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February 2025
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At first glance, you may think of charitable giving as mostly an individual act. Certainly, most of the time, the actual money or asset that constitutes the charitable donation comes from a single person, couple, or entity. Beyond that, though, it likely makes sense to think of charitable giving as a collaborative endeavor.
Here are three examples:
Thank you for the opportunity to work together to make our region a better place for everyone, now and in the future. If you’re not yet working with the Community Foundation, we look forward to exploring the options! It would be an honor and pleasure to work alongside you and your family on your charitable giving journey. 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. Summertime can mean vacations, travel, a slower (or at least different) pace, and time to reflect. This year, our team is thinking quite a bit about the significant role of philanthropy across the world and how that widespread enthusiasm drives so much energy for charitable giving right here at home.
If you’re spending time this summer reflecting, you might enjoy digging into a few of the sources we found thought-provoking,
As always, the Community Foundation is here for you! We are honored to work with you and your family as you support the causes in our region that are most important to you. You are making a difference! 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. Welcome to summer! We've put together six tips to keep in mind as you plan your charitable giving for the coming months, years, and even decades. As always, the team at the Community Foundation is happy to be a resource!
Donate appreciated stock to your fund at the Community Foundation. Yes, yes, we absolutely understand how easy it is to write a check when you want to boost your donor-advised or other type of fund at the Community Foundation. If you can remember to pause before you pull out your pen, though, it really does pay off to consider whether appreciated stock would be a better way to add to your charitable giving account. When you give shares of long-term appreciated stock, you can be eligible for a charitable tax deduction at the fair market value of the shares. Then, when the Community Foundation sells the shares and adds the proceeds to your fund, the fund–a 501(c)(3) charity–is not hit with capital gains tax. By contrast, if you were to sell those shares and give to your fund from the proceeds, you’d have a lot less cash to work with. Please reach out to the Community Foundation anytime to learn more about how easy it is to take advantage of this tax-savvy giving technique. Plan ahead for your business exit. If you own all or part of a private business, keep in mind that charitable giving can factor into your eventual exit strategy. You could be sitting on substantial unrealized capital gains if the business has grown a lot over time. Upon a sale, capital gains tax will be triggered, reducing the proceeds you get to keep. No capital gains tax will apply, however, to the sale of the portion of the business owned by your donor-advised or other type of fund at the Community Foundation. Plus, you can be eligible for a charitable income tax deduction in the year of the transfer based on the fair market value of the shares–not the cost basis, as would be the case if you’d transferred the shares to a private foundation. Keep in mind that a strategy like this only works with careful planning, so be sure to contact the Community Foundation team well in advance of setting a plan in motion. We are happy to work with you and your advisors to help achieve your charitable and financial goals. Start paying attention now to the estate tax exemption sunset. The estate tax exemption–the total amount a taxpayer can leave to family and other individuals during their life and at death before the hefty federal gift and estate tax kicks in–is scheduled to drop, rather precipitously, after December 25, 2025. For 2024, the estate tax exemption is $13.61 million per individual, or $27.22 million per married couple, an increase over 2023 thanks to adjustments for inflation. Later this year, the IRS will issue inflation adjustments for 2025. For 2026, without legislation to prevent it, the exemption is scheduled to fall back to 2017 levels, adjusted for inflation, which would roughly total $7 million per person. That is quite a drop! This means a lot more people–maybe including you–could be subject to estate tax in the not-too-distant future. The team at the Community Foundation is happy to work with you and your advisors to explore how charitable giving techniques can help you avoid estate tax and leave a legacy for the community, especially if you start planning now. If you can take advantage of the QCD, do it. A Qualified Charitable Distribution (“QCD”) is a very smart way to support charitable causes. If you are over the age of 70 ½, you can direct up to $105,000 from your IRA to certain charities, including a field-of-interest, designated, unrestricted, or scholarship fund at the Community Foundation. If you’re subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. Through a QCD, you avoid income tax on the funds distributed to charity. Our team can work with you and your advisors to go over the rules for QCDs and evaluate whether the QCD is a good fit for you. Review your IRA beneficiary designations. As you review your assets and how they are titled, perhaps in connection with an annual financial and estate plan review, pay close attention to tax-deferred retirement plans such as 401(k)s and IRAs. Typically, you’ll name your spouse as the primary beneficiary of these accounts to provide income following your death or to comply with legal requirements. But as you and your advisors evaluate whom to name as a secondary beneficiary of these tax-deferred accounts, don’t automatically default to naming your children or your revocable trust. You and your advisors may determine that naming a charity, such as your fund at the Community Foundation, is by far the most tax-efficient and streamlined way to make gifts to your favorite causes upon your death and establish a philanthropic legacy. A bequest like this avoids not only estate tax, but also income tax on the retirement plan distributions. That’s why non-retirement fund assets may be better-suited to pass to children and grandchildren. Embrace a holistic approach to philanthropy. When you work with the Community Foundation, charitable giving is easy, flexible, and rewarding. As the hub of your charitable giving, the Community Foundation offers a wide range of fund types, services, and ways for you and your family to get involved with the community you love. Many of our fund holders use a donor-advised fund to organize annual giving to charities. We can also help you establish a designated or field-of-interest fund to complement the function of your donor-advised fund. A designated fund allows you to support a specific charity over the long term, while a field-of-interest fund focuses your support on a particular area of community need by leveraging the Community Foundation’s expertise. We’d also be honored to work with you and your advisors to structure a bequest to the Community Foundation in your estate plan to support important causes, as well as the Community Foundation’s work, beyond your lifetime. We are here to help you make the most of your philanthropic intentions, and it is an honor to work together. 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. The team at the Community Foundation is committed to keeping an eye out for trends and developments that impact charitable giving and your ability to raise funds for your organization’s mission.
