Charitable giving is a crucial component of financial planning for clients at all asset levels. While it’s often associated with high-net-worth individuals, charitable giving holds significance for clients across various financial positions. Regardless of wealth, engaging in charitable giving can provide a sense of fulfillment, purpose, and connection to the community. It allows clients to support causes they are passionate about, make a positive impact, and leave a meaningful legacy.

If you want to incorporate more charitable planning into your practice, here are six tips you can implement in your firm.

1. Start Charitable Giving Conversations Early

Conversations with clients about charitable giving early in the planning process are key. By discussing their goals surrounding charitable giving from the outset, you can guide your client into making decisions that will support the cause they care about while benefiting their financial picture.

Keeping the conversation going is just as important as starting early. Even after you’ve incorporated charitable giving into their financial plan and annual budget, maintain an open dialogue and revisit the topic at the end of each year to seize any unique opportunities that may be available.

2. Ask Open-ended Questions

Open-ended questions will encourage clients to express their thoughts and emotions about the causes they are passionate about, giving you insight into what truly matters to them. This approach helps financial professionals understand their client’s goals and perspective, allowing them to tailor their advice and approach accordingly and making planning a truly collaborative process.

3. Hone in on Philanthropic Impact

Your clients’ giving priorities may be more aligned with making a meaningful difference rather than solely seeking tax benefits. By emphasizing the philanthropic impact of giving instead of viewing it as just a tax savings vehicle, you can ensure that your clients’ contributions resonate with their values and aspirations, creating a more meaningful and fulfilling charitable giving strategy. This approach empowers clients to make a real and lasting difference in the causes they care about, going beyond financial considerations and truly impacting their communities.

4. Consider a Variety of Charitable Giving Strategies

When discussing charitable giving strategies with your clients, it is essential to explore various techniques that can help them maximize their contributions and optimize their tax benefits based on their unique circumstances. Charitable giving can be considered throughout the plan, both through lifetime giving and estate planning.

One common strategy to consider is Qualified Charitable Contributions (QCDs), which are particularly beneficial for individuals aged 70½ or older who may not need the full amount of their Required Minimum Distributions (RMDs) to cover their expenses. QCDs allow for tax-free donations directly from an IRA to a qualified charity, potentially fulfilling all or part of their annual RMDs.

For those not yet subject to RMDs, a donor-advised fund can be a great way to secure a charitable tax deduction. Be sure to discuss whether giving cash or appreciated assets aligns better with your clients’ overall financial objectives. Opting to donate appreciated assets to a donor-advised fund can yield significant benefits, such as saving on taxes and maximizing the impact of the contribution to their chosen charity.

Lastly, consider charitable giving in the context of the estate plan. Naming a charity as a beneficiary of a retirement account, for example, can reduce the size of your taxable estate. For clients with more complex estate planning needs, a Charitable Remainder Trust or Charitable Lead Trust can offer a structured approach to giving while providing significant benefits to charities and the client’s overall financial picture.

5. Stay Up to Date on Charitable Contribution Rules

Legislation changes can impact charitable giving strategies or offer unique opportunities in a certain year. For example, the QCD limit was increased to $105,000 in 2024. You can also make an additional QCD election of up to $53,000 to make a one-time donation to a Charitable Remainder Trust (CRT) or Charitable Gift Annuity (CGA). By staying current on these limits and rules, financial professionals can assist clients in making the most of their giving potential each year.

6. Leverage Technology to Maximize Impact and Boost Efficiency

Seamlessly integrate considerations for lifetime giving and estate planning into your planning process by leveraging financial planning technology. Utilizing your software, you can efficiently model different giving vehicles, calculate optimal giving strategies based on tax laws, and analyze complex structures like charitable trusts if appropriate.

Technology can also help you project and highlight the total charitable impact over time. This enables you to provide insightful guidance that goes beyond tax implications and shows your clients how you are maximizing their philanthropic impact.

Help Your Clients Make a Meaningful Impact

Charitable planning is a vital part of holistic financial planning that advisors should prioritize discussing with all clients, no matter their net worth. By implementing these tips into your firm’s planning process, you can create tax-efficient giving strategies and help your clients make a lasting and meaningful impact.

To learn more about how other firms are incorporating charitable giving into their planning processes, check out our case study from Blue Trust.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

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