Charitable giving can be one of the most rewarding ways to do good, but without careful planning, it can also create unexpected challenges. Many donors assume their significant gifts will automatically make an impact, but there are common problems philanthropists face that can limit their effectiveness.
If giving is part of your plan, it’s important to understand the traps that come with donating incorrectly. Whether you’re incorporating giving into your estate plan or managing your wealth, here’s how to give the right way.
Mistakes others have made that you can avoid
Many donors don’t realize the problems with charitable giving until it’s too late. One of the biggest mistakes is donating to thewrong charity. Without proper research, you might accidentally give to an organization that doesn’t align with your values, plans, and goals, or mismanages donations.
Some donors make the mistake of paying themselves first instead of donating to the charity. With QCDs (Qualified Charitable Distributions), IRA owners can contribute up to $100,000 tax-free, but only if the funds go directly to the charity. Writing a check to yourself first means losing your tax benefits.
San Diego Estate Planning
San Diego Estate Planning
Dive into the world of estate planning with this quick and straightforward video…
Another common issue is donating the wrong assets, particularly those under a binding sales agreement. For example, a Charitable Remainder Trust (CRT) allows appreciated assets to be sold tax-free, unless the sale is prearranged. In that case, the donor could be subject to the full capital gains tax.
Charitable giving isn’t always straightforward and the right guidance can make all the difference. Remember: Nonprofits and charitable foundations must follow strict rules on how funds are used. If donors don’t structure their gifts properly, then funds may be misallocated or administrative costs can soar — all of which could lead to IRS scrutiny or penalties.
How we help
Giving back should be simple and rewarding, not stressful. As a charitable planning attorney in San Diego, Hatley Law Group specializes in helping clients structure their donations to maximize benefits for them and the causes they support. Whether you’re navigating tax implications, setting up a long-term charitable strategy, or aligning your charitable planning in California with your estate, we make sure your generosity counts.
Want to give with confidence? Let’s create a plan that works for you!
24/7 Protection
24/7 Protection
With DocuBank, you have secure access to your medical information whenever you need it.