In a 2014 publication entitled, Giving USA: The Annual Report on Philanthropy for the year 2013, the Chronicle reported that in each of the years 2009, 2010 and and 2011, 75% of individuals filing itemized federal tax returns claimed deductions for charitable gifts. The average charitable deductions taken on individual tax returns during these three years were $3,787 in 2009, $3,848 in 2010, and $4,011 in 2011.
Based on this report, it is likely that most of your clients have a history of charitable giving. Many of your clients with charitable intent could be more effective in addressing the causes that matter to them through integrated financial and estate planning. Discussing philanthropy with your clients, then, is good for your business and good for your clients!
In an article entitled, Signs Your Clients Need Help With Charitable Planning, published on March 26, 2014 in Financial Planning Magazine, Ken Nopar lists twelve indications that your clients need help with their charitable planning:
1. When clients have difficulty keeping track of their donations, can’t find receipt letters from the charities, can’t remember if they donated to an organization with a check, appreciated stock, credit card or some other asset.
2. When clients donate assets that are not optimally tax-efficient and have other assets that should be used.
3. When clients donate several times during a year to the same charity.
4. When clients donate very different amounts from year to year, often because their income and asset levels vary from year to year. Many of these clients would like to give a consistent amount and know that it is easier for their favorite charities to budget if this is done. Donor-advised funds and other vehicles could enable donors to fund these causes during good years so they can donate similar amounts over time.
5. When clients donate to different charities every year with no real pattern. This often indicates that they simply give in response to requests and are not knowledgeable or passionate about particular causes or organizations. Philanthropic advisors, community foundations and some donor-advised funds can help educate and work with these donors.
6. When clients give to organizations that are not 501(c)3 tax-exempt groups so their donations are not tax deductible.
7. When clients are very generous in their contributions to charities but their children, some of whom may work at the family firm, barely donate at all. A family charitable vehicle may enable the parents to involve their children.
8. When clients express frustration with the process, question why they are giving to certain organizations, wonder what impact they are having, don’t know where to give, feel that they are just throwing their money away by donating, or just give because they know they should and don’t feel a sense of pride and satisfaction that should result from their generosity.
9. When clients have a charitable vehicle like a private foundation but don’t like the complexities of operating one, so a simpler solution like a donor-advised fund may be appropriate.
10. When clients have other assets that heirs do not want, and these assets, such as real estate, farmland, or collectibles, can be used to fund their charitable giving.
11. When wealthy clients do not have heirs and despise paying taxes, but have not started to give significantly to charity or have not included charity in their estate plans.
12. When clients regularly give to charity and are getting ready to sell a business or other asset. Options are available like a donor-advised fund to donate pre-sale stock or assets, receive fair market value for contributions, and avoid or reduce capital gains and income taxes. In the end, clients would have much more available to donate for charitable purposes for now and the future.
Ken concludes, “Clients often do not realize that their advisors can help them identify the strategies, resources and perhaps even charitable vehicles that would help them better achieve their charitable goals, and they will be very appreciative of their advisors’ help and advice. The clients will also likely feel a greater sense of satisfaction, pride, confidence and even joy in knowing that this discussion and planning will further help the causes and charities that are most important to them.”
BCF can help you connect your clients with the causes that they care about and maximize the positive impact of their gifts to the community!