2024 Year-End Fundraising Checklist

With year end approaching, that means end-of-year tax planning, which for many includes finalizing annual charitable contributions. This presents an opportunity for nonprofits to engage donors and help them complete their gifts by December 31.

Review the checklist below for some potential strategies and opportunities for nonprofits to enhance donor stewardship and fundraising efforts at year end:

Charitable Deductions
 

• For charitable contributions to be tax deductible for the year, contributions must be completed by December 31. To avoid missing that deadline, donors should plan to initiate their gifts by December 1, allowing enough time for administrative and operational processes, particularly when transferring non-cash assets including securities.
• Charitable contributions must meet the strict substantiation rules. Recent legal cases have denied large charitable deductions for failure to adhere to these rules.
• The higher standard deduction combined with limits on other deductions means fewer people will be able to deduct their charitable contributions. An option to get a deduction is to bunch donations together into one year and take the standard deduction in an alternate year.

Reminders:

• The date of the donation is recorded as the date the money is received via wire or the postmark date on a mailed check.
• Contributions made by credit card will be recorded in the tax year the charge is made, not the year the charge is paid.
• Depending on the type of asset, transfers of securities can take three to four weeks for completion. The type of asset also determines the gift date.
• December 1 is the recommended date to initiate gifts of securities, wire transfers or qualified charitable distributions (QCDs).
• Plan to connect with consistent annual donors or prospective donors who have not yet made their gift; and avoid last-minute emergencies by ensuring asset delivery instructions are accessible and current.

Appreciated Securities
 

• For those who are itemizing charitable deductions, cash gifts to public charities or charitable vehicles such as donor advised funds (DAFs), charitable gift annuities and private foundations may be deductible up to 60% of Adjusted Gross Income (AGI).
• Gifts of marketable securities, however, offer a double tax benefit.  A gift of appreciated property may be deductible up to 30% of AGI, as determined by the fair market value of the securities when donated. Though the maximum deduction is lower, donors can avoid the 15-20% long-term capital gains tax and the 3.8% net investment income tax (NIIT), if applicable, producing a better tax result.
• Proactively discuss multiple funding options with donors to help maximize tax benefits.

Qualified Charitable Distributions (QCDs)
 

• If over 70 1/2 years old, a donor can make a direct transfer up to $105,000 from an IRA to a qualified charity. The distribution is excludable from gross income if certain requirements are met and satisfy the required minimum distribution requirements (if applicable).
• Distributions to a donor-advised fund or supporting organization do not qualify for this “IRA Charitable Rollover.”
• Recent legislation allows an exclusion from gross income for a one-time distribution of up to $53,000 directly from an IRA to a charitable remainder trust or charitable gift annuity.
• To count toward the RMD, the funds must be distributed out of the IRA by the donor’s RMD deadline which is typically December 31.
• Check against your donor database for donors who meet the age criteria for a QCD or who previously made a QCD. Schedule outreach or a timed marketing piece to remind them of this option.

Donor Advised Funds

• Many donors will make last-minute gifts to DAFs at year’s end, an easy way to maximize their charitable deductions for the year. One reason a donor may choose to make gifts using a DAF is the ability to make them anonymously. However, as a result, many nonprofits receiving grants from DAFs are unaware of the underlying donor’s identity.
  
  This can be an issue for some donors, particularly if they welcome acknowledgment from the organizations whose causes they support through their DAF, and especially if the acknowledgment speaks to the impact of their gift. Much like bequests, encouraging donors to identify themselves when making a grant recommendation creates an opportunity to deepen the donor’s connection to your organization, which can lead to conversations about ways to enhance their support.
• Update communications and templates to create reminders and forms for notifications of DAF grant recommendations, similar to those for notifications of inclusion of your organization in their will. Encourage donors with an existing DAF to name your organization as a charitable successor beneficiary.

Split-Interest Gifts 

• Split-interest gifts, including charitable gift annuities, charitable remainder trusts and pooled income funds offer several giving opportunities after the initial gift is made.
• Additions to charitable remainder unitrusts (CRUTs) are as easy as an outright gift. Donors can make an addition of cash or appreciated securities to an existing CRUT. There is no additional trust documentation required, and the donor can simply direct the additional assets to the trust after obtaining the appropriate transfer instructions. Donors can claim a charitable deduction depending on the asset transferred and will also receive a prorated distribution from the trust based on the increased market value and the date of the gift.
• Contributions of future or partial interests may offer a current tax deduction.  For a donor that no longer needs some or all of their income being generated from their charitable gift annuity, charitable remainder trust or pooled income fund they may want to consider an outright gift of all or part of their income interest. Besides the satisfaction of seeing their gift put to current use, the income beneficiaries may be entitled to an additional income tax deduction. This additional deduction can be available even if the income beneficiary was not the original donor who established the gift plan. An income beneficiary may surrender a portion of their income interest, retain a portion, and continue to receive some income.
• Beneficiaries may choose to use their year-end distribution from a charitable trust to make an outright gift to charity or to make an addition back to their existing charitable trust, often with minimal administrative effort.
• Connect with current split-interest donors who give regularly or who have sizable income distributions and offer this convenient option to support a program or focus-area they care about.