Planning for the standard deduction, and why giving makes you smile
Hello from the Morton Community Foundation!
Thank you for the opportunity to work together! Already we are hearing from many donors and fund holders about your year-end giving plans. We couldn’t be happier that so many of you are planning ahead to be sure you have plenty of time to accomplish your charitable goals for 2024. Of course, we’re happy to help put things together right up until the end of December, but it’s really nice to have plenty of time to ensure that charitable, tax, and estate planning objectives are all considered. This is especially important if you’re just getting started working with the Morton Community Foundation or are considering doing so this year. We’re ready to talk when you are!
In this issue, we’re covering three topics that have popped up several times recently in conversations.
We're in the midst of our 25th Anniversary fiscal year, and As an MCF “insider,” we want to be sure you’re in the know about MCF’s 25 Years of Gather, Grow, Grant celebrations, which has already begun! We are honored to work with you and other generous donors who are committed to improving the quality of life in our region through philanthropy. We'll offer ways you can get involved.
With potential tax law changes on the horizon, many people are taking a closer look at how the standard deduction might impact their charitable planning for the next few years. Learn how the Morton Community Foundation can help you and your advisors work through various scenarios for organizing your giving so you don’t leave dollars on the table either for yourself or your favorite charities.
Giving to charity makes people happy. That certainly does not come as a surprise to most people who incorporate philanthropy into their lives, but you might be interested to learn how the research on these positive emotions connects to the charitable giving tools available through the MCF. Lots of reasons to smile!
As always, we look forward to hearing from you! Thank you for everything you do for the community we all love.
With gratitude…
Your Morton Community Foundation Staff
Scott Witzig, Executive Director
Darcy Riddle, Administrative Manager
Standard deduction planning: Avoid leaving dollars behind
One of many items on the legislative “watch list,” especially in light of the upcoming elections, is the standard deduction. Without intervening legislation, in 2026 the standard deduction for individual taxpayers younger than age 65 is scheduled to drop from $14,600 to $8,300.
While this may spell higher taxes for some taxpayers, the news could be positive for charitable giving. You’ll recall that the Tax Cuts and Jobs Act of 2017 increased the standard deduction significantly. As a result, only 9% of taxpayers itemized deductions in 2020 compared with 31% in 2017. Although certainly not the only factor motivating charitable giving, tax incentives do play a role in donors’ decision-making about whether, when, and how much to give. Indeed, statistics recently released by the National Bureau of Economic Research indicated that the increased standard deduction resulted in $20 billion fewer charitable donations in 2018 alone.
The Morton Community Foundation is happy to work with you and your tax advisors to map out a charitable giving plan for the next few years to navigate anticipated changes in the law. For example, this year you could consider using a technique called “bunching” to make two years’ worth of gifts up front to your donor-advised fund to take advantage of the standard deduction while it is still high.
If you determine that bunching is right for you, naturally, cash is easy to give in a year of higher-than-expected income. So, for example, if you earn a large bonus this year, get a big increase in compensation, take a job buyout, or experience a significant liquidity event, your surplus income could make bunching ideal.
Most of the time, though, even when you deploy a bunching strategy, donating highly-appreciated marketable securities is a better choice than giving cash because it is extremely tax efficient. Stock given to a public charity, such as your donor-advised or other type of fund at the MCF, typically is deductible at the asset’s fair market value. The Morton Community Foundation, in turn, pays no capital gains tax on its sale of the asset, thereby generating more dollars to support your philanthropic interests than if you had sold the stock and given the proceeds to your fund.
You can think outside of the box, too, and explore other assets that make great gifts to your fund. As is the case with gifts of other long-term appreciated assets, a gift of real estate or closely-held stock avoids capital gains taxes and results in more money for your favorite causes than if you had sold the asset, taken the tax hit, and donated the proceeds.
The bottom line? Now is a perfect time to look ahead at your charitable giving plans so that you don’t leave dollars behind. Your own financial situation, as well as the charities you support, will benefit from your careful planning. The Morton Community Foundation is here to help!
Giving to others gives us lots of reasons to smile
The Morton Community Foundation is honored to serve as the “hub” of your philanthropy. Whether you’ve established a donor-advised or other type of fund, arranged for a bequest to a fund or to the Morton Community Foundation itself, or both, our team strives to help you organize your giving to make it easy and convenient. If you’ve not yet established a fund or arranged for a bequest but are considering it, we look forward to continuing the conversation!
Charitable giving is important not only locally and nationally, but also internationally. Indeed, the World Giving Index 2024 Global Trends in Generosity reports that 4.3 billion people worldwide helped someone they didn’t know, volunteered time, or donated money to a good cause in the preceding month.
It’s no surprise that research indicates that giving to others actually puts donors in a good mood. This is especially the case, studies show, in three ways:
The act of giving feels good in the moment
People like having choices about their giving
People like to see the results of their giving
We know this intuitively based on our own experiences. For instance, many of us enjoy picking out a birthday gift for a friend or family member and watching them open it.
The same good feelings translate to charitable giving. People enjoy working with the Morton Community Foundation. Certainly one reason is because the MCF activates the research’s three key factors:
Feels good in the moment. The Morton Community Foundation makes it easy to give cash, stock, or other assets to a type of fund that is the best fit for you, whether that’s a donor-advised fund, designated fund, field-of-interest fund, or unrestricted endowment fund. When you initiate the stock transfer, for example, it’s fun because the Morton Community Foundation makes it easy. You know immediately that you’ve taken meaningful action.
Offers choices. The Morton Community Foundation’s tools are flexible to meet your charitable giving goals. We can help you set up an annual giving strategy, establish a bequest to your fund in your estate plan, and everything in between. Most of all, we want to help you support the causes that are most important to you, whether those are particular charities or broader areas of community need.
Shows results. The Morton Community Foundation has its finger on the pulse of our region’s priorities and how charitable giving can improve quality of life for everyone. Every day, we work with you and other families, individuals, and businesses to help you not only make a difference, but also actually see the difference you are making. From research and hands-on site visits, to networking with other donors and meeting with community leaders, our team will provide a wide range of opportunities for you to see first hand the results of your philanthropy.
We look forward to helping you incorporate charitable giving into your life in ways that help the community and make you happy!
The team at the Morton Community Foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation.
