Charitable Giving for Americans Living Abroad

Americans move abroad for many reasons, among those reasons is a personal desire to use their time and expertise in a different country and across different cultures. Philanthropy can be a fulfilling way to enrich a sense of purpose in life and it’s only natural that expats would want to support charitable and educational causes in the country they’ve chosen to live.  Philanthropic efforts can also serve as an important tool in tax and a meaningful part of your legacy planning.  However, we frequently meet families with good intentions who haven’t been able to make the most of their efforts due to a lack of comprehensive tax planning.  Developing a formal strategy around your giving can be an important part of your financial plan.  As the tax rules can change, regularly reviewing your strategy with your tax and financial advisors is also important.

Why Plan Your Philanthropy?

The question of when and where to donate can be answered once the motivation for donating has been established. Once these questions have been answered, cross-border philanthropists can begin considering the various strategies a charitable plan can incorporate. Proper use of these strategies can ensure that these goals are met, and that giving is done in the most cost effective and efficient way possible in all countries involved.

Cross-border gifting issues as well as tax, estate, and regulatory issues, can bring about challenges with charitable donations. The best way to ensure successful charitable giving while abroad is to establish a comprehensive plan that addresses these issues, as well as current circumstances and goals while anticipating future changes.  Maximizing the tax piece, from both a US and an international perspective, can mean more dollars available for the causes you care about.

How do you get Started?

The first thing to think about is the reason why donations are being made and how much are you likely to contribute in the foreseeable future. Tax benefits are an obvious reason for why people choose to make donations, but tax saving alone is rarely the only consideration.

Many donations are made without planning based on a request or a sudden need in the community to which a donor wishes to respond.  This happens with major disasters like Hurricane Katrina or the earthquake and tsunami in Fukushima Japan.  Even individuals who otherwise do not have philanthropic goals want to contribute to these crises.  And often we are asked for donations by others – friends, family, co-workers, and universities who are raising money for a cause they care about.  While very small gifts don’t likely warrant a formal strategy, if these small gifts add up throughout the year, the lack of a plan can mean missed tax savings.

By considering the frequency and type of donations, an American aboard can begin to select the gifting tools and strategies that match to their goals.

The motivation for donating is fundamental to an overall gifting strategy.  An important consideration is whether the gifts will be made while alive as part of the estate planning after death.

The question of when and where to donate can be answered once the motivation for donating has been established. Once these questions have been answered, cross-border philanthropists can begin considering the various strategies a charitable plan can incorporate. Proper use of these strategies can ensure that these goals are met, and that giving is done in the most cost effective and efficient way possible in all countries involved.