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Your Roadmap to Philanthropy: Five Gifts to Focus on in 2024

Do you ever feel like you need a map to navigate the current giving landscape? If you work in the world of philanthropy as a philanthropic advisor or a fundraiser for a nonprofit organization, 2024 is a pivotal year for you.

The Opportunities are Great!

The Baby Boomer population is aging and ready to give. Despite the recent market volatility, Boomers are still very interested in philanthropy. And there are needs everywhere (for example, the rise in homelessness we all see whether you live in a big city or a small town). Your work is also impacted by the many economic and social challenges capturing donors' attention and pulling them in different directions including the political discord in Washington, social unrest, public health crisis and global uncertainty.

I want to give you a roadmap of philanthropic ideas to focus on for the next decade when working with nonprofit donors, families, funders and charitable clients. Some of these ideas are new based on changes in the tax and demographic landscape while others are timeless giving strategies that can appeal to anyone.

  1. Qualified Charitable Distributions (QCDs) - QCDs are an easy way for anyone age 70 1/2 or older to make gifts and QCDs equal immediate cash for charitable organizations. A person age 70 1/2 or older can make a gift of up to $100,000 from their IRA annually without being taxed on the distribution. While the donor receives no deduction, the benefits of making an IRA rollover gift are numerous. A QCD makes it possible for a person who normally makes annual gifts to become a major gifts donor and fund a special project or campaign in a way they might not have imagined possible. Under the Secure Act rules, a QCD gift can count against RMD beginning at age 73, lowering a donor's annual income and taxes. By reducing income, this gift can also reduce the tax owed on a person's social security benefits.

  2. Bequests and Beneficiary Designations - Loyal donors are individuals who have made consistent annual gifts to a nonprofit (often for five or ten years or more). They are more likely to leave charitable bequests and make charitable beneficiary designations if asked because they have already demonstrated their commitment to a nonprofit's work. A charitable bequest can be made by including a provision in a person's will to designate a nonprofit as a beneficiary of for example, a cash amount or a specific asset. One of the easiest gifts for a person to make is a gift of assets they won't use, for example, the remaining assets in their retirement plan or unneeded life insurance. These gifts can be made by updating beneficiary designations to include a nonprofit organization.

  3. Noncash Gifts - Recent research by Dr. Russell James and the American Council on Gift Annuities (ACGA) reveals that noncash gifts are growing in popularity with donors and one of the best kept secrets of growing nonprofit giving programs. Many people own highly appreciated assets with low basis (they purchased their investments years ago at a lower cost). Individuals can gift their appreciated non-cash assets to a charitable organization, instead of selling them, and avoid paying high capital gains tax. Charitable gift annuities (CGAs) are another potential area where a nonprofit could see giving growth this decade with Baby Boomers moving into their senior years. The prime demographic for a CGA is a donor in their late 70s. A growing number of CGAs are funded with noncash assets, such as securities, providing a donor with benefits that can include lifetime fixed payments, capital gains and income tax avoidance.

  4. Blended Gifts - A person can combine a gift of cash or securities with a bequest in their will to provide immediate and future support for a charitable cause. Fewer people are making major gifts -- but the ones that are giving are giving more. A nonprofit can broaden its base of support to include donors it may not have thought of as major gifts donors, by asking them to make a smaller gift today and a more substantial gift in the future, through their will. This idea makes sense because bequest donors are generally found in a nonprofit database as "loyals" (people who have given consistently for a number of years) which may be different than donors who rate high for capacity to give (the general profile for major gift donors). If a nonprofit can turn "loyals" into major gift donors by encouraging them to make blended gifts, it will find an entirely new group of supporters for its current campaign or projects.

  5. Testamentary Charitable Remainder Unitrusts - The Secure Act makes these arrangements more attractive than ever. The law provides that beneficiaries of retirement accounts must withdraw an inherited IRA within 10 years. In other words, inherited IRA payments may no longer be spread-out over a child's lifetime. One of the best solutions to the Secure Act is a testamentary charitable remainder unitrust (TCRUT). An IRA owner can designate a TCRUT as the beneficiary of his or her IRA funds. The TCRUT will receive the IRA assets at death and can stretch-out payments to children either for life or a term of up to 20 years. At the end of the trust, the remainder benefits the charity or charities the donor designates. While the attractiveness of TCRUTs may be limited to a particular donor profile, philanthropic advisors should be talking about TCRUTs as a way that individuals and families can provide their heirs with lifetime income from their IRA (despite the Secure Act limitations) and leave a gift to support a charitable cause.

I believe 2024 is the decade for new avenues of philanthropy that will help donors fulfill their greatest desires while maximizing good. I hope these suggestions are helpful to you as you think about your work in philanthropy for this year and beyond. What do you think about the road ahead for philanthropy?

Article used by permission. As always, thank you for the gift of your writing, Kristen.

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