Exciting promises have been made under the new administration, suggesting a future even more prosperous and rewarding for the wealthy. With lower taxes for households earning at least $450,000 annually, their assets would be more protected and investments safeguarded. Since 1917, taxpayers have been able to access deductions through charitable donations, caring for the well-being of the disadvantaged while nurturing their economic wealth. However, with the Tax Cuts and Jobs Act (TCJA) increasing the adjusted gross income (AGI) limit for deductions of cash contributions from 50 to 60% in 2017, simultaneously nearly doubling the standard deduction and reducing marginal tax rates, fewer taxpayers have been itemizing and claiming charitable deductions.
With over 25 years of experience in philanthropy and financial services, Richard C. Peck – The Philanthropy Guy – is skeptical, encouraging donors to act now instead of waiting for political winds of change. Amidst uncertainty, he believes that immediate action is the solution, allowing donors to claim full control over their future. “The difference we make in someone’s life is timeless,” he adds. “Giving up on that sense of fulfillment for promises that may not come true seems reckless.”
This cautiousness is especially crucial given who these promises are made by, with the new administration not having the best track record of keeping political promises. Moreover, renewing the existing policy on lower taxes and exemptions will cost approximately $4.4 trillion. With volatility on the horizon, itemizing assets and trusting in what you know, not what you want to believe, is essential.
“What will you do when your tax is in flux in 2025? If the law stays the same, and you don’t prepare ahead of time, will you truly be prepared for the consequences?” he muses. “You don’t get rich by being complacent, so why should you do that now? Work with what you know, with what’s in front of you now, and get your ducks in a row with your trusted advisors before it’s too late.”
Experts support Rick’s philosophy. For instance, Sara Barba, a renowned lobbyist and Principal at Integer, LLC, a go-to firm for navigating federal policy impacting philanthropy, said in one of her LinkedIn posts: “Gone are the days of nonprofit resources being sacred. The tax-exempt sector is quite literally on the menu now. Proposals to tap charities and other nonprofits to reduce budget shortfalls in tax reform are coming from all angles. It’s such an important time for nonprofits to advocate for themselves in DC. Otherwise, the important work being done in communities will be significantly disrupted.”
To donate thoughtfully, donors must gather a trusted team of specialists who know the industry’s ins and outs and can not only react but predict outcomes. Rick, leveraging his extensive experience, offers educational resources that illuminate this landscape. In his annually updated 10 Common Charitable Giving Mistakes Made by Donors, ‘Fail to Update Your Plan & Have a Substantive Conversation’ is highlighted as a crucial mistake that leads to missed opportunities. To avoid that, the Philanthropy Guy advises paying attention to life transformations, reviewing plans when laws change, and paying attention to asset changes. In light of the recent news, forward-thinking donors should be ready for potential changes while anticipating the worst-case scenarios and – most importantly – working with what’s available and certain now.
As a new year enters from the generosity of the holiday season, humanity can’t forget about the darkness that never sleeps. The housing crisis has taken its toll, homelessness rates are rising, and people continue to struggle. Non-governmental organizations (NGOs) and nonprofits are the ones dedicated to helping those who suffer and addressing root causes – the same organizations that will pay the price if charitable giving reduces. Painting that image, Rick asks one question, “Does that make you uncomfortable?”
“It doesn’t have to be a world where being financially sound competes with being philanthropic. In a perfect universe, they merge seamlessly, with nonprofits propelled by regular streams of money and donors rewarded for their societal contributions in many ways, including financial” concludes Rick. “The only thing we know is that the future is uncertain. But there are steps that can be taken to prepare yourself for the unknown: meet with your wealth advisor, accountant, attorney, business valuation specialist, and philanthropic advisor. Get the team together and prepare for all possible outcomes. If you just sit back and wait for change to happen, you’ll be stuck in the storm – a storm that, if you take action early enough, may be avoided through the power of giving.”
