Amanda Thomas, MS, CFP®, is a Partner and Client Advisor at Mission Wealth. Amanda specializes in customized financial planning, philanthropic and charitable giving, and tax strategies to assist in her clients' goal achievement.
The holiday season is one of giving, and there are so many worthy nonprofits that will benefit from generous donors this year. Yet, planned giving strategies should be discussed and optimized year-round. Charitable Giving tools such as Charitable Gift Annuities, Charitable Remainder Trusts, and non-cash assets are all strategies to discuss with your Client Advisor and Philanthropic Financial Planner.
I recently attended a webinar hosted by the Financial Planning Association that discussed some interesting developments to bring up when you are planning your giving strategy.
The United States is Leading by Example
- There are currently over 1.3 million charities, with 125-150 new ones formed every day.
- The United States gives double the percentage to charities versus the next three top countries combined – New Zealand, Australia, and the United Kingdom. This ranking is by the World Giving Index which examines charitable giving in three categories – donating money, volunteering time, and helping strangers.
Professionals Offer Guidance and Giving Support
- Professional advisors now help create over 65% of all charitable gifts. Accountants and attorneys are the two top advisors to assist clients with their giving decisions. This is followed by a client’s financial and wealth advisor, whose influence has doubled over a four-year period.
- Americans aged 85 and older represent the fastest-growing age group, and women are controlling or will control an unprecedented level of wealth.
Interesting Demographic Trends
- Depression-era: This group is very trusting, give discretionary gifts, and gift to traditional institutions.
- Boomers: They are more controlling, want more information to make giving decisions, and are generally engaged from a distance.
- Gen X and Y: These individuals must be engaged first, have heavy personal involvement, love grassroots and social change organizations, and social networks drive connections and giving.
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Giving Options and Taxes
- Due to the increased estate tax exemption up to today’s (2022) $12 million level, the conversations now focus more on income and capital gains tax triggers.
- Real estate, closely-held stock, and other unique assets are estimated to be 4-6 times the value of the entire stock market.
- The largest non-cash donations in history were made in the last two years.
- Charitable gift annuities are the most popular form of lifetime-income gifts.
In a recent survey, the majority of donors would not reduce their giving if income taxes or estate taxes were eliminated, meaning the motivation to give is not always financial. Surveys also suggest that the reason many potential donors don’t give is that they believe that their gifts will not be used wisely.
More education and awareness are needed from the nonprofits to their potential donors so they can see where their donated dollars are going, and how these funds are leveraged to create more benefits for the recipients. Nonprofits can also learn from one another. For example, there is a nonprofit in my local community where the board of directors is tasked with fundraising to cover 100% of the organization’s salaries and overhead so that all of the additional donations received go directly to the charity’s cause. What a great model!
How to Start a Charitable Giving Strategy
Mission Wealth Can Help. Get Trusted Support and Advice.
Your Mission Wealth Client Advisor can help facilitate your family legacy discussions. We can review your current giving strategy and identify if any updates may be in order.
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