Helping Clients Live with Purpose

For retirees, having a purpose is as essential as financial security and good health for living well in retirement. According to our own research, in partnership with Age Wave and The Harris Poll, 40% of retirees said that being generous and giving back to their community is their greatest source of purpose, meaning and fulfillment in retirement. That’s why charitable giving should be part of the holistic financial conversation.

Charitable Giving and Complete Wealth Management

Depending upon the individual investor’s goals and tax situation, there are a variety of charitable giving strategies to consider.

• For example, in 2021 only, those taking a standard tax deduction can deduct up to $300 ($600 for joint filers) in cash contributions to an IRS approved charity. If investors are looking to make a more sizable contribution, donating appreciated securities directly to qualified charities can be win-win. The charity has the potential to receive an even larger gift if the donated securities continue to appreciate, and the investor can take both a tax deduction and avoid paying capital gains taxes on the donated securities.
• Investors over age 70½ may also have the option of giving up to $100,000 directly from their retirement account to a qualified charity. This strategy allows the investor to avoid paying taxes on the portion of their required mandatory distribution (RMD) that is transferred to the charity.

The Edward Jones Charitable Gift Fund

Contributing to a donor-advised fund (DAF), such as the Edward Jones Charitable Gift Fund, is another way to give back. DAFs are a charitable-giving tool that allows our clients to make irrevocable contributions to the Fund—usually of appreciated securities–and receive an immediate tax deduction. As the fund grows, clients can request distribution in the form of grants to IRS-approved charities of their choice.

DAFs offer a variety of advantages depending upon the client’s portfolio, preferred charities and desired giving practices. For example, DAFs allow clients to grow their charitable gifts over time, tax free, evaluate their favorite charity’s fiscal responsibility over time, and remain anonymous if they desire. DAFs can also streamline tax reporting and reduce tax liabilities on appreciated investments.

A DAF isn’t right for every investor or every charitable contribution, however. Grants generally cannot be used for specific fundraising events because there is a delay between the time the grant is requested and when it is given to a charity. DAFs may also have account minimums for contributions and grants, they assess a fee for ongoing administration, and cannot receive contributions directly from retirement accounts.

Navigating all the charitable giving options can be challenging. As we enter the fall giving season, we have a great opportunity to partner with our clients to determine the appropriate giving strategies for them. The timing couldn’t be better to have those important charitable giving conversations that can be so rewarding in helping our clients find and live their purpose.