As your philanthropic clients can likely attest, the going has been rough for many of the nonprofit organizations they support. Turbulent market conditions, concerns about inflation, and an overall feeling of economic instability are just a few of the factors that may be causing donors to be more financially conservative and perhaps begin to evaluate whether to keep their charitable giving at the levels of years past. 

At the same time, many of your clients deeply understand the need to support the nonprofit sector and continue giving to the charities they love as they implement financial plans for 2025. Philanthropic support to these organizations is critical to maintaining and improving the quality of life in our region. This is especially true as the number of households giving to charity has faltered over the last few years. 

As we head into the spring and summer months, it’s a good idea to touch base with your clients about their charitable giving budgets for 2025, including evaluating the types of assets that are best suited for a particular client to give to charity. Especially important is the decision whether to give cash or stock.  

When and why it makes sense to give stock 

As economic conditions and potential inflation continue to increase clients’ concerns about their household finances, you and your clients may decide that preserving cash is a priority. This means that some of your clients who have typically given cash to their favorite charities or to their donor-advised funds at Innovia may be reluctant to do so this year. That’s actually a good thing!  

Giving appreciated, publicly-traded stock to charitable organizations is a highly effective tax strategy in any economy. This is because capital gains tax is avoided when your client transfers long-term, marketable securities to a fund at Innovia or another public charity. The client is typically eligible for an income tax deduction at the fair market value of the securities, and when the charity sells the securities, the charity does not pay capital gains tax. This is a win-win for your client and the charity. And even in a rocky stock market, not all stocks are down. Many of your clients are no doubt holding long-term stock positions that have appreciated substantially since they bought them, even with the current stock market volatility. 

When and why it makes sense to give cash 

In those instances where clients’ portfolios are down significantly across the board, this may be a year to consider contributing cash to a donor-advised fund at Innovia or another charity instead of donating highly-appreciated stock. Gifts of cash could reduce the burden on a client’s personal stock positions that may have fallen in value dramatically, giving these positions more time to recover value and, at some point in the future, be contributed to the donor-advised fund at a higher value (thereby resulting in a higher tax deduction for the client).  

Why a donor-advised fund is useful in dynamic market conditions  

Overall, in turbulent times like this, donor-advised funds at Innovia especially come in handy. Now is the time to discuss charitable giving with those clients who regularly added to their donor-advised funds throughout the market’s long bull run. If these clients intend to ride out today’s market conditions in their personal portfolios, an up-and-down stock market doesn’t mean the clients’ 2025 charitable giving must take a hit. These clients can use their donor-advised funds to support their favorite organizations, sometimes even at levels consistent with prior years.  

As always, please reach out to Innovia to discuss options for your clients’ charitable giving. We are happy to help you help your clients achieve their goals, even in a year as bumpy as 2025 appears to be!