In this issue, we’re providing updates in response to many of the questions we’ve received lately as market conditions continue to present challenges for your clients and as yet another natural disaster impacts millions of lives. We’ve also taken this opportunity to share a few reminders about why the nonprofit sector is so important to the fabric of our society.

Charitable Giving in a Challenging Economy

Earlier this year, Bankrate and Psych Central released the Money and Mental Health study and, not surprisingly, a large number of people surveyed in the research reported that money has a negative impact on their mental health. Survey results varied across generations: Financial concerns psychologically impact 48 percent of Millennials, 46 percent of Generation X and 40 percent of Generation Z.

Needless to say, every generation will feel the sting of any bear market, including (and especially) Baby Boomers.

At the moment, economic conditions feel, well, awful. Some people feel better if they can gain a better understanding of the factors that created the unpleasant mix of inflation, rising interest rates and a bear market in the first place. Others are comforted knowing they are not alone as they ride the emotional rollercoaster.

For those who are charitably inclined, challenging economic times might actually serve as an inspiration to become more intentional about charitable giving priorities. What’s more, not all donors will reduce their donations.

Here are three messages worth sharing with your philanthropic clients as bear market conditions hang on into the fourth quarter:

“Not all stocks are down.”

Giving appreciated stock to a donor-advised fund or other type of fund at San Diego Foundation (SDF) is always a tax-savvy alternative to giving cash, regardless of the economic situation. Your clients may feel disappointed that their portfolios have hit a rough patch, but this does not mean that there aren’t still plenty of opportunities to avoid capital gains tax on stocks held for more than a year.

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.

“Consider the needs of others even more acutely feeling the pinch of inflation.”

Community needs are rising. SDF is dedicated to staying on top of the issues that are critically important to the quality of life at any given time.

Families with low or moderate household incomes can be especially vulnerable to high inflation. Our team of community experts can help your clients zero in on nonprofits in our region that are serving the people who need the most help right now.

“Don’t forget about the Qualified Charitable Distribution (QCD).”

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, he or she may be eligible to make annual distributions of up to $100,000 per spouse from IRAs directly to an unrestricted or field-of-interest fund at the community foundation or other qualifying public charity. QCD transfers count toward satisfying clients’ Required Minimum Distributions (RMDs) and avoid the income tax on those funds. Plus, those assets are no longer part of a client’s estate at death, which avoids estate taxes, too.

What’s more, the QCD may get a boost if the EARN Act becomes law; proposed bipartisan legislation would expand the QCD rules to allow a one-time, $50,000 QCD to a split-interest trust such as a charitable remainder trust.

Your Clients & Disaster Philanthropy

Sadly, your philanthropic clients have likely grown accustomed to making charitable donations to support disaster relief. Individual donations provide critical resources to help communities recover from the many disasters–weather, fire, humanitarian, disease, war–that occur each year.

In the wake of Hurricane Ian, your clients may ask you about their options to support those affected by the storm. We encourage you to reach out to us. We can connect your clients with a variety of options for giving that are trustworthy and effective. We also keep our Emerging, Important Needs web page updated with guidance on how your clients can support our region during times of need and respond to major crises around the world.

Indeed, disaster relief funding is frequently coordinated by community foundations, which are widely viewed as one of the very best vehicles to help donors provide financial support to relief efforts. Individual giving is critically important to any disaster relief effort, and SDF can help your clients make an immediate, powerful, and positive impact on the lives of those affected by Hurricane Ian or any disaster.

Especially heartwarming is that many donors are now exploring ways to help improve a community’s readiness for disaster response, including building reserve funds for future disaster relief and bolstering emergency preparedness infrastructure for medical care, food, clothing and shelter delivered by a network of local, on-the-ground nonprofit organizations.

We are happy to work with your clients to establish field-of-interest funds or unrestricted funds at SDF to ensure that the people in our region remain as safe and supported as possible when disaster strikes. Disaster-preparedness field-of-interest or unrestricted funds at SDF can be especially attractive because these funds are qualified recipients of QCDs from clients’ IRAs.

We look forward to helping your clients improve the lives of those affected by disasters both here in our community and across the nation and world.

Counseling Clients about Nonprofits

Can Clients Donate from an IRA to a Community Foundation?

The nonprofit sector accounts for more than 12 million jobs in the United States, and job growth in the nonprofit sector in recent years has outpaced job growth in the private sector. As an advisor, you are more likely than ever to represent clients who hold executive positions at nonprofits, serve in key roles on nonprofit boards of directors, or do business with nonprofit organizations.

Please reach out to SDF as a resource when questions about nonprofit matters arise in your client discussions.

Here are three examples of the types of issues that come up in the nonprofit arena:

  1. The Good: The application process for exempt status has improved dramatically in recent years, thanks to IRS enhancements to its Form 1023. This is important for you to know when you are advising clients who are involved with a new charity. For those familiar with the application process, the new Form 1023 was a huge win and a major IRS accomplishment.
  2. The Bad: Watch out for exempt status issues. At the heart of a nonprofit’s favored tax treatment is the concept of “exempt purpose”–meaning, essentially, operating for the public good, not to further private interests. For charitable entities organized under Internal Revenue Code Section 501(c)(3), exempt status is crucial for an organization to remain exempt from paying income tax. Exempt status under Section 501(c)(3) also allows contributions to the organization to be eligible for income tax deductions (as well as estate and gift tax deductions). A bitter case in point is described in a recent private letter ruling outlining the reasons a healthy juice enterprise lost its exempt status.
  3. The Big Leaps: The nonprofit sector, powered by private philanthropy, can be, and has been, transformational for our society. If you’ve not spent some time reading up on the major societal changes that have their roots in the nonprofit sector, you might consider doing so. As always, our SDF team would welcome an opportunity to provide big picture background and inspiration to support the ongoing service you provide your clients who are involved in the nonprofit sector.

Learn More

For nearly 50 years, we have partnered with a large network of wealth advisorsestate planning attorneystax 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’re interested in learning how we can help meet your clients’ financial planning and charitable giving goals, contact me at (858) 245-1508 or

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