If You Have Enough, Maybe Give Some Back

by May 9, 2023

What does money do for us in our lives?

While it’s so important to figure out how much is ‘enough’ for one’s life’s goals (so that simply making more money isn’t the goal), having money is really about empowering you to not only lead the kind of life that you want, but to also possibly affect positive change in the world once you’re gone. 

  • Some people plan on, to use their words, “sliding into their coffin without a penny left”. 
  • Others have decided that 100% of what they might leave behind will go to their children and grandchildren, creating a family legacy.
  • Others might be in a position, in addition to the family legacy, to provide support for causes or charities that are near and dear to their hearts.

Giving Now – So Many Potential Tax Benefits

While we’re alive, there are so many opportunities to support ‘worthy’ causes…and there are so many causes worth supporting! As always, consulting with your tax advisor is a wise step on this journey.

The easiest way to start down the charitable giving path is to write a check or donate your time – both very much appreciated by every non-profit organization. If you’ve got some highly appreciated investments with large capital gains, your best path might be to gift appreciated stock to a charity – a good solution when you’re younger than 70-1/2.

The Magic Age of 70-1/2

At that magic age of 70-1/2, you have an opportunity to start donating to charities directly from your IRA with a tax-break. If your money is sent directly from your IRA to the charity, not sent to you to send to the charity,  that amount may not be taxed to you or run through your tax return. Donating in this way also counts toward fulfilling your annual RMD requirement (if you’re at that stage). It is a win-win! 

This type of donation is good for you and good for the charity. With certain custodians you can attach a checkbook to your IRA, making it even easier to make those direct donations. These are called Qualified Charitable Donations.


four generations of men in family

Giving Later – We Call That Legacy

But donating to charity doesn’t have to happen only while you’re alive. Did you know that you can name a charity, or multiple charities, as beneficiaries of your retirement accounts? They can be a 5% beneficiary up to a 100% beneficiary – whatever you’d like to leave behind.  So maybe your family is set to receive 60% of your IRA’s and charities get the remaining 40%. This is an excellent way to make your hard-earned money be used to its full effectiveness. 

By bequeathing money to go to a charity from your IRA, 100% of that amount will be received by the charity, without any taxes needing to be paid on that amount. So 100% of what you saved and earned over your lifetime will 100% go to the charity and the cause that aligns with your heart.

When you leave your retirement money to friends and family (such a gift),  your friends and family will likely need to pay taxes on that money. So actually, 100% of what you’ll be bequeathing to them will end up being more of a 65% – 70% inheritance after the taxes are paid on it. 

For me, I like the idea of having 100% of what I worked for during my lifetime go to something where I 100% care about it. If you’d like to view a short video where I talk about this concept in regards to one of my favorite non-profits, KQED, click here. And if you have other creative ways for donating to charities, please share them below.