Fiscal Cliff Causing Donors To Accelerate Their Giving?

I don’t believe it.

Donors accelerating their giving in 2012 ahead of fiscal cliff?  Check out this Wall Street Journal article:  WSJ click here.

Please readers – comment on this one.  If you read the linked article, you will notice that the three big investment firm Donor Advised Funds were interviewed.  Sure, their donations are up but are yours?

Yes, there has been talk about capping deductions – which primarily hurts the value of charitable deductions for higher income earners. I even wrote about that possibility less than two weeks ago.  And, yes, if a fiscal cliff compromise ends up being this back-door tax raise of capping deductions, then advisors will certainly advise their wealthier clients to accelerate their giving (particularly to donor advised funds which allow donors to time the distributions in future years).

But, capping deductions is just talk and not intelligent policy (at least if you ask me).  Honestly, not likely to happen.  What is likely to happen is income tax rates returning to Clinton era rates – it is happening automatically come January 1, if Congress can’t find a compromise.  Do you think there is going to be compromise over the next few weeks?  I don’t.

I actually suspect that advisors may advise clients to hold off on their year-end giving so that they can use their charitable deductions in 2013 when they may really need it.  I also suspect that there is so much uncertainly (tax rates, investments, well-being of the country, etc..), people may just stay put with their giving and investments.

Back to that article – you have wonder.  Only the donor advised funds interviewed actually stated their increased giving.  Others interviewed did not.  I agree that individuals may like the certainty of parking money at a donor advised fund – just in case the charitable deduction is tampered with.  But, a big increase in year-end giving in 2012?  Hard to believe.

2 comments

  1. By all means the smart donors follow Bob Sharpe’s comment and never miss the benefit of a tax deduction in a tax year because if they have the capacity they are experiencing negative cash flow if they don’t. I doubled my giving this year and to BOTH DAFs and charities.

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