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April 2024
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If you’re a business owner, odds are you already give back to your community. Like many charitably-minded people, your business likely sponsors events, makes in-kind donations, and donates cash to favorite organizations.
Many local business owners work with the Community Foundation to give back to the community where they built their businesses and developed lasting relationships with employees and customers. The Community Foundation offers a variety of tools to help you build and grow your corporate philanthropy program, including: Corporate foundation. Establishing a corporate donor-advised fund helps you organize your company’s giving in a convenient, 501(c)(3)-qualified structure. Executive donor-advised fund. Offering this elevated employee benefit to your executive team can help activate your senior management’s community involvement. Matching gifts. The Community Foundation can help guide your team in creating and administering a program that matches employees’ volunteer time and dollars. Grant making administration and strategy. You and your colleagues likely receive dozens of requests each month from community organizations requesting sponsorships and monetary donations. The team at the Community Foundation can help you create and implement a strategy for responding to and evaluating those requests to align with your company’s goals for supporting and prioritizing causes. Employee giving and disaster relief campaigns. The Community Foundation’s tools to receive and process donations can help you and your employees respond quickly and meaningfully to disasters and other urgent community needs. The Community Foundation is glad to help you deepen your business’s impact and connection to your community, customers, and employees by creating a philanthropy plan that supports causes that align with the wide range of your objectives. The team at the Community Foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation. As you contemplate your legacy and adjust your estate plan over the years, it's natural to focus on your children and family as the primary beneficiaries in your will and trust. If you’re like an increasing number of charitably-minded individuals, though, you might find that your perspectives about what exactly it means to leave a legacy are expanding beyond your next of kin. Your community is on your mind and in your heart, and you’re interested in ways you can support and improve the quality of life for people in the region we call home.
If you’re intrigued, you are not alone! Indeed, many philanthropic individuals are broadening their estate plan beneficiaries to prominently include their community or favorite cause, right alongside children and grandchildren. The team at the Community Foundation would be honored to discuss the ways we can help. Here are three options for funds you can establish with the Community Foundation to benefit our community in your overall philanthropy and estate plan: Unrestricted fund Major advantages of the Community Foundation include its perpetual structure, community-based governance, and commitment to addressing needs as they change. An unrestricted fund allows you and your family to provide support that evolves over time as priorities in the region shift. The Community Foundation’s mission is to thoroughly understand the community and improve lives within it. The Community Foundation’s board and professional staff conduct ongoing, extensive research about the needs of the community and the nonprofit programs that are addressing those needs. Establishing an unrestricted fund means you are investing in the Community Foundation to support programs that are addressing the community’s most pressing needs as well as needs that can’t be identified until the future. Field-of-interest fund A field of interest fund is an ideal way to target your giving to specific areas of community need (such as education, health, environment, or the arts). Your field of interest fund at the Community Foundation establishes parameters for grant making according to your wishes. The Community Foundation’s staff follows these parameters and uses its research and expertise to make grants that align with your intentions. Your fund can continue beyond your lifetime and for multiple generations, consistently providing grants to support your area of interest according to the terms you established when you first created the fund. Designated fund A designated fund at the Community Foundation can help you secure your favorite organization’s financial future so that its mission continues, uninterrupted, even in the face of challenges. You can set up multiple designated funds if you’d like to support more than one organization. You can even set up a designated fund to support a governmental unit, such as the parks department. A designated fund allows you to decide on the timing of the distributions from the fund, such as during the organization’s capital campaign or to support a specific program or initiative. You can serve as an advisor to the fund to recommend the timing and amount of grants to the supported organization, or you can appoint the board of directors of the Community Foundation to carry out this function according to your wishes. And here’s a bonus! If you plan to give to an unrestricted fund, designated fund, or field-of-interest fund at the Community Foundation during your lifetime, and you’re over the age of 70 1/2, you can direct up to $105,000 each year from your IRA to the fund. This is called a “Qualified Charitable Distribution,” or “QCD.” Not only do QCD transfers count toward satisfying your Required Minimum Distributions if you’ve reached that age threshold, but you also avoid the income tax on those funds. Furthermore, the assets distributed through a QCD are no longer part of your estate upon your death, so you can avoid estate taxes, too. The team at the Community Foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation. Many community-minded individuals have served on the boards of directors of charitable organizations in our region. If you’ve served on a charity’s board (or several!), you are no doubt familiar with the concept of an endowment. Many charities establish endowment funds and reserve funds at the Community Foundation to help ensure that their missions stay strong during economic downturns and periods of increased community need.
