I recently read an article in Wealth Management newspaper, by Clay Stevens with the wealth management firm Aspiriant, on how the current estate tax exemption affects charitable giving. While the article was written for financial advisors, the analysis and advice apply to gift planners as well, and it mirrors what Sharpe Group has been saying to clients throughout our 60+-year history.

Though this post presents some of the best takeaways for planned giving fundraisers, I encourage you to read the full article. (You will need a subscription.)

With today’s historically high estate tax exemption ($15 million per individual or $30 million for married couples), most estates won’t be subject to taxes, which means planned giving discussions about reducing estate taxes may not be the most strategic focus for donor communications.

This doesn’t mean charitable giving is no longer relevant to estate planning. The strategies are evolving, with a stronger emphasis on tax-wise ways to structure current and future gifts that are most beneficial for heirs and the donor’s legacy.

Structuring Current Gifts

With the estate tax virtually eliminated for most people, some taxpayers may find that holding onto assets until death can be more tax-efficient because of the “step-up in basis,” which eliminates capital gain taxes on appreciated assets.

Donor conversations may benefit from being more focused on income tax savings during life, not just estate tax savings at death. This opens the door to many opportunities for donors who believe in your mission.

Even without the threat of looming taxes, many donors still don’t want to pass their entire estate to their children. Concerns about wealth transfer, legacy and values remain strong. And as we’ve discussed several times, taxes are rarely the prime reason for gifts.

Charitable giving is a meaningful solution, not just a tax strategy. When donors realize that some gifts can also significantly reduce their tax burden, the conversation gets even more compelling.

Gifts From Retirement Plans

Not all assets are equal when it comes to charitable giving. For example, retirement accounts (such as traditional IRAs) are often one of the best assets to leave to charity, because:

• They don’t receive a step-up in basis.
• Heirs must pay income tax when withdrawing funds.
• Charities, on the other hand, receive them tax-free.
• Designated beneficiaries receive the funds outside probate at the death of the donor.

Encouraging donors to give retirement assets during life through qualified charitable distributions or at death through beneficiary designations can dramatically increase the impact of their giving.

Appreciated Assets

Many donors give cash, but that’s not always the most tax-efficient choice.

Gifting appreciated assets (such as stocks) can provide a double benefit:

1. A charitable deduction based on market value.
2. No capital gains tax is owed on the appreciation.

In some cases, the “cost” of a gift to the donor can be a fraction of its value. That’s a powerful message, and one many donors don’t fully understand.

Tools That Blend Income and Impact

For donors who want to give but still need income, charitable remainder trusts (CRTs) can offer significant benefits.

These allow donors to:

• Receive income for life.
• Receive an immediate tax deduction.
• Leave the remainder to charity.

While more complex, CRTs are especially appealing for donors with highly appreciated assets who are hesitant to sell them because of tax implications.

Donor Advised Funds

A flexible giving option is a donor advised fund (DAF). They allow donors to:

• Receive an immediate tax deduction.
• Recommend grants to charities over time.
• Adjust their giving strategy as priorities evolve.

For fundraisers, this means building relationships not just with donors but also understanding the vehicles they use to give.

Timing Can Be Critical

Charitable deductions are limited based on a donor’s income (AGI), which means:

• High-income years = bigger giving opportunities
• Low-income years = less tax benefit

Encouraging donors to “bunch” or accelerate their giving during high-income periods can significantly increase tax savings.

Conversations With Donors

When you are discussing planned giving with donors:

1. Shift the conversation from estate tax avoidance to income tax strategy.
2. Encourage noncash gifts instead of cash.
3. Educate donors on the opportunities for tax-smart giving with retirement assets.
4. Promote flexibility through tools like DAFs.
5. Collaborate with advisors when possible.

In a world where fewer donors face estate taxes, the real opportunity lies in helping them give in ways that are both meaningful and tax-efficient during their lifetime.

For planned giving fundraisers, this is a chance to elevate your role from gift facilitator to strategic partner. And that’s where the real impact happens.

Teri Sullivan is vice president of marketing for Sharpe Group and serves as co-producer of the podcast Sharpe Insights: Conversations With Your Planned Giving Experts. You can connect with Teri via email or on LinkedIn.