A charitable gift is a donation of cash or other property to, or for the interest of, a charitable organization. The gift is freely given with the primary intention of benefiting the charity.
Whether given during lifetime or after death, charitable gifts are eligible for a tax deduction, but only if made to a qualified charitable organization. For example, you may have a relative who has fallen on hard times, someone you choose to help with gifts of cash. While benevolent intentions may motivate you in making these gifts, you cannot deduct them for either income tax or estate tax purposes.
In general, qualified charitable organizations include churches, temples, synagogues, mosques and other religious organizations, colleges and other nonprofit educational organizations, museums, nonprofit hospitals, and public parks and recreation areas. Gifts to these types of organizations qualify for a federal income tax deduction if made during your lifetime or, if made after your death, can be deducted from the value of your estate for federal estate tax purposes.
Why Consider a Charitable Gift?
People give to charities for a variety of reasons.
- Because they have compassion for the less fortunate.
- A belief that they owe something back to society.
- To support a favored institution or cause.
- The recognition attained by making substantial charitable donations.
- To benefit from the financial incentives our tax system provides for charitable gifts.