What you might be less familiar with, however, is an endowment fund established at the Community Foundation by an individual or family. Every year, the team at the Community Foundation works with people like you to establish endowment funds to support the needs of our region in perpetuity. Here are answers to four frequently asked questions about setting up an endowment fund. Why does the Community Foundation offer endowment funds to individuals and families? The Community Foundation serves as the hub of philanthropy for many families in our community. We connect donors like you to community needs you care about, and this includes offering the opportunity to make a charitable investment that supports a range of community needs now and in the decades ahead–needs that cannot be predicted. That’s the purpose of an endowment: to provide a steady stream of dollars, far into the future, to meet community needs as they arise. How does an endowment work? “Endowment” is the word often used to refer to a designated pool of assets that are invested by the Community Foundation and tracked separately such that a modest portion (usually based on a percentage) of the assets are distributed each year to charitable causes, and the rest of the assets remain invested to grow in perpetuity. This growth, in turn, helps the endowment provide even more support each year to the causes for which it was established. The Community Foundation team is experienced at managing the accounting, investment, and distribution aspects of endowment funds. How can I stay involved with my endowment fund after it’s established? First and foremost, you can name the endowment fund anything you want, such as the “Smith Family Endowment Fund,” or something more anonymous such as the “Endowment Fund for Our Future.” In addition, our team is happy to keep you informed about the positive change in the community that is occurring thanks to the distributions from the endowment fund you’ve established. We can continue to keep your children and grandchildren informed, too, beyond your lifetime. In this way, your legacy continues through the generations. Who decides where the endowment distributions go each year? The Community Foundation is itself a permanent institution. Our board and staff are committed to keeping a finger on the pulse of the region’s greatest needs and maintaining a deep knowledge of the charitable organizations that are meeting these needs every day. This is the Community Foundation’s mission in perpetuity. The Community Foundation’s team is made up of dedicated and knowledgeable professionals who understand our community and build ongoing personal relationships with the people working at the region’s charitable organizations. The Community Foundation team recommends distributions from your endowment, and our independent board of directors reviews and approves these distributions to ensure that they fulfill your charitable goals for establishing the endowment in the first place. What does it take to establish an endowment fund? Setting up an endowment fund is as easy as setting up any other type of fund at the Community Foundation. Our team will prepare simple paperwork capturing the name of the endowment fund and any areas of interest you’d like to support. Then, you can transfer cash—or, even better for tax purposes, you can transfer appreciated assets such as stock or real estate. You’ll be eligible for a charitable tax deduction in the year you make the transfer to establish the fund. You can make future transfers to your endowment fund each year, too, to achieve your tax and estate planning goals. Our team is also happy to work with you and your advisors to structure a bequest to your endowment fund following your death. We highly recommend considering a bequest in the form of a beneficiary designation on an IRA because of the multiple tax benefits. Related, if you are over 70 ½, making a “Qualified Charitable Distribution” from your IRA directly to your endowment fund is a very effective charitable planning tool to avoid income tax and also satisfy your Required Minimum Distribution if you’ve reached that age as well. We look forward to working with you to support our community and your favorite charitable causes for generations to come! The team at the Community Foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation. As you read up on techniques to structure philanthropy plans for your high-net worth clients, we recommend reviewing the potential impact of the estate tax exemption sunset, as well as making sure you’re one of just half of advisors who are truly helping their clients with charitable giving in the first place. The team at the Community Foundation is happy to help you start the philanthropy discussion with clients; we understand that it’s not always easy, but it is so important.
The team at the Community Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Getting a jump on a future “to do” list is always such a good feeling. The team at the Community Foundation can help you with your clients’ long-term charitable giving plans by putting in place the structures to receive bequests decades from now.
