There is an old saying that “the more things change, the more they remain the same.” After several years of surprises and unexpected (and tragic) events, it appears that 2025 will have its own share of uncertainty: terror attacks, volatile weather conditions and political, tax and economic changes.
It may be worthwhile to consider another famous quote attributed to Benjamin Franklin, Mark Twain and others: “Nothing is certain except death and taxes.” Regardless of the source, it is fitting to suppose what the new year will have in store for you and your program as well as your donors and their advisors.
Taxes
A few months ago, it seemed certain that the provisions of the Tax Cuts and Jobs Act would be allowed to expire after 2025 or that the tax laws would be changed dramatically during the year, resulting in substantial tax increases for many affluent taxpayers. It now appears that there is a very good chance that many TCJA tax cuts will be extended or modified to provide large numbers of taxpayers with ongoing relief.
Additionally, there has been bipartisan support for special provisions that would provide incentives for charitable giving via an above-the-line deduction for certain charitable contributions in addition to the standard deduction. Currently only about 10% of income tax filers itemize deductions, even though there are a variety of smart ways to make charitable gifts and minimize taxes, such as bunching deductions. This can be done through a donor advised fund or by accelerating pledge payments, funding a large outright gift or making a life income gift.
Other ideas include making gifts of appreciated assets like stocks, real estate or other appropriate assets because these bypass capital gains tax and reduce overall tax liability. For growing numbers of seniors, IRA QCDs provide a very attractive way to make charitable gifts on a tax-free basis.
Tip: Consider informing donors and advisors about smart ways to make charitable gifts and reduce various taxes. You will want to get this message out early in the year and then again in the fall, both times when most are thinking about taxes or required minimum distributions.
Death
The association of death with the planned giving message can be negative, but the reality is that in 2025 more than three million people will die. This is about 20% more than the average number of deaths between 2000 and 2010. During the Great Depression, almost 100 years ago, charitable bequests provided much-needed revenue that helped nonprofits survive. Those with active programs asking for both current and deferred gifts fared much better than those that did not.
It has been proven that programs that consistently market and communicate with donors about giving now and in the future, by combining the two, are likely to have multiple gift revenue sources help sustain their programs during hard times.
Tip: Understand that most charitable bequests mature from seniors who made their operative will, trust and/or beneficiary designations within a few years of death, and in many cases, the prior estate plan did not include any charitable provision. Our Sharpe Knowledgebase® data shows that to succeed you need to steward and communicate with your oldest constituents and their advisors.
Make the necessary changes
Now is the time to consider what resources are available and how to best deploy them. If staff has retired or moved to another position, consider reallocating those budget dollars for planned giving training, marketing, data services or to hire a consultant “coach” to assist you and your program for a fraction of the cost. ■
As Sharpe Group’s general counsel, Barlow T. Mann, JD, consults with some of the country’s most successful gift planning programs. He is recognized as an industry expert and is on the editorial board of Planned Giving Today.
