Making a Philanthropic Impact in Volatile Markets
Charitable giving in the United States has grown considerably over the past 40 years. However, during economic recessions, we often see a decrease in philanthropic funds.
This year has been marked by inflation, headwinds from the pandemic, and the conflict in Ukraine. These factors, along with social and environmental issues, are intensifying the need for charitable support across the country and the world. Below are three steps donors can follow to support nonprofits they care about while maximizing their charitable impacts.
1. Evaluate your giving history.
When gifting resources are limited, it’s important to determine your giving goals and decide your top priorities.
2. Strategize and develop a plan.
Once you have decided which organizations you want to give to, research or reach out to discuss their needs. Nonprofits can be forced to decide between scaling back programs, changing expansion plans and potentially laying off employees. It’s imperative to understand their challenges and priorities for the future.
3. Evaluate your balance sheet and give.
Once you have established your strategic goals, it is time to determine which assets will best support your intentions. Exploring your entire balance sheet will allow you to both fund your giving plans and maximize the tax benefits you can receive in the process.
a) Gift long-term appreciated securities – Giving highly appreciated, long-term securities directly to a charity or charitable vehicle can be a tax-efficient way to support your philanthropy.
b) Donate nontraditional and illiquid assets – Do you own long-term assets outside of your portfolio that have appreciated significantly? Some nonprofits and sophisticated donor-advised funds may accept complex assets as gifts such as real estate, alternative investments, or privately held business interests.
It’s important to determine your giving goals and decide your top priorities.
c) Harvest losses and donate cash – Consider whether there are positions in your portfolio that you can tax-loss harvest. By selling an investment at a loss, you can offset capital gains and income in the current year or future.
Rick Barragan is the Managing Director, Los Angeles Market Manager, for J.P. Morgan Private Bank.
[email protected] | (310) 860-3658
privatebank.jpmorgan.com/los-angeles
