This is a terrible, heartbreaking time in America.
Since March, more than 100,000 Americans have died from COVID-19. Over 40 million people have filed for unemployment and thousands of businesses – especially smaller ones – are on the brink of failing. Millions of people across the U.S. face an uncertain future with risks to their incomes, their health and safety, and their ability to feed their families.
Coronavirus has laid bare the enormous inequities underlying our economy. The hardships are particularly devastating for those with lower incomes, for residents of dense neighborhoods, and for people of color.
At the same time, we’ve seen the horrific, brutal murders of George Floyd, Breonna Taylor, and Ahmaud Arbery, which have once again demonstrated how deeply systemic racism pervades our society. People have taken to the streets not just in America but all around the world, refusing to maintain the status quo.
The explosion of marches, protests, and riots demand not only our immediate attention but also lasting change, from each one of us. At Figure 8, we stand in solidarity with black Americans and we promise to funnel our efforts toward creating that lasting change.
We hear people asking how they can help.
For those of us with stable incomes and reliable wealth, with safe homes and access to medical care, we must find ways to be part of the solution. As financial advisors focused on social impact, we want to share specific strategies and actions steps you can take with your money now.
We fully realize that money isn’t going to solve everything – the need for change runs far deeper than that. But we firmly believe that how we choose to spend, invest and share our money makes a difference. Making strategically targeted donations right now to nonprofits, advocacy groups and political candidates can have an especially big impact, at a time when so much is at stake.
The CARES Act contains new tax incentives for charitable giving to 501(c)3 organizations. Specifically, for this year you can now deduct cash giving of up to $300 regardless of your standard deduction. If you’re considering making a larger gift beyond your standard deduction, you can deduct up to 100% of your income for cash gifts in 2020. (Note these new incentives do not apply to Donor Advised Funds.)
There is a sharp disconnect between investors in the stock market and the economic reality for most Americans – stock prices have roared back from their March lows, up nearly 20% over April and May. If you’ve benefited from rising stock prices, making a gift of appreciated stock now is an especially meaningful way to share your wealth.
As always, gifting appreciated securities to a charitable 501(c)(3) organization has tax advantages as you won’t pay capital gains on the gifted appreciation.
If there are organizations you’ve supported over time, your continued support is essential for these organizations. Consider giving more and giving early. Many people make charitable gifts at the end of the year; this year, you might not want to wait.
Make cash donations to advocacy groups working for change. These groups, which include Color of Change, the NAACP, and Extinction Rebellion, can play a powerful role at a time like this, and they need your help.
Consider advocacy an explicit part of your donation strategy, in addition to traditional charitable giving. There are now only minor differences in tax deductibility.
There are nonprofit advocacy groups working hard to pass legislation, or to support or oppose candidates, and lobby lawmakers to change policy. Right now, advocacy groups are playing an especially powerful role in giving voice to those fighting for social justice and donations directed for advocacy may be particularly impactful at this pivotal time.
Some larger nonprofit organizations, like Greenpeace, the NAACP, and the Southern Poverty Law Center, have both charitable and advocacy wings, with each accepting donations separately.
Historically, donations to charitable organizations (classified by the IRS as 501(c)(3) organizations) have been tax-deductible while donations to advocacy groups (typically classified as 501(c)(4) organizations) have not been deductible.
However, changes in the “Tax Cuts and Jobs Act” of 2017 essentially eliminated the charitable tax incentive for most people (e.g., anyone not itemizing with the new higher standard deduction). That means for most donors, there are now minimal tax differences between giving to advocacy vs. charitable organizations.
Gifts to advocacy groups are best made in cash as there are no tax advantages for giving appreciated securities. Those over 72 should know that any donations made to advocacy groups from an IRA will not qualify as Qualified Charitable Distributions and so will be taxed as income.
Political donations can also help lead to important social change. We cannot tell you how to vote or who to support, but with just about five months to go until Election Day, this is a pivotal time when who we elect may make all the difference.
As with donations to advocacy groups, gifts to political candidates and causes are not tax-deductible.
Pay attention to political campaigns in your area. Swing Left is another resource that helps identify critical campaigns and candidates. Here’s a list of key Senate races helpfully compiled by one of our clients.
Montana’s popular Democratic Governor Steve Bullock is polling ahead of incumbent Steve Daines, but lags behind Daines in money. Jon Tester, a Democrat, is Montana’s other Senator.
Democratic nominee Cal Cunningham is running even in the polls against incumbent Thom Tillis, but trails Tillis by a considerable amount in cash.
Sara Gideon has been polling slightly ahead of Susan Collins, but she also lags behind in cash on hand. The primary is July 14.
Barbara Bollier has a chance to take this open seat, especially if the Republicans nominate the unpopular Kris Kobach. Kansas now has a Democratic governor and has been moving toward becoming a purple state.
Mark Kelley is a former astronaut who is currently outpolling Martha McSalley and is doing very well in fund-raising.
Theresa Greenfield is polling neck and neck against incumbent Joni Ernst. Ernst’s approval ratings have dropped dramatically in recent months but she is still seen as the favorite.
If you’d like to make charitable, advocacy and/or political donations from your investment account, we want to help. We are here to assist with cash gifts of any amount, or with charitable gifts of appreciated securities over $500.
We would also be happy to talk with you about the bigger picture, around building a donation strategy that’s aligned with your overall financial plan and social impact goals.
Your voice, your presence, your post, your call, your donation – every action helps. Thank you for using your resources for change during this extremely challenging and extraordinary time.