You put a check in the plate on Sunday. You pay the pledge with a credit card. You write a check to the food pantry in December, because it’s December and that’s when you think about it.
That’s good. I mean that sincerely.
Before I practiced law, I raised money for a living. I have sat on the receiving end of those envelopes, and the steady donors are the reason the lights stay on. Most charitable giving in Indiana happens exactly that way.
But here is what I have learned since: writing a check is the most expensive way to give.
Not the wrong way. The expensive way.
CHARITABLE GIVING IN INDIANA: THE SHORT VERSION
- Every gift has two numbers. What the charity receives, and what the gift cost you after taxes.
- With cash those two numbers are the same. With the right asset, they are not.
- Giving splits into two timelines. Support that arrives now, and support that completes later.
- The paragraph in your Will is usually the most expensive way to leave a gift. Sometimes it never happens at all.
EVERY GIFT HAS TWO NUMBERS
The first number is what the charity receives. The second is what the gift actually cost you after taxes.
With cash, those two numbers are the same. You give a dollar, they get a dollar, and you already paid income tax on that dollar before it ever reached your checking account. Straight trade.
With some other asset you own, those two numbers differ. Sometimes dramatically.
That gap, between what it costs you and what they receive, is the whole subject. Widen it, and the same generosity supports more. Or the same support costs you less. In some cases, both.
None of this requires being wealthy. Most of these strategies are available to anyone with a retirement account, a brokerage account, or a piece of ground they inherited from a parent.
TWO TIMELINES
Charitable planning divides along a simple line: when does the organization actually receive the money?
- Giving now. Support that arrives this year and every year. The annual fund, the pledge, the capital campaign.
- Giving later. What fundraisers call planned giving. Support that completes at the end of a term, or at the end of your life, and in some cases continues indefinitely after that.
Most people do the first without ever hearing a clear explanation of the second. So let me sketch both.
THE TOOLS FOR GIVING NOW
If you are over 70½, you can send money directly from your IRA to a charity, and it never appears on your tax return as income at all. Not a deduction. The income simply never exists. Once required distributions begin, this satisfies that requirement too.
If you own stock or property worth substantially more than you paid, you can give the asset itself rather than selling it first. No capital gains tax, and the charity receives the full value instead of what’s left after the tax bill.
And if you give steadily but never quite enough to itemize, there are ways to concentrate several years of giving into one, while your church or your food bank still receives level support each year.
Cash is the least efficient asset you own for giving. Four approaches cost you less than writing a check, and none requires being wealthy. Here is how each charitable giving strategy works in Indiana.
THE TOOLS FOR GIVING LATER
If you are holding an asset you cannot afford to sell, a charitable remainder trust converts it into an income stream for your lifetime, with a deduction now and the gift completing later.
Retirement accounts work differently. Naming a charity as a beneficiary, in whole or in part, rather than a Will bequest or a check written from your estate or trust, can meaningfully reduce what your family pays in income tax, at no cost to anyone but the IRS.
If you want your giving to continue after you’re gone, an endowment at a community foundation can do exactly that. Indiana has these in nearly every county. There is almost certainly one in your community, county, or in a nearby county.
Some gifts complete at the end of your life. Others keep going after that.
Most people never had these explained. Here is how planned giving in Indiana works.
WHAT THIS LOOKS LIKE
I worked with a woman I’ll call Sally, who gave to her church every week for most of her adult life, plus something extra whenever a special project came along. Through her local foundation, she built a fund that now sends her church the monthly equivalent of those weekly envelopes, with additional income available for special projects as they arise. It did so during her lifetime. It continues to do so after her passing. It will do that for as long as the church exists. If the church someday doesn’t, the giving redirects to other, similar organizations, as long as the dollars last.
She is gone. The weekly support for her church still shows up.
And for families with substantial assets, a private foundation may be a consideration. It is the structure behind names like White and Anderson you may see around The Region. That is a narrower conversation, but a powerful one, and it is more flexible than most people assume.
ONE THING WORTH CORRECTING NOW
Most people who intend to leave something to their church or their alma mater do it with a paragraph in their Will. A Bequest.
That paragraph is funded with the same post-tax dollars as writing a check. Just later. And a Will only distributes through Probate. If your Estate avoids probate, which I recommend, but that’s another article, that gift may never happen at all. I’ve written about that problem more fully in this article.
There are cleaner ways. Most of them are a beneficiary form and fifteen minutes.
THE COMPLETE CONVERSATION
When I sit down with someone about their Estate Plan, we cover four things:
- Taking care of the people you love.
- Reducing expense and taxes.
- Avoiding the delay, expense, and public record of probate.
- And the fourth: your legacy
It’s leaving your mark in the community, in an organization, or in supporting the people who touched your life, so that others, in the future, get that same help.
That impact does not have to end when you do. And getting it right is usually less complicated, and less expensive, than people assume.
CCSK Law works with families across Northwest and Central Indiana on estate planning, elder law, and charitable planning. If you’d like to talk through what your current plan accomplishes and what it could, we’re glad to have that conversation.
Call us: (219) 230-3600. No charge for that first conversation.
Keep reading:
- Strategic Giving During Your Lifetime. IRA distributions, appreciated stock and real estate, and how to give more without spending more.
- Legacy and Planned Giving. Charitable remainder trusts, beneficiary designations, endowments, and private foundations.
QUESTIONS PEOPLE ASK ABOUT CHARITABLE GIVING IN INDIANA
It works, and it is what most people do. It is also usually the most expensive version of the same gift, because the paragraph in your Will spends dollars you already paid income tax on. There is a second problem. A Will only operates through probate, so if your estate is built to avoid probate, that gift can quietly fail. A beneficiary designation usually accomplishes the same thing more cleanly.
It is giving that completes later instead of now. Sometimes at the end of a set term, sometimes at the end of your life, sometimes continuing indefinitely after that. Fundraisers use the phrase constantly and rarely explain it. The practical version is that you decide today what happens later, and the organization can count on it.
No. Most of these tools work for anyone with a retirement account, a brokerage account, or land they inherited. A private foundation is the one option that genuinely requires substantial assets. Everything else on this page is available to an ordinary donor with an ordinary balance sheet.
You contribute to a fund the foundation manages, and the fund pays out to the causes you name. Indiana has a community foundation in nearly every county, which is unusual and worth knowing. The appeal is durability. The fund can keep supporting your church or your cause long after you are gone, and it can redirect if that organization ever ceases to exist.
This article is general information, not legal advice. Reading it does not create an attorney-client relationship, and every situation has details that change the answer. For advice about your own situation, talk with a licensed Indiana attorney.
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