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Charitable planning trends, client planning tips, supporting local needs, and charitable giving conversations

Charitable planning trends to watch in 2025

Now that you’ve emerged from the hectic tax-planning whirlwind that often characterizes the last few weeks of the year, you may be turning your attention to commentary in the media about how the new administration might impact legislative priorities and tax law changes. At GiveWell Community Foundation, we keep a close eye on developments that could impact the strategies you recommend to your charitable clients; we strive to be your go-to resource for philanthropy-related matters.  

Naturally, we’re watching what might happen with the Tax Cuts and Jobs Act (TCJA) of 2017. You’re no doubt well aware that the TCJA introduced several changes that significantly impacted charitable giving. These changes are set to expire at the end of 2025, leaving many advisors and clients wondering about the ramifications of a potential extension and how to evaluate certain charitable planning techniques in the meantime.

Here are three points you’ll want to be aware of as you work with charitably-inclined clients:

TCJA’s provisions impacted charitable giving
The TCJA lowered individual income tax rates across the board, which in turn decreased the tax savings for each dollar donated, making charitable contributions slightly less attractive from a tax perspective. Plus, the TCJA nearly doubled the standard deduction. (In 2025, the standard deduction is $15,000 for single filers and $30,000 for a married couple filing jointly.) This increase led to a dramatic reduction in the number of taxpayers who itemized their deductions. This meant that fewer taxpayers could claim charitable deductions, potentially discouraging giving among those who previously itemized. Indeed, research estimated that U.S. charitable giving fell by about $20 billion in 2018, the first year the TCJA was in effect!

In addition, the TCJA roughly doubled the estate tax exemption, which now has reached $13.99 million per person for 2025. The higher exemption has diluted purely tax-driven motivations for charitable giving among affluent clients. With fewer estates subject to tax, many advisors are dealing with a smaller pool of clients for whom charitable bequests are useful as a technique for reducing the size of the taxable estate.

Tax deductions are typically not the primary motivator for charitable giving
Of course, as was the case following the TCJA’s enactment, tax policy plays a role in clients’ charitable giving behaviors. Nevertheless, studies have shown that the majority of donors are motivated by factors other than tax savings, including a sense of responsibility, a desire to tackle disparity, passion for specific charitable causes, and religious beliefs. Your clients who give to nonprofit organizations appreciate knowing that they are helping others and strengthening a community. While tax benefits certainly are part of a client’s decision-making process, they’re likely not the primary reason for giving. Even with tax benefits, your client will always end up with less money after making a charitable contribution, a reality that is at odds with tagging financial gain as the main driver of philanthropy.

Something will happen in 2025 that influences charitable planning
Although key TJCA provisions are set to expire at the end of 2025, it’s too soon to determine exactly how you should advise your clients about their charitable planning strategies.

For example, if the current TJCA provisions are extended, the current patterns of charitable giving are likely to continue, with a potentially continued reduction in overall donations due to the higher standard deduction and estate tax incentives that motivate only the most affluent clients.

On the other hand, if the provisions expire without replacement, and the tax code reverts back to pre-TJCA rules, it could lead to an increase in charitable giving as more taxpayers return to itemizing deductions and face higher marginal tax rates. Plus, a lower estate tax exemption would create a strong incentive for more of your clients to pursue lifetime and legacy gifts to charitable causes to reduce taxable estates.

What’s more, new tax legislation could introduce different incentives for charitable giving. For example, the proposed Charitable Act aims to create a universal charitable deduction, which could encourage giving across all income levels. For an uplifting read that includes compelling points about the role of the nonprofit sector and the history of charitable giving, check out this letter that was issued on Giving Tuesday to congressional leaders urging them to enact a charitable deduction for taxpayers who do not itemize.

The bottom line? 2025 will be a big year for tax policy, with ramifications for charitable planning no matter what happens. We’ll keep you posted. In the meantime, please reach out to strategize about individual client circumstances. The professional staff at the Community Foundation is here to help you structure charitable plans to help your clients achieve their philanthropic goals, with or without a tax deduction.

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Playing the long game: encouraging your clients to plan ahead in 2025

Your clients (and you!) may still be recovering from a hectic end to 2024, but don’t let that stop you from helping families get a jump on their charitable planning for 2025.

As compelling and traditional as year-end giving may be, perhaps even more compelling are the reasons for planning and launching a charitable giving strategy early in the year – even in January. Benefits of a year-long giving strategy include:

  • Helping nonprofit organizations meet their budgets all year long, which can save them from worrying as much about whether constituents’ ongoing needs can be addressed.
  • Increasing predictability of cash flow and therefore being proactive, not reactive, in supporting the causes your clients care about. Your clients might even consider setting up automatic contributions to their donor-advised or other types of funds at the Community Foundation to formalize this component as part of an ongoing plan.
  • Taking advantage of plenty of time to learn more about the charitable causes a client plans to support so that the client can be an even more informed and impactful with their donations, including fully utilizing the Community Foundation’s expertise and resources.
  • Giving the client (and you) time to include children and grandchildren in the charitable giving conversation and tax-planning structures as a learning experience for the whole family.
  • If your client is over 70 ½, being able to avoid the year-end scramble to process a Qualified Charitable Distribution (QCD) from an IRA directly to an eligible nonprofit, including as an unrestricted, field-of-interest, or designated fund at the Community Foundation, by executing a QCD in the first quarter.
  • Leaving enough time to explore options for more complex giving techniques, such as gifts of closely-held business interests or charitable remainder trusts, that might provide tax benefits as well as meet a client’s charitable goals, rather than waiting until the last minute when it may be hard for everyone to coordinate calendars.

