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Financial Planning > Charitable Giving

Help clients make the most of charitable donations this season

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We’re well into the hectic holiday season at this point, and you may be finding that people are generally harder to reach right now than they will be come January. Financial planning and insurance needs probably aren’t top-of-mind for clients and prospects for the next two weeks, but there is still one important topic that people most definitely ARE thinking about this time of year: Charitable giving.

It is the giving season – the time of year when individuals and businesses focus on philanthropy and make their largest charitable contributions of the year. Consider that charitable giving totaled $316 billion in the U.S. in 2012. Nearly 30 percent of all charitable donations occur in December, including 10 percent in the last two days of the year. This is a key time for charitable organizations, who are relying on these end-of-year contributions to fund their programs for the coming year.

Of that $316 billion, 72 percent was donated by individuals, with 15 percent coming from foundations, 7 percent from bequests and 6 percent from corporations. A lot of these individuals who will be donating before 2014 arrives could use your help, and it’s a great excuse to start up a conversation with that client or prospect you’ve been looking to connect with but haven’t found the right opportunity.

You may be able to help clients use life insurance to achieve their goals by naming a charity as the owner of an existing policy, naming a charity as the beneficiary of an existing policy, or setting up a new policy with the charity as owner and beneficiary. Or perhaps they may want to name a charity as the beneficiary of an IRA, or transfer ownership of an appreciated stock or mutual fund to the brokerage account of their favorite charity or as a recent Wall Street Journal article suggested. This can sidestep a tax bite that might be incurred by selling instead of donating.

You might recommend your client employ an annuity arbitrage strategy, where clients who intend to make a charitable gift at their time of death can receive an income tax benefit during their lifetimes while their favorite charities will benefit upon death.

And finally, help your clients make sure that the legacy they intend to leave is not sullied by a charitable organization that squanders or misuses its donations. We all know there are plenty of charities out there that pay their executives too much or spend too much on “operations” while a too-small percentage of donations or assistance actually reach the people the charity purports to help. You can help by researching nonprofits clients are interested in to make sure they are approved by the IRS as a 501(c)(3), and the charity can also be vetted via ratings at websites including, and