After nearly 20 years in the charitable sector and working with financial, legal and tax advisors, I’ve seen a noticeable increase in the number of advisors who discuss charitable planning.
This discussion often was initiated by clients, but many advisors are proactively engaging their clients as they realize that it is best for their clients, the advisors’ relationships with their clients and families, and the charities that their clients support.
There always seems to be great need in society, and this year is no different. For various reasons, the number of Americans who donate to charity has continued to drop. Fortunately, the wealthy continue to maintain overall funding levels.
However, when funding is more concentrated among the very wealthy, certain sectors — such as education and the arts — benefit, while others that depend upon large numbers of smaller donors, such as religion and human services, may lag.
Even as some advisors and clients still talk about charitable giving only in November and December, this conversation now takes place more often throughout the year. Most donors understand that charities need financial support year-round and often make the best philanthropic decisions without being rushed at year-end.
This is especially true for those clients who have previously established donor-advised fund accounts or private foundations since they receive the tax deduction at the time of donation to the charitable vehicle, and not at the time that they make their grants to charities from the vehicles.
But because this is the end of the year, this is the time to engage clients with whom you have never or not recently had the conversation. Fortunately, most clients’ net worth has increased significantly in recent years, and, as a result, they are in an ideal position to support their favorite charities.
If they have not yet identified the causes and nonprofit organizations they want to support, or they do not want to donate a significant amount to one charity, they still have time to create or fund a DAF or other charitable vehicle that will enable them to give for years. For clients reluctant to rush to donate now, you can secure their commitment to discuss this early in the new year so they do not feel pressed at the end of 2026.
Some clients are reluctant to begin their giving, or to give more significantly, if they do not have a connection to a specific cause or charity. While some large wealth management firms and banks may have internal philanthropic advisors who can help clients, a growing field of independent philanthropic advisory practitioners and firms can be brought in to help clients get started.
Some private foundations and DAF sponsors can allow for payment for these services from the accounts so clients do not have to pay out of pocket.
The tax and spending megabill passed by Congress this summer includes several reasons why giving a substantial amount in 2025 may be advantageous for certain wealthy clients, and these have been well-documented. Bunching donations, using qualified charitable distributions from individual retirement accounts, and donating other appreciated non-cash assets instead of cash have been emphasized for years, especially after the tax law changes in 2017.
Tax benefits are rarely the main reasons why wealthy donors give, but if talking about these would be helpful in encouraging them to give now, discussing these benefits can be useful so clients don’t come back next year and regret not contributing in 2025.
For clients who have been active donors for years or have already established a charitable vehicle, do not assume that they are all set in their direction. Establishing a DAF or other charitable vehicle is just step one, and while some clients need help to get started, others may want to rethink their charitable priorities, get their children involved or change their giving timeframe.
Some may have previously determined a certain amount that they want to give each year, but as their net worth has increased, they are in a position to give more now, at their deaths or for years after their deaths.
Now is the time to reach out and review clients' charitable plans that were established before, and to create plans if none existed previously. Many clients wonder what they can do but just don’t know how to start. This conversation can be important in retaining clients and their heirs as clients.
Some advisors use this as a differentiating factor in bringing in new clients, especially if their prospects’ current financial advisor does not have these deeper conversations.
This is an opportunity to help clients create a legacy for which they will be remembered, and to create an impact that will far outlive them. On their own, they may not know how or where to start, but with your help, they can begin and will appreciate your guidance and support.
Ken Nopar is the principal of Nopar Consulting, working with advisors, donors and non-profits to increase global charitable giving.
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