Consider a case where you’re finalizing an estate plan for a client who would like to leave bequests to multiple charitable organizations, but the identity of those specific organizations may be a moving target over the years because of the client’s evolving level of engagement with various charities as a donor, volunteer, or board member. In other words, this client likely will want to make small changes to the estate plan’s provisions for charitable giving but leave everything else as is. For example, a client’s trust could be drafted to provide that 10% of the remaining estate be divided equally among five charities, which of course could be listed in the trust document. But what if, a few years from now, the client wants to add another charity to that list? Even a small change like this would require an amendment, which can be time-consuming for both attorney and client. Instead, the client’s trust document could name a fund at the Community Foundation as the beneficiary of 10% of the remaining estate. Then, the client can work with the Community Foundation to draft a fund agreement that lists the charities that will share the 10%. When the client wants to add new charities or switch out charities from the list, the client can reach out to the Community Foundation and execute simple documentation of the client’s updated intent for the fund. This process is fast and simple, and it allows clients to ensure that their bequests are in line with ever-changing needs in the community. In some cases, the client may not intend to use the fund during their lifetime. That’s perfectly fine; the Community Foundation can establish a fund to sit dormant and receive assets only after the client passes away. Your client can still name the fund whatever they’d like, and the fund agreement can be modified anytime before the client’s death. Please reach out to the Community Foundation to learn how funds and other planning tools can help your clients achieve their charitable goals both during their lifetimes and beyond. The team at the Community Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. No matter how frequently you remind clients to pause before they automatically reach for the checkbook to make their charitable gifts, many clients still give cash! As an attorney, accountant, or financial advisor, you are well aware that giving long-term appreciated assets is often one of the most tax-savvy ways your clients can support their favorite charities. Nevertheless, it’s sometimes hard to convey that message to clients with words that stick. Next time, consider using illustrations to help clients see the benefits.
Below are three simple examples* to help you show your clients the benefits of giving appreciated stock. Sally and Bob Jones give $100,000 Sally and Bob Jones plan to give $100,000 to their donor-advised fund at the Community Foundation to organize all of their giving for the calendar year. Let’s assume Sally and Bob have a combined adjusted gross income of $600,000, which lands them in the 35% federal income tax bracket. If they gave $100,000 in cash to their donor-advised fund, they could realize an income tax savings, potentially, of $35,000. What if instead of giving cash, Sally and Bob gave highly-appreciated, publicly-traded stock, valued currently at $100,000, to their donor-advised fund. Let’s assume they’ve been holding the stock for many years, and the shares have a cost basis of $20,000. Not only are Sally and Bob eligible for a potential income tax deduction that will save them up to $35,000, but they have also potentially avoided $12,000 of capital gains tax that they would have owed if they’d sold the stock (using a long-term capital gains tax rate of 15%). So, it’s easy to see why Sally and Bob should consider giving highly-appreciated stock instead of cash. Jenny and Joe Smith give $1 million Jenny and Joe Smith plan to give $1 million to community causes this year. They’ll do that by adding $500,000 to their donor-advised fund at the Community Foundation, which in turn they will use to support their favorite charities. They’ll also be making a $500,000 gift to an unrestricted fund at the Community Foundation to help address the region’s greatest needs for generations to come. Let’s assume that Jenny and Joe are in the highest federal income tax bracket because they earn multiple seven figures. If they were to give $1 million in cash, they could save, potentially, up to $370,000 in income tax. If they gave publicly-traded stock instead of cash, assuming a $200,000 cost basis in stock valued currently at $1 million, they would still potentially save up to $370,000 in income tax, and they would also potentially avoid $160,000 in capital gains tax (based on a long-term capital gains tax rate of 20%). Tiffany and Brett Thomas give $5 million Tiffany and Brett Thomas plan to give a target amount of $5 million to charity as the cornerstone of their overall philanthropy plan. They would like to use publicly-traded stock that they’ve held for many years, valued currently at $5 million. They would love to receive a lifetime income stream from these assets, so that the remaining assets will flow to their fund at the Community Foundation after their deaths. In this case, you’ll explore setting up a charitable remainder trust that pays out an income stream to Tiffany and Brett while they are both living and then to the survivor for the survivor’s lifetime. Let’s assume that TIffany and Brett are both 55 years old. And let’s assume that the stock has a very low cost basis–just $500,000–because the Thomases have held it for so long. Depending on the IRS’s applicable rates, and assuming a 5% annual payout rate paid at the end of each quarter, here’s an approximate tax result if you worked with the Community Foundation to help Tiffany and Brett establish a charitable remainder trust:
Following the death of the survivor of Tiffany and Brett, the remaining assets will flow to the Thomas Family Fund at the Community Foundation, which Tiffany and Brett have already established and which, upon their deaths, will split equally into two funds. The first fund will be a donor-advised fund for which their children will serve as advisors, and the second fund is an unrestricted endowment fund to support the Community Foundation’s priority initiatives in perpetuity. Of course, no client’s circumstances will exactly match those of Sally and Bob, Jenny and Joe, or Tiffany and Brett. The net-net here, though, is that we are happy to discuss the various tax-savvy options for charitable giving in any client situation. Please reach out. It is our honor to help you serve your charitable clients. *These examples are for illustration purposes only. Every client’s situation is different, and, therefore, the tax strategy and tax impact will be different for each client. For example, these illustrations are based on federal income tax rates only, and you’ll need to evaluate, among many other factors, the impact of state taxes and potential tax credits. The team at the community foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Despite what some people viewed as a softening in charitable giving over the last couple of years, philanthropy now appears to be on the upswing and is expected to rise by 4.2%. This is good context for your work with donors, especially as donors strive to engage their children and grandchildren in the family’s philanthropic endeavors, paying particular attention to the changing preferences and giving styles of younger generations.
