Though the current environment is rife with uncertainty, history reveals that Americans’ desire to give will continue for the most part unchanged, even in tough times.
Retaining existing donors may be even more important—and cost-effective—than acquiring new ones. Current donors, especially those with a long history of support, should be treated with the respect and gratitude they deserve. And remember to inform donors often of the giving options that may be particularly attractive in today’s environment.
1. Gifts of appreciated securities. Keep in mind that many donors still have significant amounts of securities that are worth more than they paid for them and yield little income. It can make sense for donors to give these securities and use the cash they might have otherwise donated to repurchase other investments and enjoy a new higher cost basis. The securities may also be good candidates to fund gift annuities and other gifts that result in immediate tax savings and increased income.
2. QCDs. Donors over the age of 70½ have until Dec. 31 of this year to make tax-free charitable gifts up to $108,000 from traditional or Roth IRAs. Using unneeded IRA funds for gifts allows donors to make larger gifts today without affecting their other cash flow or income. Keep in mind also that wealthier seniors may be well advised to give from these funds because they can be subject to both estate and income taxes when ultimately received by non-charitable heirs.
3. Bequests. Finally, encourage bequests and other planned gifts from older donors. Most charitable bequest maturities come from people who pass away in their 70s, 80s and 90s whose will, living trust or other arrangement was finalized just a few years before death. In times like these, it may make sense to direct more time and resources to your oldest long-term constituents, who are more likely to be making their final plans in the next few years. During the early years of the Great Depression, charitable bequests from older donors provided a much higher percentage of larger gifts and helped many charitable organizations survive those turbulent economic times. ■
