Charitable Giving Stragies: End-of-year Advice for Clients

Clients coming to you at the end of the year want to ensure they are in the best possible financial situation heading into tax season. This proactive approach not only ensures legal compliance but optimizes tax benefits. By reviewing their finances and planning ahead, you can identify potential deductions, credits, and strategies – including a number of charitable giving options – to minimize your clients’ tax liability. Below are some charitable giving options to discuss with your clients.

Charitable Bunching

Since the Tax Cuts and Jobs Act (TCJA) of 2017 significantly increased the standard deduction, charitable bunching has become a popular, tax-savvy strategy for many people. By bunching several years’ worth of charitable contributions into a single tax year, your clients may surpass the standard deduction threshold, potentially maximizing their tax benefit.

Charitable bunching can be particularly beneficial if your client plans to donate highly appreciated assets, such as stock. Your client can take advantage of the charitable deduction while also potentially avoiding capital gains taxes on the appreciated assets.

Donor Advised Funds, like those offered at the Omaha Community Foundation, are great tools for charitable bunching. Your clients can donate the bunched amount into the fund, then distribute the funds over several years. Because the funds in Donor Advised Funds are invested, the amount has the potential to grow, as well, potentially creating more money that can be directed to support the nonprofits your clients choose.

Federal Estate Tax

Upcoming changes to the federal estate tax exemption may affect your high-net-worth clients. In 2023, the per-person federal estate tax exemption is $12.92 million. Without Congressional action, that number will drop to $7 million at the end 2025. Donating assets such as real estate, business interests, stock, retirement accounts, or annuities can reduce the value of the estate.

Assets donated to a Donor Advised Fund or other type of fund at the Omaha Community Foundation can be used to support your client’s church, alma mater, or other causes closest to their heart.

New Clients

First-time clients coming to you at the end of the year might need tax solutions quickly. A Donor Advised Fund or Charitable Checkbook fund at the Omaha Community Foundation are great solutions. By donating to a fund at OCF, your clients can receive the tax deductions for 2023, then take time to determine which causes or nonprofit organizations they want to support in the coming years.

Please contact our Donor Services team at 402-342-3458 or to learn more about charitable giving options and strategies.

- Advertisement -

Disclaimer: This article provides an overview of the possible tax advantages of various types of charitable donations and is not intended to provide tax or legal guidance. The Omaha Community Foundation recommends discussing these strategies with an accountant, financial advisor or attorney.