A recent New York Times article, Tax Cut Deal Could Benefit Charities, illustrates how nonprofits can benefit from recent changes to the tax law. Though the changes have been called “tax cuts for the rich,” there are some gift-and-estate tax advantages that personal wealth advisors see as a way to direct more funds to nonprofits.
With regard to gift and estate taxes, the new law exempts donations of $5 million per person. As the article points out, this means a couple is now able to give or bequeath up to $10 million in any combination of assets “tax-free.”
Why is this good news? Because estate planning and donations made through wills is strong. Statistics have shown that while 8% of those individuals who die every year leave funds to nonprofits, double that number - 16% - who do estate planning, plan to leave funds for their favorite charities.
The math of the interest stream from these assets can often add up to significant amounts. In addition, for assets held long-term for a nonprofit, to provide an ongoing asset stream for others (perhaps an older living relative), the final capital amount can also be substantial.
What can nonprofits do to be proactive about this? Reach out to their wealthier donors and talk to them about estate planning. Show how they are currently good stewards of the dollars they are receiving. Illustrate how they are thinking about and planning for the future, also. Give donors a reason to be passionate about their future, too.
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