Pittsburgh Post-Gazette/ZUMAPRESS.com via Alamy A lot of people scramble to make charitable contributions before Dec. 31 to get a tax break, but they may not be making the maximum impact -- either for the charity or for their own tax situation. "When people give at the last minute, they may not be in a position to be as strategic with their giving," says Sara Montgomery, philanthropic services specialist with Wells Fargo (WFC) Private Bank. Sometimes you unintentionally end up diluting the focus of your giving because you didn't have a plan in place, she says. And you may be able to stretch your tax benefits by planning in advance. Here are tips to help you make the most of your charitable contributions throughout the year. Make a charitable-giving plan. As you gather your 2013 charitable-giving receipts to file your taxes this spring, think about how you'd like to do it differently this year. Are there charities you would like to support more? Did you write checks last year you felt obligated to write? Ask your favorite charities what they need the most -- say, cash at certain times of the year (it's not always in December) or larger donations spread over several years. "If you start planning earlier, you can give to the charity in a thoughtful way that makes the gift more meaningful," says Tracy A. Craig, partner and chairwoman of the trusts and estates department at Mirick O'Connell, a law firm in Worcester, Mass. When you have more time, you can work with the charity to designate a specific purpose for the funds or make the most of matching offers. You may also discover that another type of giving could work better for you, such as a investing in a charitable gift annuity if you want to create an income stream for yourself, or making a charity the beneficiary of an IRA or life insurance policy. Build charitable savings throughout the year. Rather than rush to make contributions in December, set aside a little bit of money for charitable giving throughout the year. You don't need to make your contributions then; you can keep the money in a savings account earmarked for charitable giving or in a donor-advised fund so it's ready to go when you're ready (see below for more information about donor-advised funds). "If giving is important to you, make it a line item in your budget," says Montgomery. Another benefit of saving early is that you'll have some money ready to give if you want to help victims of a natural disaster or other emergency. Get an extra tax break from appreciated stock. Giving appreciated stock or mutual funds to charity gives you an extra tax benefit: You can deduct the current value of the investment as a charitable contribution if you itemize, and you'll avoid paying capital-gains taxes on the profits. (You'd owe capital-gains taxes if you sold the stock first and then wrote a check.) Identify investments you may want to donate during the year, and set a target price for transferring them to charity. Ask the charity ahead of time about the steps for transferring ownership, so you're ready to take action when the stock or fund hits your target price. For more information, see Charities: Give Stocks Instead. Consider a donor-advised fund. You can set up a donor-advised fund through many brokerage firms, mutual fund companies and community foundations. You get a tax deduction based on the date you give the money to the fund, but you have a nearly unlimited amount of time to decide which charities to support (you may be required to give a minimum amount every few years from the fund). You can't take back your donations, and the administrator has the ultimate say over which charities to support, although most requests are honored as long as the charity is a 501c3 organization in good standing. You usually invest the money in mutual funds or investment pools until you've chosen the charities to support. You can donate cash, stocks, mutual funds or other assets, and some donor-advised funds even accept shares of privately held companies, real estate and other complicated assets.
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