Robin Hood

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I often got harassed in college for wanting to be an accountant. I had my reasons, and believe me, none of them had to do with cubicles, ten keys, or green visors. I wanted to become an accountant and, in turn, became a financial planner so I could “do” the math that I love, follow the news and investments that have always interested me, and get to know new people and hopefully help them. I’ve always been motivated by helping others, and that’s because helping others makes me feel like Robin Hood. You read correctly: Robin Hood. Now I don’t wear Sherwood green, and I’m certainly not often a “man in tights,” but I do view my job’s purpose as being eerily similar to the path chosen by Sir Robin of Locksley. I promise you can trust me with your deepest financial concerns and your largest investment portfolio, but I should probably tell you that I frequently help my clients rob from the “rich” and give to the “poor." Let me explain…

I get to be Robin Hood because of tax planning. As an accountant and a financial planner, I frequently work with clients on ways to lower income taxes and reduce estate taxes. This allows my clients to give less money to the government and direct the destination of more of their money. One of the biggest arrows in my quill of tax planning opportunities is charitable giving, and charitable giving lets me take my Robin Hood complex one step further. By making charitable donations, my clients give less to the government and get to help a lot of worthwhile organizations; many that benefit the sick or less fortunate. That’s why today, I want to briefly discuss charitable giving.

People make charitable contributions for a variety of reasons: some feel religiously obligated, some feel socially obligated, some donate out of the genuine goodness of their hearts, and some people contribute solely for the tax benefits. I know people who fall under all of these categories, but I never judge my clients’ reasons. I only look at the fact that charitable donations are win-win situations, because the donor is not only getting a tax benefit, but is also helping a good cause or several causes.

How can you donate? As you probably know, you can give cash. You can also give property. I would like to point out that, while you won’t be eligible for a tax deduction for the value of your time or services given to a nonprofit or charity, that doesn’t mean you can’t still donate your time or services.

To whom can you donate and receive a tax benefit? Per the IRS’s latest publication, you can donate to religious, charitable, educational, scientific, and literary foundations or organizations. You can also make a donation to organizations working for the prevention of cruelty to children or animals, war veterans’ organizations, certain non-profit entities, or to the United States (or any individual state) itself. Under tax treaties, there may also be tax-deductible donations you can make to Canadian, Mexican, or Israeli charities. Just be sure to check with the organization and your CPA or financial planner to make sure your donation will yield the tax deduction you are expecting (as always, there are specific tax laws).

To whom should you donate? I would say to whatever cause(s) you feel the most passionate about. Perhaps that means you donate to a church, to your alma mater, or maybe to an organization looking for the cure to the disease that took your grandmother from you way too soon. For what it’s worth, some of my favorite organizations are: The Salvation Army, Epworth by the Sea, the Alzheimer’s Association, the Arthritis Foundation, and the Rally Foundation.

Before you make any charitable donations or increase your charitable giving, please note that you must look after your financial security first. You are by no means the Sheriff of Nottingham by doing that; you are just being realistic. I also want to emphasize that you are never making money with charitable donations; you are simply shifting who gets what percentage of money by making a donation or donations that happen to change your effective tax rate or get you below an estate tax exemption. A charitable donation may not make you better off, but you will have the satisfaction of knowing you made a cause, or the people who benefit from the cause, better off. An added bonus is that you might just feel like Robin Hood, or at least Little John.

-Tom