Gift Planning

Updates

Timing the Delivery of Your Year-End Gift to Ensure It Qualifies for a Charitable Tax Deduction

Posted November 2024

As the year-end giving season approaches, many of our friends and donors begin to think about how they can best support the causes they care about most—including our mission. While the main motivation for many charitable gifts is a genuine desire to share one’s good fortune for the benefit of others, an added bonus is the opportunity to receive a charitable tax deduction.

To ensure a gift is made in the most tax-wise way, it is important to be aware of the many nuances of the IRS rules for delivery of philanthropic gifts. The delivery date is important because an income-tax charitable deduction can be claimed only after the gift is “delivered” to a charitable organization.

For example, a check sent through the U.S. Postal Service is considered to be delivered on the postmark date (also known as the Mailbox Rule). However, if that same check is sent through one of the commercial overnight delivery services (UPS, FedEx, etc.), it is considered to be delivered when the envelope arrives at the organization’s office.

Here are a few other examples of how the IRS delivery rules work for certain gifts:

IRA QCDs: When making a qualified charitable distribution (QCD) gift through a broker or on an IRA provider’s website, the gift is delivered when the funds arrive in the charitable organization’s account. If an end-of-year QCD is needed to meet the required minimum distribution, the gift must be delivered to the organization before December 31.

Many people now have a checkbook for their IRA. However, the Mailbox Rule stated earlier does not apply to gifts made from an IRA checking account. To qualify, the check must arrive at the organization’s office and the charity must also actually deposit it into its account before banks close on December 31.
Mutual Fund Shares: Most mutual funds require the organization to open an account with them in order to receive a charitable transfer of shares. This may take a week or two. Also, it may take several days for the transfer to actually occur. When considering a year-end gift of mutual fund shares, it would be best to begin the process no later than December 1 and stay on top of it to make sure the December 31 deadline is met.
Stock: Very few people still hold stock certificates. Shares are held electronically. When making a stock gift, the IRS deems that it is delivered for charitable deduction purposes when the shares actually arrive in the charity’s account. Again, it is important to start this process early enough to ensure that the stock hits the organization’s account before December 31.

We would be happy to discuss your giving options to support our work and to offer our assistance in helping you and your financial advisors meet the year-end deadline.

Next Steps

The discussion herein is general in nature and may not apply to all individuals. Prospective donors are urged to consult their personal tax and financial advisors concerning the specific consequences of making gifts to Colgate. We would be pleased to discuss, in confidence, ways in which you may support Colgate. These measures may also have an impact on your estate planning.