Sponsored content from the PCA Foundation.
Generosity can take many forms. When you think about giving to your church, you probably picture placing a check or cash in the offering plate on Sunday morning, or perhaps giving online. It’s a familiar practice and a meaningful expression of worship. But it’s easy to forget that the offering plate is just one of many ways you can support your church.
For many Christians, a significant portion of their wealth isn’t held in cash. It’s invested in stocks, tied up in real estate, or held in a privately owned business. Others experience seasons of unusual income, receive an inheritance, or want to make a substantial gift while spreading their support across several years.
In these situations, traditional giving methods may not offer the flexibility you need to make the most of your generosity.
The PCA Foundation helps Christians explore additional ways to give, making it possible to support their churches and favorite ministries through a broader range of assets and giving strategies that typically reduce taxes for greater giving. Here are two approaches worth considering:
1. Give Through a Donor-Advised Fund
A donor-advised fund (DAF) offers a flexible way to organize your charitable giving. You contribute assets to a charitable fund, receive a tax deduction in the year of your contribution, and then recommend grants to your church and other eligible charities over time.
Think of it as a dedicated account for your charitable giving. You can contribute and deduct when it makes sense for your financial situation and distribute gifts according to your desired giving rhythm.
A DAF can be especially helpful when you want to:
Give more in a particular year. Perhaps you receive a year-end bonus, sell an investment, or experience another significant taxable financial in-flow. A DAF allows you to give in the current year the amount of that income you want to give eventually, and deduct it against that high taxable income. You then distribute that amount to your church and other charities over time, on a schedule you choose. Taking the full deduction in the current year enables you effectively to give more while keeping the same after-tax amount you had planned to keep.
Plan your giving across multiple years. You can make a larger contribution to your DAF in one year and recommend grants to your church and other charities over time, helping you maintain a consistent pattern of support.
Simplify your charitable giving. Instead of managing contributions to multiple ministries individually, you can organize your giving through one fund (and receive just one charitable receipt).
Give strategically while maintaining privacy. You can recommend grants without having your name shared with the recipient organization, if you desire.
One strategy that works particularly well with a DAF is called bunching. It involves combining two or more years of planned charitable contributions into a single tax year to increase your overall tax deductions.
Here’s how it works: say you normally give $15,000 annually to your church and other charities. Instead of contributing just that amount in the current year, you contribute $15,000 to those charities, and an additional $15,000 to your DAF. You then deduct the full $30,000, along with your other itemized deductions. In the following year, you recommend grants from your DAF rather than your personal accounts to continue supporting your church and other charities, and take the standard deduction rather than itemized deductions on your tax return. The effect is a double deduction for the giving in the second year, which reduces taxes and enables you to give more while keeping the same amount of after-tax income.
And you can achieve this greater giving without making your church and charities wait: the frequency of your gifts remains the same.
A donor-advised fund like the PCA Foundation’s Advise & Consult Fund ® ️ can help you put these strategies into practice while keeping your giving focused on the churches and charities you care about. The Advise & Consult Fund carries zero administrative fees and can be opened with an initial contribution of as little as $1,000.
2. Give Appreciated Assets Instead of Cash
What if one of the most effective ways to increase your giving was to donate something other than money?
Many households hold a substantial portion of their wealth in appreciated assets, including publicly traded stocks, mutual funds, real estate, and interests in privately held businesses. Donating all or a portion of certain assets directly to charity, rather than selling them and donating the proceeds, offers significant tax savings for greater giving – up to 30% to 40% greater depending on the amount of appreciation. The key is to donate the asset or a portion of it before selling it.
Imagine you purchased stock for $10,000 that is now worth $30,000. If you sell the stock first, you will owe capital gains tax on the $20,000 increase in value. If you then donate the proceeds, you’ll qualify for a charitable deduction.
But what if you donate the appreciated stock directly to charity instead? After you have owned assets for more than one year (long-term capital gain property), you’ll be able to exclude from capital gains the appreciation (the equivalent of a deduction) while also qualifying for an actual charitable deduction of the asset’s fair market value. The double tax savings make more of your wealth available for ministry rather than taxes.
The same principle applies to other appreciated assets, including real estate and privately held business interests, but typically with much greater effect due to much greater appreciation. These gifts require additional planning and evaluation.
Note: The transfer of asset ownership to the PCA Foundation must happen before you sign a binding contract or agreement of sale, ensuring that you, the donor, avoid triggering capital gains under IRS anticipatory assignment of income rules.
When does non-cash giving make sense? Consider these scenarios:
Your investments have grown significantly. Rather than selling appreciated stock to fund a charitable gift, you may be able to donate shares directly.
You are preparing to sell a business. A gift of eligible business interests before a binding sale commitment offers substantial tax advantages. The PCA Foundation’s advisors and staff can help you explore your options and navigate the giving process. Because timing is critical, connect with the PCA Foundation staff early in your planning.
You own appreciated real estate. A property that has increased in value represents an opportunity to make an even larger charitable contribution.
You want to make a larger gift. Giving an appreciated asset allows you to contribute more effectively than selling the asset and donating the remaining proceeds after taxes.
The PCA Foundation can help facilitate gifts of eligible non-cash assets, including coordinating the receipt and liquidation of those assets. It places proceeds in a donor-advised fund, allowing you to recommend grants to your church and other eligible ministries over time.
Because these gifts can involve complex tax, legal, and financial considerations, it is important to begin planning early. In particular, a charitable gift preceding an anticipated sale must be completed before an agreement for sale becomes binding; simply transferring an asset before sale closing is not sufficient.
Ready to explore new ways to give?
Visit pcafoundation.com/donors to learn more about donor-advised funds and non-cash gifts. You can also explore the Foundation’s resources on non-cash giving and discover how thoughtful planning can help you make the most of your generosity.
The PCA Foundation also offers free, in-person workshops for churches covering basic estate and gift planning, non-cash giving, and advanced gift planning. Help your congregation discover new ways to facilitate generosity and advance God’s kingdom. Learn more at pcafoundation.com/smart-giving-workshop.