TO GIVE IS DIVINE AND OH, SO TAX-DEDUCTIBLE.

• Author: PETERSON, ERIC
• Position: Managing charitable donations - Brief Article - Statistical Data Included

December is the busiest time of the year for Colorado's charities, as the Spirit of Giving annually teams up with Uncle Sam to prompt deductible donations.

It is also the time of year when Ben Franklin's observation that there is nothing certain in life but death and taxes is most apt.

"When you die, 55% of your assets above a certain minimum are lost to the U.S. government," said Mark Brown, certified financial planner and partner at Denver-based investment firm Brown & Tedstrom Inc. Estate taxes are simply an uncontrolled form of philanthropy--to the federal government--Brown noted. "What's motivating is, instead of not having any influence (as to how donations are spent), you can be philanthropic and have a lot of influence," he said.

Spirit tends to be in the driver's seat on serious gifts to charity--Uncle Sam merely chips in.

"There really needs to be a charitable desire," noted Bob Thul, a Colorado Springs-based CPA. "If you make a contribution, the resulting (tax savings) is equal to your tax bracket times that contribution," not the full amount of the gift. The most an individual can deduct from charitable gifts, he continued, is 50% of their adjusted gross income for a given year. If contributions tally more than 50% of his or her adjusted gross income, the excess can be carried over and deducted the following year.

Donors want to get their money's worth. So, two questions:

Q: How can you ensure that the money really is helping the cause you are giving to?

Susan Steele, executive director of the Cherry Hills Village-based Buell Foundation, a $97 million private foundation for children in need, explained that grant-making is in many ways a business decision.

"The kind of things we look for (are) organizations that have been around for a while," with a strong track record, she said. Steele noted that the "really passionate, humanitarian people" driving philanthropy do not always have the strongest business savvy. (See sidebar.)

Q: How can you maximize your tax benefit?

A: "The maximum deduction you can get is from donating appreciated assets" such as stock, said Thul. "You get a deduction on the fair market value on the stock, but you don't have to pay tax on the gain."

Individuals who receive a sudden influx of money in a given year, from a home or business sale, booming stock options, or inheritance, may want to consider establishing a trust, advised Daniel Day of the Boulder-based Daniel M. Day & Associates estate planning firm...