The Why of Giving
by Ashley Parks, CFP
As we get closer to the end of the year, charitable gifting is often a topic of discussion. In years past, there have been many interested in the purely charitable aspects of giving while others were more set on tax benefits of giving to charity (I’d rather give it to them than the government).
The new tax law changes did have some effect on charitable contributions. Some individuals stopped or reduced giving when they no longer could deduct contributions if they were now using the Standard Deduction instead of Itemizing on their tax return.
Age 70.5 or older? Required Minimum Distributions (RMDs) from your retirement accounts can go directly to charity, called qualified charitable distributions. These charitable distributions come out of your traditional IRA to the charity tax-free (meaning you won’t be taxed on the distribution whereas a normal IRA distribution is taxed as ordinary income). There is a $100,000 limit on total qualified charitable distributions for any one year per person and the charity must be an eligible charity that you would normally have been able to deduct charitable contributions.
At the heart of the issue is: Why are you giving? Is it for the tax benefits or to further God’s work?
What does the Bible say about what we should do? Here are a few verses that are my favorites on this subject:
- 2 Corinthians 9:7 “Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.”
- Proverbs 3:9 “Honor the Lord with your wealth, with the first fruits of all your crops.”
- Matthew 6:3-4 “But when you give to the needy, do not let your left hand know what your right hand is doing, so that your giving may be in secret. Then your Father, who sees what is done in secret, will reward you.”
Growing up I was quite confused on this issue. Some say give 10% and no less and others just give what you can. The verses above have conviction in that we should be cheerful in giving, give our firstfruits (so why wait until year end?), and in secret (don’t do it to get our names on a plaque). In working with charitable organizations and seeing the impact they truly have on the world, spreading God’s word and work, why would I not give when my needs are taken care of.
My recommendation is to take a good look at where money is being spent in your household and find out if you can find dollars to give to others that might be in much more need than we are. If that budget determines that you can do $20 per month, then get that set up to automatically be contributed monthly. If that dollar figure is higher as you’ve been blessed with much, consider when meeting with your tax advisor or financial professional to incorporate giving into your financial picture. Luke 12:48 “From everyone to whom much has been given, much will be required; and from the one to whom much has been entrusted even more will be demanded.”
Those contributions could help your taxes depending on your situation, but regardless they are for God’s people to further His Kingdom.
Ashley is a Registered Representative and Investment Advisor Representative, Securian Financial Services, Inc., Securities Dealer, Member FINRA/SIPC. A Registered Investment Advisor. Martin Financial Group is independently owned and operated. #2663118 DOFU 08-2019
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