Here are three developments you'll want to track:
Thank you, as always, for the opportunity to work together! It is our honor to be your partner in philanthropy and community impact. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Your donors are likely very familiar with the term “endowment,” but they might not know how it works or how important it is to help sustain your mission for the long term. If you’ve established your organization’s endowment fund at the Community Foundation, we’re happy to help you communicate the benefits of endowment gifts to interested donors who may be new to providing this type of support.
For example, you can include language in your communications along these lines: “Endowment” is the word often used to refer to a designated pool of assets that are invested by and tracked separately such that a modest portion (usually based on a percentage) of the assets are distributed each year for charitable purposes, 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 our organization. And this: Our organization has established its endowment fund at the Community Foundation, where the team is experienced at managing the accounting, investment, and distribution aspects of endowment funds. Working alongside the Community Foundation, our board and staff are committed to keeping a finger on the pulse of our community’s greatest needs and maintaining a deep understanding of how our organization can meet those needs now and well into the future when priorities emerge that simply could not have been predicted. Distributions from our endowment fund are reviewed and approved by an independent board of directors to ensure that they fulfill our organization’s mission-focused goals for establishing the endowment in the first place. And this: When you support our endowment fund through gifts of stock, bequests in your will, beneficiary designations on your retirement plans, or even gifts of real estate and other complex assets, you are helping pave the way for our organization’s long-term stability to continue to improve the quality of life in our region. What’s more, we can work with you and your advisors to structure endowment gifts that meet your own estate planning and tax objectives. As always, please reach out to the team at the Community Foundation for ideas about growing your endowment. We are here for our community, and we are here for you! This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Even with many of your donors traveling or taking time off, summer is not the time for stewardship and fundraising to move to the back burner. Especially because endowment gifts and complex charitable giving structures take time to establish, mid-year presents an excellent opportunity to double down on development efforts.
For example, always remind your donors to give appreciated stock instead of cash. Absolutely it feels like you are a broken record! You mention the benefits of giving appreciated stock all the time in your donor communications. But it really can’t be overstated. Donors are so tempted to reach for the checkbook for charitable giving, even when they are making a gift to your organization’s endowment fund at the Community Foundation. Emphasize to your donors that not only will transfers be eligible for a charitable deduction at fair market value (if the donor held the shares for more than one year), but also your organization won’t pay income tax on the capital gains. This means the donor will be making a much bigger gift than if the donor had sold the stock, paid the tax, and supported your organization out of the proceeds. The Community Foundation is always happy to help you process gifts of appreciated stock, especially when a donor wants to give a large block of a single stock to support your organization as well as others. And keep talking about QCDs! Donors who are 70 ½ or older absolutely must consider giving from an IRA. Certainly you mention this a lot in your discussions with donors, but sometimes donors are not ready to hear it, especially if they are on the cusp of reaching 70 ½ but aren’t there yet. They will listen differently when they’ve actually hit the age. As you know, a QCD allows a donor to direct $105,000 from an IRA to your organization, penalty-free. If a donor is subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. That means the donor can avoid income tax on the funds distributed to charity. The Community Foundation is happy to help you work with donors and their advisors to determine whether a QCD is a good fit to help maximize charitable giving. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. As your go-to resource for charitable giving techniques, the Community Foundation team pays close attention to best practices in addressing the broad range of your clients’ charitable intentions to support both near-term and long-term community needs. This includes tracking legal developments that may impact philanthropy broadly, impact specific giving vehicles, and everything in between.