At the Community Foundation, we are always here to serve as a sounding board for ways you can build long-lasting relationships with all of your donors. Our goal is to help your organization ensure that its endowment and reserve funds are strong and growing to secure your charity's mission in perpetuity. Please reach out anytime! This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. In our last newsletter, we shared that our team is closely tracking the IRS’s proposed regulations concerning donor-advised funds, issued in November 2023. Certainly these regulations are just “proposed”; it is unclear whether and to what extent they will become final.
If you routinely read financial publications, you may have seen articles about these proposed regulations and speculation about what they might mean for charitable planning. At this point, it is anyone’s guess! You can rest assured that the Community Foundation team is on top of the issues, and we will update all of our fund holders as more information becomes available. Indeed, you may have seen the news that the IRS has scheduled public hearings on the proposed donor-advised fund regulations, set for May 6, 2024, so it’s not likely we’ll hear anything definitive for several months. In the meantime, you might enjoy reading up on donor-advised funds and the many ways they can help grow philanthropy. The Donor Advised Fund Research Collaborative’s recently-released study of donor-advised funds is full of statistics and insights about the popularity of donor-advised funds and how they help grow philanthropy. We’ll keep you posted! This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. At the Community Foundation, we are honored to work with generous individuals and families like so many of you who’ve established funds to support the causes you care about and the needs of our community both now and in the future. We’re also inspired by those of you who are getting to know the Community Foundation and considering establishing a donor-advised or other type of fund.
Wherever you are in the stages of your philanthropic planning, the team at the Community Foundation is here for you and considers our relationship to be personal. That’s why we welcome the opportunity to meet with our fund holders and prospective fund holders. Here are a few insights into what those meetings are all about. You can expect personal, dedicated service. Unlike financial institutions' donor-advised fund platforms where access to a dedicated donor services team can be rare, the staff at the local Community Foundation is here to help you every step of the way along your charitable giving journey. Our team is happy to meet with you one-on-one, and we are also happy to join a meeting with you and your legal, tax, or financial advisor to assess your current situation and determine the best charitable tax strategy for you. This includes evaluating the best assets to give to your fund or funds at the Community Foundation, including publicly-traded stock and even other noncash assets such as real estate or closely-held stock. We care about your intentions for your fund. The team at the Community Foundation wants to understand the areas of interest that are a priority for you, whether that’s the arts, health care, social services, the environment, education, community development, or something else. We also want to understand the role you envision for the successor advisors you’ve named in the fund documentation, such as your children, who will make decisions about the fund when you are no longer living or able to manage the fund yourself. We will help you establish additional funds to meet your goals. Sometimes when the team at the Community Foundation is working with a fund holder to understand the intentions for a donor-advised fund, we discover that it’s worth adding one or more additional funds to complement the donor-advised fund structure already in place. For example, some fund holders decide to also establish a designated fund for a particular nonprofit organization or an unrestricted fund to support the Community Foundation’s mission in perpetuity. Many times, fund holders decide to make recurring contributions over time to multiple funds at the Community Foundation to achieve their various philanthropy goals. We make the paperwork a breeze. As you know if you’ve already established a donor-advised fund at the Community Foundation, the paperwork is straightforward and not at all cumbersome. As we’re exploring updating your existing donor-advised fund, setting up a new donor-advised fund, or adding additional types of funds to your portfolio, we’ll prepare simple documentation to capture your wishes, collect important contact information, and address your vision for your fund or funds both during and after your lifetime. We’re always here to strategize about your giving options. As you periodically review your assets and financial situation with your advisors, keep an eye out for appreciated assets that could be ideal to give to your fund or funds at the Community Foundation because of the potential capital gains tax savings. The Community Foundation can work with you and your advisors on contributions of a wide variety of assets to help you achieve your tax and estate planning goals. We are happy to go over the appraisal and documentation requirements for gifts of nonmarketable assets such as closely-held stock and real estate. We’ll let you know about educational opportunities and gatherings with other fund holders. During our meeting, we’ll share a calendar of upcoming events and ways you can learn more about the causes you care about and what’s going on in the community overall. Our team is here to help you stay up-to-date and on the various ways you can support the community by working with the Community Foundation and partnering with other fund holders. Thank you for your commitment to philanthropy! If you’re already a fund holder, we are grateful that you’ve made the choice to organize your giving by working with the Community Foundation. If you’re considering getting started, we look forward to continuing the conversation! In either case, we look forward to seeing you soon! This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Developing a practice of regular contributions to your donor-advised fund at the Community Foundation not only allows you to systematically build a philanthropic nest egg for your annual giving to favorite charities, but also paves the way for your future legacy bequests. Whether your cadence of contributions is monthly, quarterly, semi-annually, or annually, the consistency delivers many benefits.
