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A snapshot of tax-time charitable giving questions

Three questions that are top of mind for many professional advisors, along with answers that can help you serve your clients as you work through 2023 returns and plan for 2024.

Tax season is in full swing. As many professional advisors work through 2023 tax returns and 2024 planning with their clients, now is a good time to review a few basic tax principles related to charitable giving.


1. How important is it to high net-worth clients to get a tax deduction for gifts to charity?

Among people who own investments of $5 million or more, 91% of those surveyed reported that charitable giving is a component of their estate and financial plans. In another study, most affluent investors cited reasons for giving well beyond the possibility of a tax deduction and would not automatically reduce their giving if the charitable income tax deduction went away. What this means for your practice is that it’s important to be aware of your clients’ non-tax motivations for giving, such as family traditions, personal experiences, compassion for particular causes, and involvement with specific charitable organizations. This also means it’s critical to talk about charitable giving with all of your clients because it’s likely that most consider it to be important. Click here for more tips on how your colleagues in New Hampshire talk to their clients about charitable giving.

2. Why do people so often default to giving cash?

Many people simply are not aware of the tax benefits of giving highly-appreciated assets to charities or to donor-advised funds or other philanthropic funds at the Foundation. Even if they are aware, they forget or are in a hurry, and end up writing checks and making donations with their credit cards. It’s really important for advisors to remind clients about the benefits of donating non-cash assets such as highly-appreciated stock, or even complex assets (e.g., closely-held business interests and real estate). When people give highly-appreciated assets in lieu of cash, they can often significantly reduce capital gains tax exposure, and they can calculate the deduction based on the full fair market value of the gifted assets.

3. What are the basic deductibility rules for gifts to charities?

It’s important to know that the deductibility rules are different for your clients’ gifts to a public charity (such as a fund at the Charitable Foundation) on one hand, and their gifts to a private foundation on the other hand. Clients’ gifts to public charities are deductible up to 60% of AGI, versus 30% for gifts to private foundations. In addition, gifts to public charities of non-marketable assets such as real estate and closely held stock typically are deductible at fair market value, while the same assets given to a private foundation are deductible at the client’s cost basis. This difference can be enormous in terms of dollars, so make sure you let your clients know about this if they are planning major gifts to charities.

Please make it a habit to mention charitable giving to your clients, and reach out to the Charitable Foundation to help your clients set and reach their charitable goals.

This report was compiled by New Hampshire Charitable Foundation staff with material provided by Embolden. This article is informational and educational in nature. It is not offering professional tax, legal, or accounting advice. 

For more information about how the New Hampshire Charitable Foundation can help advisors help their clients with charitable giving, please contact Michael DeCristofaro, Foundation director of advisor relations at Zvpunry.QrPevfgbsneb@aups.bet or (603) 225-6641, ext. 251.