After a bountiful 2024, all eyes are on 2025 when it comes to charitable giving.
The donor class was given a lot to work with in 2024, and by all accounts they gave their fair share back. The S&P 500 spent most of the year more than 20 percent to the plus side, even after a breathless 24 percent sprint higher in 2023. Gold turned out to be a risk-on asset after all, outshining stocks by rising almost 30 percent through November, while bitcoin more than doubled by year-end, pushing past $100,000 the week after the Thanksgiving holiday.
Meanwhile, even the bull market’s skeptics were able to add to their piles as the months passed, clipping coupons on the sidelines as is their wont and custom. For the first time in ages, though, they bided their time in bonds without biting their lips. That’s because the risk-free 10 Year Treasury yield stayed well above four percent for a significant chunk of 2024, making it far less painful as they waited in cash or high-grade corporates for the rally in stocks to peter out.
Which it never did, of course.
In fact, the bull market kicked into a higher gear in early November upon the election of former President Trump and the promise of lower taxes and less regulation. Not that the risk-off crowd was left entirely out of the market's good cheer. Trump’s victory also spurred yields higher due to those very same two reasons and their potential effects on the nation’s widening debt obligations.
“With back-to-back years of strong stock market performance, 2024 has been a record year for charitable contributions. Fidelity Charitable’s annual report reveals nearly a five-times increase in grants over the past decade. This surge highlights that wealth creation, when paired with strategic planning, often leads to greater community impact,” said Rick Nott, managing director at Angeles Wealth Management.
Fortunately, society’s most fortunate generally did the right thing with all that extra dough, proving yet again that America, both the red and blue of it, is indeed a charitable nation.
According to DAFgiving360, formerly Schwab Charitable, donors granted more than $6.6 billion to charity in fiscal 2024 (ended June 30), a 31 percent increase year-over-year, totaling over $1.5 billion more than the prior fiscal year. DAFgiving360 said its donors supported nearly 141,000 charities through more than one million grants.
Breaking down its fiscal 2024 results even further, DAFgiving360 saw 70 percent of its existing donors grant to organizations that they had not previously supported. It saw 87 percent grant within their home states, providing 652,000 grants to local causes. And it showed 35 percent of grants set up as automated recurring gifts to charities.
Based on DAFgiving360 and similar reports, it’s safe to say that the market “gaveth” in 2024 – and donors gaveth, too.
“When you look at all the grants our donors recommended in the last fiscal year, it averages out to more than $18 million donated to charity each day, or about three-quarters of a million dollars donated every hour,” said Fred Kaynor, managing director of relationship management, marketing ,and strategic partnerships at DAFgiving360.
A lot of that giving took place in so-called Donor Advised Funds, or DAFs (which is what the DAF in DAFgiving360 stands for, in case you were wondering).
Rory O’Hara, founder and senior managing partner of Ausperity Private Wealth, a partner firm of Sanctuary Wealth, said he saw a tripling in the number of DAFs he opened for clients in 2024, as more families embraced the vehicle as a flexible and significant way to give.
“Recent stock market gains have created significant positions with unrealized gains, making DAFs an even more attractive tool for tax-efficient giving,” O’Hara said.
It’s worth noting that the money in a DAF is already committed to charity, so even when stocks are down and donors may not be able to contribute as much, they can continue to grant money from their DAF.
Meanwhile, the spike in equity and fixed-income valuations has some clients matching or exceeding their 2023 charitable contributions, said John Lupi, managing director of investments at Client First Financial, part of Stifel Independent Advisors.
“I’ve noticed donors taking advantage of the $5,000 increase in the qualified charitable distribution, and clients continue to donate appreciated equity securities to carefully selected charities. I have also seen an increase in domestic disaster relief giving and local charity gifting throughout 2024,” Lupi said.
Abby Axelrod-Wunderman, philanthropic director at Fiduciary Trust International, said the biggest trends she witnessed in 2024 were the increased focus on multi-generational philanthropy and legacy, the increased use of DAFs, the ongoing leveraging of technology, and an increase in complex asset, or non-cash, giving.
“In a world where some may emphasize that cash is king, donors were and are leveraging non-cash assets such as business interests, collectibles, real estate, private equity, and more to support their philanthropic goals. Often, these types of assets lead to greater charitable impact as well as larger tax benefits. Better positive impact is what the donor and nonprofit want,” Axelrod-Wunderman said.
Looking ahead to 2025, with a new administration and possible tax-policy shifts, O’Hara plans to focus even more on strategies like DAFs and charitable trusts “to help clients maximize tax advantages while staying aligned with their giving goals.”
Along similar lines, Axelrod-Wunderman will be monitoring tax changes and what they could mean for income tax rates, charitable deductions, estate and gift taxes, and overall giving. Once the rules and regulations become clearer, she will apply them as needed per client.
“In certain circumstances we may recommend clients accelerate donations in the early part of the year or explore flexible giving options like a DAF. Since it remains uncertain what tax policies may change, we regularly review charitable plans and remain agile in case we need to make effective shifts,” Axelrod-Wunderman said.
Stasia Washington, senior wealth manager at Lido Advisors, said the uncertainty around tax policies under a new administration may prompt adjustments in charitable strategies. For example, she foresees an increase in the use of charitable remainder trusts or charitable lead trusts as clients seek to optimize tax benefits.
“With potential changes in deductions or limits on giving, it’s essential to review and, where needed, adapt strategies to ensure tax efficiency while continuing to support meaningful causes,” Washington said.
Finally, Jerry R. Sneed, senior vice president at Procyon Partners, primarily uses DAFs to support his clients’ philanthropic initiatives, dedicating significant effort to understanding the missions of their chosen organizations. While his fundamental approach is unchanged heading into the new year, he aims to enhance its impact by fostering connections among like-minded clients.
“By bringing together those who share similar values and goals, we can help them collaborate to achieve greater collective impact,” Sneed said.
Giving away highly appreciated stock to avoid long-term capital gains is setting up to be an advantageous move in 2025 as the bull run rumbles on and the so-called Magnificent 7 stocks power even higher, Sneed said.
“We purchased a significant amount of tech stocks in October 2022, which appreciated substantially over the past two years. By gifting these individual stock positions to donor-advised funds, we’ve been able to take a tax deduction on the full market value while completely avoiding capital gains taxes,” Sneed said.
“One notable instance involved a client who invested $39,000 in NVDA and META. In 2024, they gifted both positions to a donor-advised fund, resulting in a total gift of $1 million. This strategy not only maximized the tax benefit but also supported their philanthropic goals,” Sneed said.
Magnificent indeed.
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