Charitable Giving News - Tax Preparation Season

Amy Jordan |

While thoughts of the upcoming tax preparation season may be inspiring to think of tax savings – remember to think of charitable giving. Those that have a charitable fund give to their favorite causes while reducing their tax bills, and making a difference in the community and improving quality of life.

Charitable giving is a powerful topic, and unfortunately, it is often overlooked by advisors.  Among 421 wealth advisors surveyed last year, only 20% reported regularly bringing up charitable giving in their meetings with clients, and another 45% of these advisors said they discuss it “occasionally.” The rest said they bring it up “rarely,” only if the client brings it up, or even avoid the subject altogether. 

This is a missed opportunity, and it’s a particularly compelling opportunity during the first quarter. Early in the year, financial advisors, attorneys, and accountants can tap into charitable giving motivations to help clients get organized across the board on all of their estate planning and financial matters. Indeed, tax time is a great time to start this process because you and your clients are already reviewing assets and income as you prepare for 2023 tax filings.

Your clients may find that organizing their giving through one or more funds at the Hudson Community Foundation (HCF) will make their lives easier. Establishing a fund at HCF is an easy way to organize and track charitable giving. For example, a client can make a single, tax-deductible contribution each year to HCF,  to be added to their donor-advised fund. An especially tax-savvy technique is for the client to make this contribution using highly-appreciated stock.  After the stock has been transferred to the community foundation, the proceeds from the foundation’s sale of the stock–free from capital gains tax–are used for distributions to support your client’s favorite charities. No matter how many different charities receive support from the fund, the client in this example still has just one receipt to keep track of charitable donations for income tax deduction purposes.

Bigger picture, the subject of charitable giving paves the way for a discussion about the basics of estate planning. Many clients are simply not aware of the meaning and importance of critical elements, such as:

--The difference between a will and a living trust and how charitable wishes fit in to these documents.

--Why it’s critical to be intentional about how each and every asset is titled so that the assets actually pass as intended (which requires making a comprehensive list of assets in the first place).

--The dangers of hurriedly filling out life insurance and retirement plan beneficiary designations and why these documents are absolutely critical components of a financial, estate, and charitable plan.

--Reasons for having both a “living will” and a durable power of attorney, both of which (or the lack thereof) have a major impact in the event of incapacity.

--A reminder to make sure someone in the family knows where to find a list of logins and passwords.

Even though charitable planning is just one of many steps in your work with clients, it can be an excellent catalyst for helping clients understand why they need that comprehensive estate and financial plan you’ve been encouraging them to complete. The team at Hudson Community Foundation is happy to help with the charitable components of your service to clients. We look forward to making it easier for you to address all of your clients’ needs. 

We welcome conversations to help donors give to their favorite causes. Hudson Community Foundation enables simple, smart, and meaningful family philanthropy. Although HCF is a public charity, it does not promote one charitable cause. Rather, HCF is committed to expanding the capacity of family philanthropy - no matter where you live.

 Read more about Donors Guide to Donor Advised Funds.

With a fund at Hudson Community Foundation (HCF), advisors can manage the charitable assets on their preferred platform at any amountAssets stay under your management. You can provide your clients with the consistent investment advice they expect. We are your partner in charitable giving!

The team at HCF is a resource as you serve your philanthropic clients. We understand the charitable side and are happy to serve as a secondary source as you manage the primary relationship with your clients. This blog is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.