For instance:
The team at the Community Foundation is happy to work with you and your advisors to determine the best way for you to make regular contributions to your fund, especially if your priority is to give highly-appreciated stock to take advantage of the opportunity to avoid income tax on capital gains. We look forward to talking with you about how recurring donations to your existing donor-advised fund (or a new donor-advised fund if you’re considering it) might be a fit for you and your charitable plans. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. If your organization has established an endowment or agency fund with the Community Foundation, your staff and board of directors are already experiencing the benefits of our relationship. We are here to help you grow critical financial resources to support your important mission well into the future.
Many nonprofit organizations who work with our team appreciate the opportunity to periodically review with their directors the benefits of working with the Community Foundation, whether at a board meeting or in a board communication. Here are points you can include in your next endowment update to your directors:
An endowment or agency fund at the Community Foundation is a powerful tool to help secure your organization’s financial future for generations to come. Thank you for the opportunity to serve as your behind-the-scenes back office. If your organization has not yet established a fund at the Community Foundation, please reach out. We’d love to explore how the Community Foundation’s tools and services can help you grow donors’ support for your mission. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. You’re no doubt familiar with donor-advised funds, especially if some of your donors use their donor-advised funds at the Community Foundation to support your organization. What you might not know is that the national average annual “pay-out rate” for all donor-advised funds is 18%, and most donor-advised funds make at least one grant per year. Furthermore, donor-advised funds help many individuals and families get involved in organized giving at a low barrier to entry. Indeed, nearly half of all donor-advised funds carry balances less than $50,000. To dive deeper into these and other insights, we suggest taking a look at the Donor Advised Fund Research Collaborative’s recently-released study.
At the Community Foundation, we are committed to growing philanthropy, connecting donors to the causes they care about, and leading on critical community issues. An important part of our mission is offering donors a wide range of ways to give to your organization and other charities that are most important to them. In many cases, establishing a donor-advised fund, field-of-interest fund, designated fund, or other type of fund at the Community Foundation helps a donor unlock assets for charitable purposes that would otherwise be difficult to tap. This is especially the case with highly-appreciated, noncash assets such as closely-held stock and real estate. We also make it easy for donors to structure long-term giving plans and bequests so that they can maximize their support for you and other favorite nonprofit organizations and involve their families, too. Please reach out anytime if you’d like to learn more about the Community Foundation’s mission to grow philanthropy for our entire region. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Most of your donors have been made aware, often repeatedly, that giving highly-appreciated stock to favorite charities is a very tax-effective strategy. Indeed, gifts of shares held for more than a year are typically deductible by the donor at fair market value. When the charity sells the shares, the charity receives 100 cents on the dollar because nonprofit organizations don’t pay income tax. The net-net here is that the donor (1) benefits from a favorable income tax deduction, (2) avoids the capital gains tax that would have been triggered if the donor had sold the shares and used the cash proceeds to make the gift to charity, and (3) maximizes value for the charity.
