OR WAIT null SECS
The author is a former senior editor of <i>Medical Economics</i>.
You want to give back, but don't know how to go about it? Here's help.
You've probably received information on planned giving from your alma mater. Do those vehicles make sense? Or are there better ways for you to go about making a donation? We checked with development offices, CPAs, and financial advisers to find out the most advantageous way to make a gift. (Don't forget to consult with your attorney, too, if you're concerned about coordinating your donation with your estate plan.)
Donate to the general fund or earmark your gift?
For ideas, call the dean and ask where the need is greatest. "The key is to find out what's happening at your school that really triggers your interest or pride. Find out if the school is sponsoring research or initiatives that you'd like to support," says Colby Collier, executive director of development at NYU Medical Center. Or maybe you'd like to direct your donation toward your specialty. Call the director of that division at your medical school and ask, "What's going on there that's exciting?"
If you benefited from scholarship money, perhaps you'd like your gift pooled with other scholarship funds. "Young people who intend to go into primary care are tempted to go into a subspecialty so that they can make more money and pay off their debt quickly," says Frank Reider, director of communications for Medical Center advancement at Georgetown University, where the most urgent need is student financial aid. "We're hoping to provide more money for scholarships so that more of these students can continue into primary care." For more information about one program that supports this effort.
Cash or securities: Which is best?
The easiest way to make a gift is to write a check. However, for a doctor in midcareer, a gift of appreciated securities or mutual funds that have racked up significant capital gains is probably the best bet. So check to see if you own any of these investments. Donating appreciated securities benefits you in several ways, says tax attorney David Schiller of Norristown, PA. He points out that if you were to sell the securities instead, you'd have to pay tax on the capital gains. However, when you donate the securities, you pay no capital gains tax. You also get a charitable donation based on the fair market value of the appreciated stocks or funds.
For example, say you paid $30,000 for a stock that's now worth $75,000. You donate it to your alma mater, which sells the securities, but doesn't have to pay any capital gains tax. Nor do you owe any capital gains on the $45,000 of unrealized gain. But you get a tax deduction based on the stock's appreciated value of $75,000.
This strategy works as long as you've owned the securities for more than one year. If you've held them for less time, your deduction is based on the amount that you paid for the stock. So, in the example above, your deduction would be limited to $30,000.
What if you're looking to unload a stock that's gone down since you bought it-say, you paid $50,000 and it's now worth $30,000? In this case, you could still benefit by donating it, but it makes more sense to sell the depreciated stock first, then make a cash gift to the school with the proceeds. That's because your charitable deduction will be limited to the stock's fair market value at the time you sold it, which is only $30,000. By selling the stock yourself, you could claim the resulting loss as one deduction and the charitable donation as a second one.