Two Charitable Conversation Ideas That Will Make You Look Trendy in 2021

Feb. 11, 2021 null

By Jordan Richardson, CAP® | Director of Charitable Giving

As we look back at 2020 and ahead at the year to come, consider these two charitable giving topics as trendy talking points for client conversations. 

Qualified Charitable Distribution (QCD) 

 If you asked me a year ago to name the trendiest idea in charitable giving, I would have said the QCD. In fact, I’ve been saying that since the QCD became permanent law in 2015, and I’ve been practically shouting about it since the Tax Cuts and Jobs Act of 2017 increased the standard deduction, resulting in 90% of us not itemizing our charitable deductions.[1]

Want a refresher on the QCD? Watch this short video before reading on. 

Even with a one-year hiatus from RMDs, the QCD strategy remained popular in 2020. Some IRA owners continued to give out of habit, others were motivated by the goal of decreasing future year RMDs, but some, through collaboration with their professional advisors, saw an opportunity for an even deeper level of charitable intentionality with their IRAs by opening a designated fund at the Community Foundation. 

You might recall that donor advised funds are not permitted recipients of QCDs, but a designated fund might be a great alternative for IRA givers. Your clients can contribute to a designated fund with a QCD and make grants to up to four selected charitable organizations over time. They can even apply for Endow Iowa Tax Credits for their QCD gift if they opt to endow their giving to Iowa charities. 

As we look ahead at 2021, especially with the return of the RMD, I would expect this strategy to continue to grow in popularity. 

Donor Advised Funds (DAFs) 

Granting from DAFs hit record highs in 2020. When we reflect on last year, that should come as no surprise. One of the fundamental values of a DAF is the ability to invest dollars for future charitable giving, and the need for giving in 2020 was significant. As we face the future, the value of the DAF continues to grow.  

In addition to the reality of an uncertain future, I see DAFs as a trendy charitable conversation topic for several additional reasons, including: 

  • Legacy Giving – Whether you choose to include future generations in your DAF giving or by simply naming the DAF in a will or trust, a DAF can be a great way to extend charitable giving beyond your lifetime. 

  • Noncash Gifts – A DAF can receive assets such as appreciated securities, farmland, and real estate, magnifying the charitable and the tax impact for the donor. 

  • Strategic Giving – Our staff works with fund holders to facilitate strategic giving by reflecting on past giving, personal values and looking toward alignment with future charitable projects and opportunities. 

If you would like to continue a conversation about these or other charitable trends, reach out to me at richardson@desmoinesfoundation.org or (515) 244-0020. 

[1] https://www.taxpolicycenter.org/briefing-book/what-standard-deduction