For example, we pay attention to the IRS’s plan to increase audits of wealthy taxpayers so that our team is better positioned to help you and your clients understand the requirements of valuing gifts to charity. And we’re gearing up to help you and your clients incorporate charitable giving vehicles as a way to blunt the potential impact of the anticipated estate tax exemption sunset. And we’re watching the IRS scrutinize aggressive techniques using annuities inside charitable lead trusts. And so much more. Another issue we’re watching closely is the latest news on the IRS’s proposed regulations of donor-advised funds. We’ve studied the transcript from the public hearings in early May, and it was inspiring to see so many community foundation leaders share their recommendations urging that any new regulations not disrupt the positive and productive working relationships between community foundations and advisors who are helping their clients achieve philanthropic goals. 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 informed. Of course, a donor-advised fund is just one of many types of funds your clients can establish at the Community Foundation. We offer donor-advised funds, endowment funds, field-of-interest funds, scholarship funds, designated funds, and a wide range of planned giving and legacy options for clients who want to invest in the community’s long-term needs. 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. What’s especially rewarding for our team is to work with you and your clients to explore a diversified portfolio of giving vehicles. It’s possible that a client's portfolio would include a donor-advised fund, and perhaps also one or more of a variety of other tools, such as a bequest, unrestricted gift, charitable trust, and endowment gift. Above all, we are confident in our ability to continue to work collaboratively with you and other advisors for years to come to help fulfill your clients’ philanthropic wishes. 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. It’s relatively straightforward to see how philanthropy figures into the financial and estate plans you build for individuals and families. After all, many of these clients are already supporting their favorite community causes, and it’s your job to make sure they know about all the options for structuring both their near-term and long-term plans to give to charity using techniques that achieve both philanthropic goals and tax goals. The Community Foundation works with attorneys, accountants, and financial advisors every single day to help meet clients’ needs.
What you might not always consider, though, is that many of your clients are executives in companies whose leaders want the company itself to lean into charitable giving. That’s why it’s wise to be aware of best practices in corporate philanthropy and know the ways the Community Foundation can help. For example, establishing a corporate donor-advised fund - essentially functioning and named as a corporate foundation - helps corporate executives organize the company’s giving in a convenient, 501(c)(3)-qualified structure, avoiding the time and expense that would be required for the company to establish and maintain a separate foundation entity. The company can fund the corporate donor-advised fund each year (especially in really good years!), thereby organizing charitable donations to a wide range of nonprofits through a single source of funds. This structure can help maintain historical corporate giving levels even when the company experiences a down year. What’s more, many companies coordinate with community foundations to offer donor-advised funds to employees, especially to take advantage of company stock gifts. A program like this is a perk for employees who’ll enjoy organizing their giving and using the Community Foundation’s many tools and services. The program also helps inspire employees to get more involved in the community, which is good for everyone. In many instances, the Community Foundation takes on a back office role for a company’s matching gifts program, grant administration, and giving strategy. For example, the Community Foundation can help guide corporate leadership in creating and administering a program that matches employees’ volunteer time with dollars. In addition, the Community Foundation can help a company create and implement a strategy for responding to and evaluating funding requests to align with the company’s goals for supporting and prioritizing causes. Finally, the Community Foundation can help establish and administer employee giving and disaster relief campaigns. The Community Foundation’s tools to receive and process donations can help a company and its employees respond quickly and meaningfully to disasters and other urgent community needs. Note that many companies appreciate the community’s foundation’s infrastructure, reporting practices, and compliance protocols to ensure that all tax laws and other IRS requirements are met. Instead of the company bearing these responsibilities, it’s the Community Foundation’s job. Corporate executives regularly view the relationship with the Community Foundation as a very wise outsourcing move. The team at the Community Foundation looks forward to working with you and your clients who are corporate executives, or even local small business owners, who are excited to give back to the community where they’ve built businesses and developed lasting relationships with employees and customers. 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. At the end of 2024’s first quarter, an estimated 485,000 Americans could count themselves among the so-called “401(k) millionaires,” meaning the balance in their employer-sponsored retirement plans has reached the $1 million level. Thanks in part to stock market rallies during the first part of the year, that’s a larger number than ever before. Many of these 401(k) accounts will be rolled over into IRAs after retirement and the assets will continue to grow.
With so many of your charitably-inclined clients holding large sums of money in 401(k)s and IRAs, now is an important time for a brief refresher course on the benefits of deploying these accounts toward achieving clients’ philanthropic goals. Indeed, although a charitable bequest of any type of property can help achieve a client’s estate planning and legacy goals, retirement accounts are especially powerful. When your client names a public charity, such as a donor-advised or other fund at the Community Foundation, as the beneficiary of a traditional IRA or qualified employer retirement plan, your client achieves extremely tax-efficient results. Here’s why:
So, if your client is deciding how to dispose of stock and an IRA in an estate plan and intends to leave one to children and the other to charity, leaving the IRA to charity and the stock to children is a no-brainer. Remember, the client’s stock owned outside of an IRA gets the “step-up in basis” when the client dies, which means that the children won’t pay capital gains taxes on the pre-death appreciation of that asset when they sell it. Speaking of savvy giving techniques using IRAs, a client who is 70 ½ or older can make tax-efficient gifts directly from an IRA to a qualified charity (including certain types of funds at the Community Foundation), up to $105,000 per year! This is known as a “Qualified Charitable Distribution.” The Community Foundation is always happy to work with you to ensure that your clients are maximizing their assets to fulfill their charitable giving goals, both during their lives and through legacy gifts. We look forward to the conversation! 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. |