So, with all of these benefits, why do so many donors forget about giving stock when they’re ready to make a gift to your organization or your organization’s endowment fund at the Community Foundation? Sometimes a donor is in a hurry, doesn’t think it through, and writes a check before realizing that it would have been better to give stock. Sometimes a donor assumes it will be too much of a hassle to pursue a stock gift. Most of the time, though, a donor simply forgets. This is why it is so important for your organization to mention the benefits of giving stock in nearly every fundraising communication. At any point in time, during any year and any month, regardless of whether the stock market as a whole is up or down, at least a few of your donors will be sitting on highly-appreciated stock. Those are the donors who need to hear the message. Already in 2024, for example, several stocks are hitting milestone one-year performance marks. Assure your donors that giving stock to your endowment fund is very easy. Seamless processing for stock gifts is one of the many benefits of establishing your organization’s endowment fund with the Community Foundation. As always, please reach out to the Community Foundation for ideas and strategies to build your endowment fund through donors’ gifts of stock. We’d love to help you seize the opportunity! This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. On an ongoing basis, the team at the Community Foundation tracks legislation, legal developments, trends, news, and innovative strategies for all types of charitable giving so that we can keep fund holders and their advisors up to date.
Recently, donor-advised funds have been the subject of conversation within financial and estate planning circles, as well as a trending topic in philanthropy, related to a set of proposed regulations issued by the IRS late last year. The IRS has scheduled public hearings on the proposed regulations, set for May 6, 2024. As just one of many types of funds your clients can establish at the Community Foundation, the donor-advised fund is popular because it allows your client to make a tax-deductible transfer of cash or marketable securities that is immediately eligible for a charitable deduction. Then, the client can recommend gifts to favorite charities from the fund to meet community needs as they emerge. Our team has compiled a list of articles we’d recommend if you’d like to dig deeper into the topic of donor-advised funds.
While these materials are useful to gain an understanding of the current situation, at this point, no one can predict what will happen with the proposed regulations--whether and how they will be revised or when they might become effective, if ever. As always, our team is staying on top of the issues. We’ll keep you posted! The team at the Community Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Just as each of your clients has a unique estate plan and financial plan to meet the client’s particular situation and goals, each of your philanthropic clients needs a unique charitable giving plan. For example, for some clients, giving shares of highly-appreciated stock consistently every year to their fund at the Community Foundation makes the most sense for their charitable goals and their mix of assets. For other clients, leaving a bequest to the Community Foundation to support specific areas of interest is the best fit for the client’s financial situation and community priorities.
The Community Foundation offers charitable giving vehicles to meet a wide range of clients’ needs. In many cases, a single client can benefit from setting up multiple funds of different types. Here’s a quick primer on a few of the most popular fund types. Donor-advised Fund A donor-advised fund enables your client to establish a specific account for charitable giving. Your client makes tax-deductible contributions of cash (or, ideally, stock or other highly-appreciated assets) to the fund, and then recommends grants to favorite charities. Unrestricted Fund The Community Foundation has its finger on the pulse of the community’s most pressing issues. An unrestricted fund gives your client the opportunity to support community needs that can’t be identified until the future. One of the biggest benefits of a community foundation is its perpetual structure that allows clients and their families to offer support to nonprofits that evolves over time as priorities in the region shift. Field-of-interest Fund Clients who want to target their giving to specific areas of community need (such as education, health, environment, or the arts) can set up a field-of-interest fund to establish parameters for grant making under the ongoing guidance and expertise of the Community Foundation’s staff. Designated Fund A designated fund allows a client to direct giving to a specific agency or purpose. Over time, the Community Foundation's staff manages the distributions from the fund according to the terms established by your client. Organizational Fund An organizational or agency fund is similar to a designated fund, except in the case of an agency fund, the source of the initial contribution is the beneficiary nonprofit organization itself, not a donor or donors as is the case with a designated fund. If your client serves on boards of directors of charities, they’d likely be interested in learning more about agency funds. Indeed, if you represent nonprofit organizations and their board members in your practice, it’s helpful to keep in mind that organizations frequently establish agency funds at the Community Foundation to set aside endowment reserves or rainy day funds. The team at the Community Foundation is adept at navigating the specific accounting standards that are unique to this type of arrangement. Scholarship Fund Clients can set up funds to support students’ educational pursuits based on the parameters and application requirements they outline with help from the experts at the Community Foundation. Here’s a pro tip: If you represent clients who are age 70 ½ and older, consider recommending a Qualified Charitable Distribution from a client’s IRA to a fund at the Community Foundation. All of the fund types noted above are eligible recipients, with the exception of only the donor-advised fund. We look forward to working together to discover the type of fund (or funds!) at the Community Foundation that could be a good fit for each client’s unique charitable giving needs. The team at the Community Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. |