Whether considered a leading or lagging indicator of overall economic performance, it’s good news nonetheless. With the annual giving season under way, Schwab Charitable says it expects record charitable contribution levels, largely driven by efforts to meet philanthropic goals ahead of the possible expiration of the Bushera tax cuts at the end of this year, as well as the implementation of other tax policy reforms.
Specific to 2012, Schwab also offered up some strategies to maximize giving this holiday season, especially with so much tax and fiscal uncertainty just over the horizon.
As for the donation boom, as of October 31, Schwab says its donor-advised fund has seen a 74% increase in contributions year-over-year.
“This is the start of the busy giving season, which typically runs from Thanksgiving through the end of the year,” Kim Laughton, president of Schwab Charitable, said in an interview with AdvisorOne on Tuesday. “This year is a bit different. Over the summer, there was a question of whether the exclusion levels on the estate tax would be reduced from $5 million to $1 million, so giving activity started to ramp up much earlier.”
The reason, Laughton (left) added, is that a conversation about wills and estate taxes is a natural precursor to a discussion about charitable giving.
“They figure, ‘If I’m thinking about my legacy of charitable giving after I die, why wouldn’t I do it when I’m still alive, as well?’” she said.
Additionally, she said she’s “pretty sure there will be an increase in capital gains,” and strong stock market performance recently means many investors will be looking to offset the taxes on those gains through charitable giving deductions.
The Schwab vehicle, a donor-advised fund, allows investors to contribute cash or appreciated assets to a charitable account to realize the greatest possible tax benefit. This means donors can more “strategically” support the charities of their choice.
As for those strategies, Laughton offered up five for smart giving this holiday season; some are tried and true, some are new.