The Procrastinator’s Guide To Year-End Charitable Planning

If you are like many donors, you wait until the last minute to make your year-end charitable gifts. shutterstock_236746399Whether due to indecision, hectic holiday schedules, or plain old procrastination, it is a well-known truism in philanthropy that a good number of gifts will arrive at charities’ doorsteps the last few days of the year.  (One year at The ALS Association, I took a donor’s $10,000 credit card gift over the phone – on December 31.)

You’re in luck: you have this last-minute blog post to help you in the nick of time.  With a little bit of forethought, you can avoid some common pitfalls and make the most of your year-end giving.

The most important date to remember is December 31.  Not coincidentally, this is the date that motivates most procrastinating donors into action, since this is the date by which your gift needs to be completed in order to qualify for a charitable deduction on your income taxes for the year.

So the question you need to ask yourself is: when is a charitable gift considered complete?  The answer is not as easy as you might think.

The gift is complete on the “date of delivery,” and that date depends on what kind of property you use to make your gift.  The most popular means for giving are:

  • Cash (including checks and credit cards)
  • Stock and securities

Now for the “date of delivery” rules for each:

If You Give Using Cash or Check

If you mail your gift, you can take advantage of the so-called “Mailbox Rule,” which says that the date of mailing is considered the “date of delivery” as long as the check clears in due course.  Thus, your gift is considered complete when you physically drop the envelope with your check in a U.S. Postal Service mailbox, even though the check may not be received by the charity until the following year.

That means you could, in theory, drop a check in the mail at 11:59 p.m. on December 31 and it will count as a gift in the current year – not that I would suggest you procrastinate that much.

If you do wait until December 31 to mail your gift, be sure to do so using Certified Mail so that you have proof of the mailing date.  And don’t rely on a postage meter either – several Tax Court cases have ruled against the use of a postage meter to establish the date of mailing.

Warning: the Mailbox Rule only applies to the U.S. Postal Service, not private services like FedEx or UPS.  If you use a private service to send your gift, the “date of delivery” will be the date the charity receives the gift.

If You Give Using a Credit Card

This one is a bit tricky.  The gift is considered made when the bank pays the organization, not when you pay your credit card bill.

If you call a charity to make a credit card gift on or before December 31, make sure the organization processes the donation by December 31.  Most online giving platforms will process the charge right away, but double-check your card statement to be sure.

If You Give Stocks or Other Securities

Again, the rules are tricky here.  The gift is made once the securities are no longer under your control.  But when exactly is that?

One thing is certain: the day you provide instructions to your broker or advisor is not the gift date.  From the charity’s standpoint, the only date they can verify is the date the shares landed in their brokerage account.

With the rule somewhat vague, probably the best date to use is the date shown on your account statement that the shares transferred out of your account.  Since these transactions can take a few days to complete, be sure to start the process early.

If you have a physical stock certificate, mail the certificate and a properly completed stock power in separate envelopes to the organization.  The Mailbox Rule applies assuming you use the U.S. Postal Service.

If you own mutual fund shares directly with the fund company (not in a brokerage account), the charity often will be required to open their own account with the fund company in order to receive your shares.  Plan accordingly if this is the case.

Other types of assets – like real estate or tangible personal property – have varying rules around what constitutes date of delivery.  Contact the charity’s development office with any specific questions.

Conclusion

The bottom line: time is short.  Don’t wait until December 31 to make your gift.

And next year: start a little earlier.

Comments? Contact me on Twitter @juanros.

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