This is the time of year, many clients are traveling and spending time with family, which means they may be having conversations about their favorite charities and the year’s plans for giving to favorite charities.

To help you prepare for your clients’ questions when they return after summer holidays and travels, in this issue we’re sharing insights on a few topics that may be top of mind:

  • AI is certainly a hot topic, even in discussions about philanthropy. We’re offering three suggestions for client conversations about AI and charitable giving, whether your clients are investors, nonprofit board members, or just curious.
  • IRAs are a great source of charitable gifts through beneficiary designations and the popular QCD tool for clients 70 ½ and older. Ensure you’re helping your philanthropic clients maximize their IRAs’ potential through catch-up contributions.
  • Every year, the Giving USA report tells us about the state of charitable giving in America. Although 2022 numbers were down, the total number is still inspiringly large.

We’re also keeping you up-to-date on the latest tax news surrounding NIL money and an article to help you understand why the philanthropy conversation is so valuable to your practice.

AI’s Impact on Charitable Giving

News about the capabilities of artificial intelligence has skyrocketed over the last few months. As attorneys, accountants and financial advisors, no doubt you are watching these developments closely, both because of the potential legal issues involved and the ways AI can enhance your work.

Here are three suggested discussion points when your clients ask how AI might impact their philanthropy plans:

  1. AI could mean significant advancements in fundraising capabilities for clients who serve on boards of directors or work for a nonprofit. From research to communications, generative AI could help fundraisers finish their work. It would be a welcome development in a profession under stress due to a shortage of professionals and a challenging fundraising environment.
  2. Some of your clients may be investing in AI companies. Pay close attention to this. While not all AI ventures will make it, some AI startups will likely be very successful, creating huge financial gains for their shareholders. Please talk with your clients about contributing shares of these companies to their donor-advised or other funds at San Diego Foundation. Upon an eventual exit, the shares held by a donor-advised fund (DAF) will not be subject to capital gains tax, allowing your client to support their favorite charities much more significantly than if the client waits to sell the shares and transfer the proceeds (minus the tax hit) to a charitable fund.
  3. While AI can certainly help your clients research their favorite charities, it can also play a role in helping charities fundraise and carry out their missions, it’s important to remember that right now, in AI’s early stages, most AI results are still only as good as the prompts and instructions provided by humans. The key to getting the right answers is to ask the right questions; sometimes, asking the right questions is the hardest part.

As always, please get in touch with us for help as you serve your charitable clients. Our team has deep, personal knowledge and experience in all areas of charitable giving, from tax deductibility rules to planned giving techniques to understanding the needs of our community and how your clients can make a difference in the causes they care about.

How “Catch-Up” Contributions Can Boost Clients’ Giving

Advisor on computer

We regularly work with legal, financial, and tax advisors like you to help clients reach their charitable goals.

As a professional who regularly works with charitable clients, you are undoubtedly well aware of the tremendous benefits to clients and charities when a client names a charity or fund at SDF as the beneficiary of an IRA or other qualified retirement plan.

So how can you help a client plan ahead to maximize a bequest of retirement fund assets and support increased giving during the client’s lifetime?

A great way to do this is by encouraging clients to maximize their IRA contributions—for many reasons:

  • Taxable income “suppression” in the year of the contribution.
  • Tax-deferred growth until distribution—and now not required until age 73 of the account owner.
  • Ease of changing a beneficiary designation to name the client’s fund at SDF, which will remove the assets from the client’s taxable estate at death and avoid income tax.
  • With retirement plans flowing to charity, leaning into highly-appreciated stock and other property at stepped-up values to make bequests to family or others effectively erases the recipients’ unrealized capital gains.

Ensure your charitable clients don’t overlook an important tool in retirement savings maximization (and ultimately charitable giving) known as the “catch-up” contribution. This is the “extra” money that retirement savers aged 50 or older can stash into their retirement accounts—and into more than one account as applicable.

Advisors and clients might better consider this a bonus opportunity rather than a “catch-up,” especially if a client has been maximizing their retirement savings all along. Additionally, the catch-up contribution allowance helps a client make up for years when retirement contributions fell short due to earnings or savings interruptions due to layoffs, caregiving, high-expense years or similar circumstances.

Thanks to the SECURE Act, catch-up contributions have created even more buzz about opportunities for retirement savings, especially as the rules are set to shift in 2024 and 2025. In any event, the effects can be impactful. For example, an extra $1,000 deposited annually from age 50 through 65, earning 6% on average, could potentially deliver an extra $27,000 in retirement income at age 65.

From a charitable giving perspective, the greater the IRA balance, the more opportunity a client can give to a fund at SDF later. What’s more, higher IRA balances can motivate your clients to deploy a Qualified Charitable Distribution (QCD) strategy, with its many benefits:

  • Beginning at age 70 ½, your client can make QCDs up to $100,000 in 2023 ($200,000 for married couples) and indexed for inflation starting in 2024.
  • QCD assets can be distributed to a designated or field-of-interest fund at SDF or to another qualifying public charity.
  • QCDs can count toward Required Minimum Distributions (RMDs) for clients who must take them.

IRAs are the most prolific retirement savings vehicle in the United States, accounting for nearly 33% of the $33 trillion of total retirement assets as of December 2022. But regardless of the retirement savings vehicle, contribution maximization—aided by so-called catch-up contributions—is a winning strategy for wealth building, family gifting and charitable giving.

Giving USA Report

Giving is down, but the total amount-–nearly $500 billion—is still impressive.

Just reported in June by Giving USA was a rare decline, 3.4%, in charitable giving by Americans in 2022. Though giving totaled nearly $500 billion, officials cited high inflation and the stock market’s pullback as reasons for the decline from $516 billion of total giving in 2021. Despite households’ financial pressures, 64% of giving came from individual donors. Dig into this compelling infographic for a comprehensive look at the state of philanthropy in America.

NIL Collectives: DOA?

NIL collectives have been all the rage in some higher education circles, but that may change. Contributions to these entities may not be tax-deductible after all, according to the IRS in a May 23, 2023 memo. This development is an excellent reminder that private benefits and charitable tax exemptions do not mix well.

Learn More

You may be missing out if philanthropy is not a regular topic of your client conversations. Not only can it be an easy icebreaker, but also studies have documented strong organic client growth through such conversations. And as this article points out, the combination of client dissatisfaction, wealth transfer and the affluence of future generations spells opportunities for advisors.

For nearly 50 years, we have partnered with a large network of wealth advisors, estate planning attorneys, tax planners and other advisors to help high-net-worth clients and families achieve financial planning objectives and charitable giving goals while maximizing tax deductions.

If you want to learn how we can help meet your clients’ financial planning and charitable giving goals this year, contact me at (858) 245-1508 or

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