October 2022
For those who are charitably inclined, a challenging economic climate might actually serve as an inspiration to become more intentional about giving priorities. What’s more, not all donors plan to reduce their philanthropy in the face of financial headwinds.
Here are three messages worth sharing with your clients as bear market conditions hang on into the fourth quarter.
1. Not all stocks are down
Giving appreciated stock to a Donor Advised Fund or Scholarship Fund at Napa Valley Community Foundation –- or to another charitable organization — is always a tax-savvy alternative to giving cash, regardless of the economic situation. Most portfolios have declined sharply in recent months, but your clients may still have an opportunity to donate stocks held for more than a year and avoid capital gains taxes in doing so. (Take a look at the historical share price of Apple, for example, and imagine the capital gains tax liability for clients who’ve held the stock for several years.)
2. Consider the needs of others who are feeling the pinch of inflation more acutely
Working families in Napa Valley can be especially vulnerable to high inflation. As prices for gas and groceries continue to climb, thousands who are employed in agriculture and hospitality, the twin-engines of our local economy, may struggle to make ends meet. Napa Valley Community Foundation is in regular contact with the frontline charities that serve our Valley’s most vulnerable residents. And we can help your clients zero in on nonprofits in our community that are serving the people who need the most help right now.
3. Don’t forget about the Qualified Charitable Distribution
We mention this tool a lot because it is such a financially savvy way for your clients to support the charities they care about. If your client has reached the age of 70 1/2, they can distribute up to $100,000 annually from an IRA to charities of their choice, or to any number of charitable Funds at the Foundation, like our growing roster of Scholarship Funds. (Please note that Donor Advised Funds may not receive QCDs). QCD transfers count toward satisfying clients’ Required Minimum Distributions and are not subject to income tax. Of note, the QCD may get a small boost if the EARN Act becomes law. This proposed legislation would expand QCD rules to allow a one-time, $50,000 transfer to a split-interest trust such as a Charitable Remainder Trust.