With the intense political attacks on our community, many of us are looking for ways to help. For some, this is deeply personal as we’ve watched family and loved ones actively support actions that could take away our rights or harm our relationships or our people.
The attacks on our community are real. Some are easy to see, such as legislative efforts and others are a little harder to find. Many of the anti-DEI campaigns have been coordinated by activist Robby Starbuck. While he describes himself as an opponent of DEI, half of his attacks are aimed at corporate support of gay, lesbian and transgender people, while a much smaller fraction – nine percent – target racial diversity. (USA Today 09/2024). These efforts have caused major corporations to stop supporting our community financially. This is not just stopping contributions to Pride, or no longer submitting questionnaires to the Human Rights Campaign, this has an impact on the funding of grants (such as for medical research), and corporate charitable giving as well as all kinds of LGBTQ+ organizations.
Some information about the organizations that support our community:
- Only 0.16 percent of all charitable giving is to LGBTQ+ focused organizations. That’s correct, that equates to less than 2/10 of 1%, a very small amount of funds compared to non-LGBTQ+ organizations.
- In the past, government grants made up about 40% of total contributions to LGBTQ+ organizations. Corporate contributions accounted for more than 15% according to Equitable Giving Lab.
In the Carolinas, there are nearly 150 registered charitable organizations. Nationwide, there are thousands of charitable organizations focused on the LGBTQ+ community, providing support, education and/or advocacy. Some provide legal advocacy or promote civil rights, while others fund medical research, or help those seeking to start families, and some provide camaraderie and social engagement, or keep us informed with news about our community. Lists are available from various sources, such as equitablegivinglab.org and charitynavigator.org, which also has reports and rankings for the financials of organizations.
Your Money and Making an Impact
With much needed investments in support of our community not coming from government or the corporate sector, we can help fill the gap. There are strategies to help you make the most impact with your money. A charitable giving plan is a great tool for this.
All of us have different financial situations. Some would like to give and some would not. Some may want to do something now, others are on fixed incomes. Some would like to give to several nonprofits, and others might want to give to nonprofits that are not focused on the community. The key is to be aware of the options. When thinking through a charitable giving plan, being strategic can help any gifts go further. Some of the strategic objectives might be to maximize a gift, or to make any contributions in a way that helps with taxes, or to hold onto their money as long as they’re alive but to give any remaining estate to charity. When planning future giving, it may be years or even decades between now and the time of giving. Situations will change within nonprofits and charitable organizations. Flexibility is needed.
Next are brief explanations of different strategies that can be used. Before engaging in any of them, I recommend understanding them fully, as well as the impact on your overall financial plan. Good financial planning will coordinate charitable giving in certain tax years to maximize the benefit. Currently, 60% of cash contributions are deductible and appreciated assets (such as stocks) get a deduction of 30% with no capital gains tax.
One tool that helps answer many of those needs is a Donor-Advised Fund (DAF). Highly flexible, DAFs can be customized to the wishes and timing of the donor. They can accept cash and non-cash (think of property or valuables, or even investments). Donations can be made during the lifetime of the donor, or with assets from the estate. During lifetime, the timing of gifts into the DAF can be coordinated to help with taxes.
It’s true that any property can be given (or left in a will) directly to a charitable organization, however, many organizations are focused on their charitable mission and find it difficult to manage gifts of property or investments. When planning gifts, it’s best to ask the intended organization what kind of gifts they can accept.
Life insurance is an often-overlooked strategy. For example, there may be an old life insurance policy that’s no longer needed but has cash value gains that would be taxable if surrendered. A charity (or DAF) could be named as beneficiary. Some people even purchase a life insurance policy specifically for the purpose of charitable giving. The intent is to pay the annual premium knowing that it will leave a much more substantial gift at death. For some, leaving that legacy is important.
Many corporations offer life insurance as an employee benefit, generally 1x or 2x salary. Employees pay tax on the premium for any face amount over $50,000 based on rates published by the IRS. For older people with higher salaries, the tax on that amount can be substantial. If a charity is named as beneficiary for the entire year, then there would be no tax on that premium amount.
Another idea is a Qualified Charitable Deduction (QCD). Everyone age 73 and older must take a Required Minimum Distribution from their qualified retirement accounts, such as 401ks or Traditional IRAs. With a QCD, if the contribution is made directly from the qualified account to a 501(c) 3 organization, there is no tax on the RMD to the donor. There are limitations to this strategy.
For couples, it is possible to structure estates and retirement plans to ensure both spouses will be cared for during their lifetimes with remainders going to charity. Those with significant estates might want to explore charitable trusts or even private foundations.
Whatever one’s estate looks like, no matter how much you wish to give, there are ways to help you and the organizations you wish to support. Developing a strategy is involved and requires knowledge and expertise. A financial planner can help people with these concepts. It should also be discussed with an attorney when developing estate plans, and with a tax preparer or CPA.
Frank Summers is a Certified Financial Planner™. He can be reached at or frank.summers@ceterainvestors.com or 704-459-4646.
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