Don’t Sell It First, Give It and Then Sell
In yesterday’s blog we talked about How NOT to Make a Charity Donation.
If you want to donate property that has appreciated, which could include real estate or stocks, you have a couple of options on how to donate it. You could sell the property and pay the taxes on the gains. Give the charity what’s left over. That’s the amount of your deduction.
Or you can supersize your donation by giving the appreciated property intact. You will get a deduction for the full fair market value of the property. Then the charity can sell the property for the full fair market value and since they’re a nonprofit, they pay no tax.
You get a bigger deduction and the charity nets a bigger contribution. It’s a win-win!
Another strategy is one that I used for years as co-founded of the now dramatically changed Maui Millionaires company. I haven’t been part of it in years, but the way it was run back then set a model for other businesses and non profits.
Put On a Show!
If you, as a business owner, have a particular service you offer that lends itself to live events (now on Zoom), you can set up a workshop or virtual event. For example, a lawyer may offer advice about setting up a will, things to look for in a contract, that type of thing. A real estate investor may do a class on how to find good deals and maximize the cash flow and value. An online business owner may share advice on how to start a profitable online business.
The experts provide the content and advice. The charities “fill the room” by selling tickets. The nonprofits keep the admission fee for the class. The experts have an audience who wants to hear their advice, and possibly hire them for future work.
With that model, we were able to provide over a million dollars a year to charities.
I think this model could still work, if someone wanted to put it together.
Those are just a few ideas on how you can give money to a charity in a tax-leveraged way.
What ideas do you have?