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Two Reasons Why It's a Critical Time to Discuss Charitable Planning

And the four client types that stand to benefit most.

Now’s one of the most critical times in recent history to discuss charitable planning with clients. Fortunately, wealthy clients continue to provide significant donations to charities. Still, the number of households that give to charity has decreased from two-thirds at the beginning of the 21st century to only one-half 20 years later.

While total giving has increased from $450 million in 2019 to $499 million in 2019, the 2023 Giving USA report indicated that in 2022, for only the fourth time in the past 65 years, donations dropped from the previous year. The decrease was 10% when adjusted for inflation.

So why is this such a critical time to talk with clients? For two main reasons:

  1. With the markets near record levels and the threat of recession and inflation rate decreased most high-net-worth clients should have confidence that they have plenty to give.
  2. Numerous charities are desperate for funding because there’s still a great need among the people and missions they support, and fewer donors are giving.

Some clients have traditionally donated to charities or their donor-advised funds or private foundations toward the end of the year. Still, increasingly, they aren’t waiting and are giving at the time that will maximize their gifts and charitable deductions. Due to the significant growth of many investments, advisors and clients may be considering selling some that have appreciated significantly to rebalance portfolios. Rather than pay considerable capital gains taxes soon after they sell them, this may be an ideal time to donate these to avoid the taxes and receive a significant tax deduction.

Considering today’s world and national events, some clients may not feel confident about the future. Advisors can reassure them that they’ll have plenty of assets for themselves and their families, and by donating directly to charities or establishing a charitable vehicle now, they can have a significant impact both now and in the future.

Though advisors should have the conversation with all clients, here are just a few types of clients who could most benefit:

Baby Boomers

Many wealthy baby boomers think they’ve already gifted enough to their children or want to limit what they’ll give them. Some feel their children have successful careers and don’t need to leave them too much. Others may question what legacy they’ll leave behind, and creating a charitable one can instill a sense of fulfillment. Many clients nearing retirement establish and fund a DAF to receive significant tax deductions upfront, enabling them to make grants during retirement. Others make qualified charitable distributions from their retirement accounts to charities (though not to DAFs or PFs) to fulfill their required minimum distributions and thereby avoid taxes on them.


Fewer millennials have gotten into the habit of giving. This may be because not as many millennials attend religious services as in the past, and the standard deduction is now higher than before. Many volunteer, but it’s essential that they begin to give, even at lower amounts, because their donations will grow over time. More millennials are opening DAF accounts through their advisors, at work or on their own because they’re so easy to use, and they receive just one tax acknowledgment letter from the DAF sponsor. Establishing a giving plan early is essential, especially for those who have begun to accumulate wealth.

Clients Without Children

The birthrate in this country has continued to decline, and people are getting married later, while many others never do. As a result, many clients who don’t have children will have to decide what to do with their assets later in life and at death because they often don’t want to leave their assets to distant family members. Most want to avoid significant taxes and, therefore, wish to donate their fortune to charity directly or initially through DAFs. Without the expense of raising children or a need to leave them a considerable amount, this group often decides that giving to charity is the best option during life and at death.

Business Owners

Companies want to be good citizens in their communities, and increasingly, they realize the importance of engaging their employees in their efforts to be philanthropic. Though some have offered matching gift programs and encouraged volunteerism, many companies have formalized their grantmaking in the last several years to attract and retain employees. Additionally, many firms know they may have enjoyed record profits while there’s a great need here and abroad. Company executives have set up corporate DAFs or their own DAF accounts when they’ve received large bonuses or significant compensation. The time to begin this conversation is early in the year because, often, business owners wait until year-end when they realize that they’ve had a banner year. By then, it’s usually too late to initiate a program. Establishing and funding a corporate DAF during good years can enable the company to give consistent amounts during less successful years.

Having charitable planning discussions is helpful to clients, their families, the charities they support and the advisors themselves. Many clients are capable of having a positive impact. Because many have significant assets, they can begin their philanthropic journey or expand it if they started it years ago.

Ken Nopar is the Director, Philanthropic Practice Management for the American Endowment Foundation (AEF). one of the nation’s leading independent donor-advised fund sponsors since 1993 with $7 billion in assets. AEF expands philanthropy by partnering with firms and financial advisors in the financial services industry.

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