In the weeks after tax season, donors tend to talk more openly about their finances. They might make passing comments about what they owed, what they sold, or what they’re rethinking for the months ahead. Those comments can be revealing. They can indicate the donor’s mindset, needs, concerns, and plans, and this information can open the door to tailored, productive conversations.
The key to making the most of these opportunities is knowing what to listen for and how to respond. Consider the following five tax-related statements, what they indicate about the donor, and how you can respond.
1. “We don’t itemize deductions anymore.”
Many people now take the standard deduction. The donor may assume that tax-efficient giving is no longer relevant to them.
Take this opportunity to highlight:
• “Bunching” gifts for two or more years into a single year (with or without a donor-advised fund)
• The double tax advantage of giving appreciated assets—they get a tax benefit (avoiding capital gains tax) even if they don’t itemize
• Gifts from an IRA, which are made tax free and also count toward the donor’s required minimum distribution (RMD) if one is due, offering strong benefits without the need to itemize
This conversation has the potential to broaden into effective ways to structure giving over time.
2. “I had to sell some stock this year, and the capital gains taxes were painful.”
Tax season often reminds donors how much tax they owe on the sale of appreciated stock or real estate. The donor may be more receptive to giving strategies that will reduce future tax exposure, especially if they expect to rebalance their portfolio this year.
Use this opening to note the benefits of giving appreciated property:
• A charitable income tax deduction for the full fair market value (subject to limitations), if they itemize
• The ability to bypass the capital gains tax they would have owed on a sale of the property
Many donors give cash out of habit. Highlighting this approach could help shift their perspective.
3. “I never thought about how much my RMDs would increase my taxable income.”
People saving for retirement often worry they won’t have enough. They don’t tend to worry about paying taxes on those eventual distributions—and that tax burden can be larger than expected.
Remind IRA owners age 70½ or older about the planning benefits of qualified charitable distributions (QCDs):
• The outright QCD allows donors to transfer funds directly from their IRA to charity—a tax-free distribution (up to the annual limit) that satisfies part or all of their RMD.
• The one-time, life income QCD allows donors to use a tax-free IRA distribution (up to the annual limit) to create a new charitable gift annuity or charitable remainder trust that will provide the donor and/or the donor’s spouse with a lifetime income stream.
The conversation can easily move into future giving with a mention of a charitable beneficiary designation on the IRA.
4. “We need to update our will this year.”
Tax preparation often prompts a review of estate plans. The donor is already thinking about long-term plans and the eventual distribution of their assets.
Follow the donor’s lead to connect those plans with their foundational values:
• Stay away from tax strategy and keep the focus on legacy and long-term impact.
• Frame charitable goals as an integral part of an overall financial and estate plan.
• For those who came out of tax season looking for ways to manage current expenses, highlight the fact that a gift in a will won’t have any effect on the annual budget.
Updating a will often prompts thoughtful decisions about how a donor wants to be remembered and the role charitable giving can play in that legacy.
5. “I’m trying to simplify things financially.”
After working through tax documents and reviewing accounts, many donors start thinking about simplifying their financial lives. The donor may be ready to consolidate, streamline, and make more intentional decisions for their overall finances and charitable giving.
This mindset offers an opportunity to explore:
• Combining multiple gifts or approaches into a more coordinated giving plan
• Using beneficiary designations as a simple planning tool
• Implementing life income gifts or trusts that meet multiple financial and charitable goals
• Using a donor-advised fund to set money aside for charitable giving while retaining the flexibility to make future grants on their own schedule
This conversation has the potential to deepen, touching on how philanthropic priorities and financial goals can support each other, making giving both meaningful and manageable.
Donors rarely give primarily for tax reasons
People are motivated to give by belief in your mission, gratitude for your organization’s impact, and the desire to make a difference for future generations. Tax considerations simply help them make those gifts in ways that are financially wise. By recognizing tax-time comments as conversation openings, you can bring the focus around to planned giving and how it can become an integral, meaningful, and effective part of an overall financial plan.
