Ahead of the curve: Protecting charitable impact from inflation

By Josh Dukelow, gift planning officer

Maybe you’ve heard… according to GivingUSA’s 2022 Annual Report, Americans donated a total of $484.85 billion to charities. That’s a 4 percent increase in nominal terms, but thanks to 40-year high inflation it’s actually a 0.7 percent decline in charitable giving. That means a real decrease in the resources nonprofits have to pursue their missions. This fits with historic trends; when inflation is high charitable giving declines. That’s the bad news. 

The good news is that you can help your clients fight the impact of inflation on their charitable donations. While the pace of price increases is slowing somewhat in 2023, the inflation beast is not tamed yet. Until that time comes, here are some tangible ways you can help your clients boost their support of their favorite nonprofit causes. 

• Remember Why: Charitable giving should be driven by a donor’s values and desire to have an impact. Just because purchasing power is eroded or wealth seems to be diminished doesn’t change the need for support. To the contrary! Now that support is more important than ever. 

If your client suggests pulling back on giving, initiate a conversation about why they started down the philanthropic road in the first place. Remind them about the impact or outcomes their donations have had already. 

• Get Creative: Just because current economic conditions are challenging doesn’t mean your client doesn’t want to leave a philanthropic legacy. To preserve assets and impact you may need to get creative.  

• Explore blended gift plans that combine outright donations with deferred gifts (which could be worth more when they are given in the future than they are now). 
• Suggest using appreciated land or business interests instead of cash or securities. 

These techniques require a bit more effort, but can create a bigger impact. The Community Foundation can help with either of these strategies. 

• Secure Income for Life: At the heart of inflation-fears is often the worry that your client won’t have the money they need to live comfortably for the rest of their life. With life-income gifts, such as charitable remainder trusts, you can combine charitable gifts with a stream of payments for life. In particular, higher-capacity donors should explore charitable remainder unitrusts where assets can be invested to produce long-term growth and therefore higher payments later in life. 

Technical aspects of these giving tools can intimidate donors, so make sure to explain the benefits to both the donor and the nonprofit in simple language to get buy-in. The Community Foundation can provide language and illustrations for you to use or conference in with you and your client to review this popular gift option. 

High inflation is on the minds of donors, including those of substantial means. By understanding that mindset and proactively bringing solutions to the table, you can strengthen your relationship with your client as well as their support for their favorite nonprofit organizations. A real win-win! 

As always, the Community Foundation is here to help. Reach out to Alison O’Carroll, director and philanthropic counsel, at 404.333.0241 or aocarroll@cfgreateratlanta.org to discuss creative gift solutions and life-income programs that can defend against inflation and sustain valuable charitable causes in our community.