There are many ways to give to worthy causes besides financial giving such as volunteering your time or pro bono services. Each method can deliver major benefits to the recipient and is appropriate depending on the circumstances. However, a well considered financial giving strategy not only benefits the recipient but can result in significant tax benefits to the donor.
Saward Dawson offers advice on many strategies, appropriate depending on individual circumstances and what you are trying to achieve.
The simplest method of tax effective giving is to make a donation of $2 or more to a Deductible Gift Recipient (DGR). The donation is generally deductible in the year that it is paid.
Workplace giving enables employees to give regularly, deducted from after-tax salary and claimed in the tax return. This method can simplify giving for both the donor and recipient however employers may restrict the list of DGRs.
Some taxpayers may be eligible to distribute pre-tax income from a discretionary trust which is not restricted to only to giving to DGRs. However, strict rules apply.
Private Ancillary Funds, charitable funds and bequests are some other forms of financial giving. Some options can be expensive to run so this must be considered against the benefits.
Formulating a tax effective giving strategy or setting up tax effective structures can be beneficial for both donors and recipients.