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What's Trending in Charitable Gift Planning?

Updated: Oct 2, 2023

By Kristen Jaarda, JD, LLM, CAP, CFRE

Executive Vice President, Crescendo Interactive

I recently received a question from a nonprofit fundraiser inquiring about the types of charitable gifts trending now. Most of the organizations I work with are focused on the easiest planned gifts any donor can make including charitable bequests, charitable beneficiary designations, outright gifts of securities and qualified charitable distributions (QCDs) made through individual retirement accounts (IRAs).

Charitable gift planning is trending in new directions, impacted by the recent changes in personal health and well being, the economy and new tax and regulatory requirements. Are you talking with your donors and clients about the right things? Here are the trends I am seeing and how they may inform your discussions moving forward.

Charitable Bequests

Over the last two plus years, an increasing number of charitable bequests were created and acknowledged through estate plans. As Americans came to terms with their own mortality amidst COVID-19, they created and updated plans in record numbers. With studies showing younger donors planned at a higher rate, I anticipate seeing continued and growing interest in charitable bequests and other planned gifts in the future.

Donor Advised Funds

Donor advised funds (DAFs) continue to grow in popularity, permitting donors to make a tax-deductible gift today and recommend grants to the causes they support now and in the future. It's no secret that Congress is scrutinizing DAFs. Look for upcoming regulations and proposed legislation that could impact the timing of grant making and donor transparency.

Charitable Remainder Trusts

The sophisticated estate planning and wealth planning firms are working with high net

worth (HNW) individuals (with charitable intent) to create charitable remainder trusts for capital gains tax avoidance. Although CRT gifts have waned since their peak in the 80s, the gifts made today are larger and accomplished with more complex assets. Some of the largest gifts are made by those who own highly appreciated real estate and business interests. I have fielded more questions about gifts of partnership interests in recent years.

Charitable Stretch IRAs

In light of the SECURE Act changes, philanthropic advisors report they are talking more about CRTs funded with IRAs to stretch out payments to heirs over 20 years. These plans get around the 10-year IRA to beneficiary payout limit imposed by the SECURE Act and work well for individuals who wish to leave an IRA inheritance to heirs and support their favorite charitable causes. Advisors admit they haven’t seen as many of these plans as anticipated, but it’s part of their client discussions.

Gifts of Real Estate

With the rapid rise in real estate valuations, gifts of appreciated real estate are going strong. Gift planners tell me that donors are increasingly expressing interest in charitable life estates, which permit an individual to make a gift today, benefit from a

tax deduction and remain living in their home until they pass away. The home may then be sold or retained by the recipient charitable organization.

Only a very small percentage of nonprofits are offering lifetime gift annuity payments along with charitable life estates --Those that are, especially in areas with the highest real estate appreciations, see this as a significant source of gift revenue.

Charitable Gift Annuities

The recently released American Council on Gift Annuities (ACGA) 2021 Survey of Charitable Gift Annuities shows growth in charitable gift annuities, but primarily reported by larger issuers in this study. The average number of gift annuities closed in a single year was 21 in 2021, with more than half of the data coming from programs issuing gift annuities for 30 years or more. For success strategies for gift annuity programs of any size, check out the National Association of Charitable Gift Planners and ACGA's joint 2019 Survey of Charitable Gift Annuity Program Best Practices.

Charitable Lead Trusts

Over the last couple of years, the Sections 7520 rate used to calculate charitable gift deductions has hovered around 0%, at the lowest level in decades. Now with interest rates on the rise, the Section 7520 rate is at 3.8% for August. Estate planners are calling the low interest rate environment we just came out of “the golden age of lead trusts.” There were significant charitable lead trusts closed because low rates permitted individuals to pass on greater values to family at reduced tax costs. The interest level in family lead trusts among HNW individuals and families may decline with the higher rates.

Cryptocurrency Gifts

Cryptocurrency gifts were hot at the market height. With the crypto market cooling, nonprofits report fewer inquiries about these gifts as of late. Stay tuned and get

informed. Crypto may be down, but there is a big industry built around crypto and it isn’t going away anytime soon. For help getting started, check out my Forbes article How Your Nonprofit Can Accept Gifts of Cryptocurrency.

What types of charitable gifts are you seeing?

Copyright Notice & Disclaimer The above content is subject to copyright. © Copyright Kristen Jaarda 2022. All rights reserved. The above information is provided for educational purposes only, not to provide specific legal advice. By using this information, you understand and agree that there is no attorney-client relationship between yourself and the copyright holder named above and that this information is not a substitute for competent legal advice from a licensed professional attorney in your state.

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