How to give now
5 strategies to make the most of these times

By Kelly Greene, TIAA Senior Director and co-author of the New York Times best-seller The Wall Street Journal Complete Retirement Guidebook
Lines of cars snaking around food pantries. Charities left to make ends meet without live events. Nonprofit hospitals struggling to manage through the pandemic.

Whatever cause moves you to give, never has the need felt so urgent. It has always paid to understand how you can make your gift go farther—while balancing giving with the need to save for your own future needs.

Now, with big changes in this year’s rules governing tax breaks for giving, here are four strategies to help you leverage any donations you make, taking into account your income level and where you are in your career:
  1. Get the tax break.
    If you’re just starting out in your career, or your state taxes are relatively low, you may not “itemize” deductions on your tax returns. And that means you usually can’t get any tax benefit from making gifts to charity. But this year, you can deduct up to $300 in cash donations to tax-qualified nonprofit groups anyway. It’s a break provided through the federal CARES Act, enacted earlier this year in an attempt to mitigate some of the COVID-19 pandemic’s economic hardship. So keep track of your receipts, and make sure you are giving to a group that is recognized by the federal government as a tax-exempt nonprofit group .

    If you do itemize deductions on your tax return, and you have been looking for the right time to give a big gift, there’s another big change to note this year in the tax rules: You can deduct up to 100% of your 2020 income (on your tax return, this would be your adjusted gross income) for cash gifts. That’s up from the usual 60%.

    Note: Both of these changes apply to cash gifts. You can’t claim these deductions by donating stock, real estate, food, used cars, etc.--or by making contributions through donor-advised funds or your IRA. (More on that later.)
     
  2. Give back a windfall.
    Many people, including a few who have been furloughed, are discovering newfound savings during the pandemic. In addition to temporary savings on commuting costs, meals out and so forth, there have been other notable givebacks. About 41% of Americans said in a June survey that they are saving more, with younger people leading the way. And in New York City, for example, families of the 1.1 million children in public schools are supposed to get a $420 payment for every child to cover the school meals they missed last spring.

    Can you afford to pass the money on to people with more pressing needs than your own? It’s important to balance your own wants and needs, saving for the future, and gifts. But it quickly starts feeling complicated in daily life. Here are a couple questions to help you think through these goals:
     
    • First, do you have adequate emergency savings? The rule of thumb among experts is to have enough saved to cover three to six months of your basic expenses—and even before the pandemic, many Americans hadn’t saved enough to cover three months of living costs, according to a 2019 Bankrate survey.

      • Second, how much are you saving for retirement? Is it at least enough to get any matching contributions through a workplace savings plan? Or, if your employer has paused your match, have you increased your own savings? Alternatively, if you save for retirement with an IRA, consider trying to fund it up to this year’s limit.
     
  3. Match everything you can.
    Tax deductions aren’t the only way to make your giving work harder. Many employers will match employees’ giving to some organizations, but it’s worth checking ahead of time to see which types are included. Some companies have a specific list, make matching gifts to relief groups following a natural disaster, or rally employees to come together for virtual food drives. Your employer may also be willing to make a financial donation to a group to which you have contributed volunteer hours, or on your behalf after you have completed some sort of athletic event. And some organizations even provide paid time off to volunteer.
     
  4. Your time is valuable, too.
    If you find yourself with newfound time, rather than savings, many nonprofit groups would be just as grateful for your help as your money right now. Many retirees, the backbone of many nonprofits’ volunteer labor, have had to pause their in-person volunteering due to health risks. From food pantries to polling places and charities organizing meal deliveries from soup kitchens to people quarantined at home, nonprofits across the U.S. that previously depended on older adults as their chief source of volunteer labor are coming up short.

    The needs run wide and deep, and they are expanding: Plug into a neighborhood app or online forum and you’re likely see this at work. My track club, for example, has a specific email address to which anyone can send a note asking someone to, literally, run an errand for them. A “pizzaiolo” who (luckily for me) lives in my neighborhood now turns out dozens of gourmet pies each week and gives them away to unemployed restaurant workers—while also “giving” pizza to people who still have jobs in exchange for donations. Local farms are asking for help harvesting extra vegetables to give to people in need. The list goes on.

    Even if you are stuck at home, or you have children in tow 24/7, there are ways to help: Many nonprofits need assistance keeping up communications, writing grants, and coordinating volunteers. Do you have a sewing machine gathering dust on a shelf, along with some old clothes? Make masks to give away.

  5. Rethink donations from your IRA.
    If you’re retired, and you typically make donations from your IRA, you may want to reconsider that strategy this year. While you are still allowed to use your IRA to make what’s known as a “qualified charitable distribution,” or QCD, you can’t use it to offset taxable income from your IRA because the CARES Act waived required withdrawals from IRAs in 2020. As you can tell, this gets complicated fast, so it would be worth a check-in with a financial advisor as you think about other ways to give this year.


No matter where we are on our career path, we’re all looking for ways to deal with the weariness of so much uncertainty—and giving can provide a welcome way to do something. At a time when so much continues to feel so limited, consider leveraging this way to invest your savings, time—and desire to make a difference.

This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances.
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