Dear Chardon Church Families,
We hope this letter finds you well. As we come to the close of another year many look to
the new year to make changes in different aspects of their lives. One of those changes
might be assessing your financial situation; where it may have been and where you see it
going. Some people look at where they have given funds in the past and might consider
changing the route of their donated funds. If you are considering a change, we ask that
you prayerfully consider your Chardon United Methodist Church. As with any of your
giving, it is important to realize the ongoing uncertainty in our economy, and how
important it is to give smarter. While there are other tax planning techniques available
to enhance the charitable giving process, below are two of the more common techniques.
While wealth can grant an enhanced standard of living, it can also help build a legacy
and improve the community. Charitable giving can help you give meaning to your
wealth. It gives an opportunity to express yourself, support the issues you care about,
and impact the world around you. At a time when many nonprofits such as Chardon
United Methodist Church are experiencing urgent needs, charitable giving can help
answer their call.
Please keep in mind tax strategies vary based on a host of factors, including a taxpayer’s
age, income levels, tax/charitable giving goals, etc. In addition, one must be sure they
are following the IRS dictated requirements relative to any tax planning strategy to
avoid loss of the intended benefits. For this reason, it is strongly suggested that any
strategy be reviewed with a professional advisor (e.g. CPA, tax attorney, enrolled agent,
etc.) during the planning process.
Two of the more common strategies involve utilization of donor advised funds and
required minimum distributions as sources for charitable giving:
1. A Donor Advised Fund (“DAF”) provides a simplified approach to supporting charities
while potentially maximizing charitable contributions and tax benefits. A DAF is
a charitable giving vehicle administered by a “public charity”, providing maximum
benefits to those with the financial resources to make multiple years charitable
deductions “up front”. It provides not only tax savings benefits when utilized properly,
but also provides the opportunity to make recurring, periodic contributions while
providing a detailed administrative trail. A contribution to a DAF, results in an
immediate tax deduction, allowing for future disbursements designated by the donor
from the fund to qualifying (i.e. 501(c)(3) ) charitable organizations . A third-party
administrator (e.g. Fidelity, Charles Schwab, etc.) actually operates the DAF, and has
legal control over the contributions. They provide an easy means to establish a DAF
giving account, typically through completion of a simple on-line application. By
establishing a DAF you can:
• Support multiple charities, at virtually any time, with a single contribution.
• Be eligible for an immediate tax deduction for your contributions. A strategy referred to
as “bunching” (contributing multiple year’s contributions in one year) can maximize the
tax benefit in the year a contribution is made to the DAF, while utilizing the standard
deduction in the non-contributing years.
• Contribute stocks, mutual funds, cryptocurrency or non-publicly traded assets, which
other charities may not be able to accept.
• Choose from different investment options relative to the balance in the giving account,
including a program that enables donors to recommend qualified investment advisors to
manage assets held in a giving account.
• Streamline your recordkeeping and consolidate tax receipts, provide for pre-established
periodic donations (e.g. weekly/ monthly), create a valuable estate planning tool to
support your legacy goals, etc.
• Keep in mind the planning process should project out over two to four years plus the
level of contribution required to maximize the benefit from this strategy.
2. Utilizing direct transfer of a required minimum distribution (“RMD”) directly to a public
charity (i.e. a 501(c)(3) organization). In this way, a taxpayer required to receive an
• Makes a tax-free transfer from their IRA to a designated charity without having to
recognize the RMD as income on their tax filings.
• In not recognizing the RMD as adjusted gross income, there is no need to report a
separate charitable deduction either. As a result, this tax-free transfer provides
A. For example, the taxpayer doesn’t need to itemize their deductions to get a tax
benefit, (which could be limited based on the current itemized deduction
B. Making the tax-free transfer also avoids reporting the RMD as adjusted gross
income, which provides other benefits such as avoiding the Medicare highincome surcharge, which boosts your Part B and Part D premiums if your AGI is
more than $85,000 if single or $170,000 if married filing jointly.
C. Keeping the money out of your AGI could also make less of your Social Security
benefits taxable, etc.
D. Ability to increase the effect of ROTH conversions.
Thank you in advance for your consideration in supporting Chardon United Methodist
Church to help strengthen its ability to create future disciples for our Lord Jesus Christ.
Should you have any questions on the above, please feel free to reach out to any member
of your Leadership Board/Finance Committee. We are planning to be available during
an upcoming Sunday morning, so please keep an eye out for the scheduled times.
John Forbes, Rick Stark and Mike Williams
CUMC Finance Team