Thanksgiving 2020
/There is no doubt that Thanksgiving festivities are going to be very different this year. Large family gatherings of extended family and friends are no longer popular due to COVID-19. Instead, small, intimate gatherings are being encouraged.
Although this will be an adjustment, there is a silver lining. Having a small gathering replace a large one usually means you know the attendees very well. You’ve spent years cultivating these relationships and know each other’s likes and dislikes, what makes them laugh and who to take seriously. So this year, in keeping with the Thanksgiving spirit, you have the perfect opportunity to host a Thanksgiving that includes a meaningful table-top discussion on which charities you support and why.
If you decide to take the discussion one step further, and put it into action, consider opening a Donor- Advised Fund (DAF) at a custodian such as Schwab, Fidelity or Vanguard. Initial minimums can range from $0 to $25,000, and ongoing administrative fees may apply.
A Donor-Advised Fund lets you take the charitable deduction in the year the DAF is funded, but allows you to keep the funds invested (tax free) until you decide to disperse them in increments as you see fit. This allows you to donate to your favorite charity on an annual basis or whenever you wish. Additional donations can be made at any time.
The number of DAFs has tripled in the past four years and has grown approximately 150 percent since the standard deduction doubled when the Tax Cuts and Jobs Act was passed at the end of 2017. (Per Accounting Today by Michael Cohen, November 12, 2019.) The doubling of the standard deduction meant that many taxpayers would no longer exceed the standard deduction when itemizing their taxes which meant they would miss out on receiving the tax benefit for their charitable donations. So instead, taxpayers decided to bunch their donations – or prefund their charitable giving - by gifting multiple years-worth at one time into their DAF to ensure they would be over the standard deduction threshold.
This could be the most poignant Thanksgiving in a long time! By discussing several charities while enjoying your Thanksgiving feast, you’re creating an experience that is both moving and touching but also slightly painful. On the other hand, what a great way for the family, including children, to get in the habit of giving back to the community.
Create your own charitable legacy today by opening a Donor-Advised Fund.
