your financial strategy incorporates layers of science, data, and peer-reviewed evidence tailored to your needs.  

When you partner with Cogent, you gain a partner who makes your financial interests their number one priority.
We’ll be there for you as life events happen, so if this is what you’re seeking, reach out to us to schedule an introductory interview.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal or tax advice. Cogent Strategic Wealth provides investment advice only through individualized interactions. Certain information is based upon third-party data, which may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. © 2023, Cogent Strategic Wealth®