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Making Your Charitable Gifts Count:

A charitable giving strategy can benefit you and your favorite charities

Many individuals own assets valued a lot higher than they think and would be surprised to learn that they top the $625,000 threshold where estate taxation begins. If after taking an inventory, future taxation looks likely, you may want to consider using charitable gifts to reduce your taxable estate or provide valuable estate tax deductions.

Giving to charities rewards the giver twice
Americans are very generous. In fact, charitable gifts made by individuals, foundations and corporations in 1996 accounted for 2% of the nation's GDP. In addition to providing valuable altruistic rewards, for many an important element of giving is the associated tax benefit that the IRS allows.

Writing a check - usually at year end - is unquestionably the most popular way to give, but not always the most effective. "Taking a little time to think strategically about charitable giving and its tax benefits and identifying alternatives to the year-end check writing rush can ultimately benefit both you and your recipients charities," says Jamie Jaffee, president, Charitable Gift Fund.

Planning ahead makes charitable giving work for you

Consider these two ways to make the most of your giving.

  • Seek advice early. Consult your financial planner, accountant, or other adviser early in the year to discuss your financial and tax situations for 1998. See them when they have time to concentrate on your situation (after April 15 and well before year-end).
  • Make some estimates. If you've just completed your 1997 tax return, use what you've learned to determine how much you can afford to give in 1998, and how much in charitable deductions would be beneficial.

Should you decide to give, here are some tips for assessing which charitable giving vehicle or method is right for you:

Prioritize your needs and goals when considering a charitable giving method. Ask yourself these questions:

  • Are current or annual gifts to charities important to me or are deferred gifts to bequests important, or both?
  • Do I have appreciated securities that I could donate instead of cash?
  • Is a charitable deduction important to me?
  • Do I need lifetime income prior to my charitable gift?
  • Am I more concerned about defraying estate taxes than current income taxes?

The answers to questions like these should help you determine the best giving strategy for you and your family.

Consider donating appreciated securities so that you do not have to pay capital gains tax on the appreciation. If you plan in advance, you may also get the added benefit of timing your appreciated securities gifts when you think their values are peaking - potentially increasing the gifts and providing even greater tax advantages.

Do your homework now
Often when people wait until the last minute to give, they wish (in vain) that they had more time to research their options. Talk to your advisers and the development offices of your favorite charities and ask them for their giving option brochures. You can also consult charitable giving tax guides like:

  • Coopers & Lybrand's Charitable Giving in the 1990's (call: 202-822-4000)
  • Arthur Andersen's Tax Economics of Charitable Giving (call: 800-546-3209)
  • Fidelity Investments' Giving Wisely, Giving Well: A Consumer Guide to Charitable Giving (call: 1-800-682-4438).

Fidelity Investments Charitable Gift Fund is a public charity and donor advised fund. Various Fidelity Investments companies provide investment management and administrative services to the Charitable Gift Fund.

1998 Charitable Gift Fund

To visit the Fidelity Investments Charitable Gift Fund site click here.
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