As always, just remember that we are here to help. Please reach out to learn more about how your clients can make the biggest difference with their charitable dollars, and how the services offered at the Community Foundation can help you ensure that your clients are able to fully carry out their charitable wishes for 2025. You and your clients will both be glad you planned ahead to empower charitable organizations to fulfill their mission throughout the entire year, as well as maximizing tax benefits and avoiding December’s crunch time.

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A variety of funds can help your clients support local needs

Your charitably-minded clients certainly have no shortage of options for their philanthropic dollars. Your clients can use a donor-advised fund at the Community Foundation to support favorite charitable organizations locally and beyond, including alma maters, organizations in the communities where they’ve lived in the past or have a second home, or nonprofits in communities where their grown children are now living.

But even clients whose charitable priorities extend far and wide have a lot of passion for local causes and improving the quality of life right here in our own community. Here are some planning considerations for helping clients support local needs:

  • The Community Foundation can help your clients achieve their goals for local support by establishing a field of interest fund designated for broad-reaching causes such as disaster recovery efforts, families in need, critical workforce development initiatives, or historic preservation.
  • A designated fund is an excellent choice, to help a client deploy charitable dollars to benefit a specific nonprofit organization over a period of time instead of a lump sum at one time. It is not uncommon for a family to establish a donor-advised fund alongside other types of funds at the Community Foundation as part of a diversified charitable giving “portfolio.”
  • Many clients support the Community Foundation’s operating endowment to ensure that the organization can continue its focus on increasing charitable giving and improving local quality of life far into the future.

Historically, we have found that local giving is a powerful force and a top priority across generations:

  • Emerging research points to a trend toward local giving among younger people. It’s therefore important for advisors to be aware of these clients’ deep commitment to the local community where they’re living now, raising children, or building businesses.
  • At the other end of the generational spectrum, giving to a fund dedicated to local needs may be particularly compelling to your clients who are 70 ½ or older. That’s because these clients may be eligible to make annual distributions up to $108,000 (in 2025) per spouse from IRAs directly to an designated, field of interest fund or an existing agency fund at the Community Foundation. This transfer is called a “Qualified Charitable Distribution,” or “QCD.” Not only do QCD transfers count toward satisfying Required Minimum Distributions, but your client also avoids the income tax on those funds. Furthermore, those assets are no longer part of the client’s estate upon death, so the client can avoid estate taxes, too.

Just reach out to the Community Foundation to learn more about how a variety of fund types and unrestricted gifts can help make the biggest difference possible, right here in our community. The Community Foundation is a resource to help your clients support both current and future local needs, and also meet their own financial, tax, and generational legacy goals. We look forward to working together!

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Want happy clients? Talk about charitable giving.

Over the years, many professional advisors have shared with the Community Foundation staff that some of their happiest clients seem to be those who’ve incorporated charitable giving into their estate and financial plans. Whether or not you believe this phenomenon is a “chicken or the egg” dilemma, it’s hard to dispute that philanthropy offers both emotional and rational upsides to your clients. Advisors who lean into these benefits stand a strong chance of being viewed by their clients as effective, impactful, and delivering well-rounded services to improve clients’ lives and give them peace of mind.

Despite these advantages, many advisors lack sureness in discussing philanthropy with clients. A survey found that only 5% of advisors felt “very confident” in this area, with 72% not including philanthropy in their initial fact-finding conversation with clients. This gap represents a significant opportunity for advisors to enhance their services and strengthen client relationships through philanthropic discussions.

Keeping clients loyal and engaged with your services is just one of many reasons to talk with clients about charitable giving. A recent Wall Street Journal article shed light on the ways charitable giving can have positive effects on both mental and physical health.

Notably, the article made these points:

  • Donating to at least one charitable organization can lead to improved mood, lower blood pressure, and potentially a longer life.
  • The act of giving may trigger a release of serotonin and dopamine, hormones associated with happiness, while reducing cortisol levels.
  • Brain scientists and economists have conducted studies supporting these health benefits of charitable acts.
  • Research suggests that the positive feelings associated with giving may contribute to these health improvements.

The article implied that engaging in charitable activities could be a way to enhance overall well-being, suggesting that generosity might have tangible benefits beyond just helping others.

Of course, not every client will have exactly the same experience with charitable giving, and of course, charitable giving is above all primarily motivated by a client’s desire to help others rather than solely for personal benefit. Still, it’s critical for advisors to be aware of the unique role charitable giving can play in a client’s life.

The Community Foundation is here for you! Please reach out anytime you are working with a client who is charitably-inclined. Our highly-trained, professional staff can help navigate both the tax planning complexities as well as the emotional side of giving to ensure that your clients achieve their financial goals as well as their goals for making a difference.

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The professional staff at GiveWell Community Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary and trusted source as you manage the primary relationship with your clients. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.  

Ready to get started?

You know your clients. We know philanthropy. Together we can ensure your clients make the best decisions for making a difference in the community.

Lori Martini

Lori Martini

Vice President/CPO
863-683-3131
lmartini@givecf.org

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