 Charitable giving traditions are a big part of many peoples’ lives. The ways philanthropic values translate into action and behavior, however, vary widely from person to person. And that’s a good thing! When you align your charitable giving activities with your own personality and the ways you like to do good, you’ll enjoy it a lot more and as a result, you’ll be more likely to get even more involved with your favorite causes.
Indeed, your choice of the causes you support may be based on personal experiences or even how you view your character. You may also find that philanthropy fosters personal growth and self-discovery. Some people find that getting involved in the community creates opportunities for networking and building relationships based on shared values and goals. That’s why it’s important to acknowledge that not everyone likes to “do good” in exactly the same way. To figure out what mix of charitable activities might best suit your personality, consider reflecting on whether you tend toward an ”investor,” “connector” or “activator” profile. Here’s what it might look like to be an “investor” type of philanthropist:
If you tend toward the “connector” type, this may describe your preferences:
If you’re an “activator” type, here’s what that could look like:
Whatever your personality type, the Community Foundation can help! Whether it’s setting up a donor-advised fund to organize your giving, working with you and your advisors to establish a legacy bequest, or getting your family and friends involved in site visits to favorite charities, we’re here for you! 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.  Every week, the team at the Community Foundation works with a wide range of charitably-minded individuals and families who are either already working with the Community Foundation or are considering establishing a donor-advised or other type of fund to organize their giving. We also talk with attorneys, accountants, and financial advisors as they work alongside charitably-minded clients. Indeed, many advisors are telling us that they’re taking advantage of summer’s slower pace to get a jump on 2024 tax planning and estate plan updates.
As you work with your advisors over the next few months, be sure to let them know that the Community Foundation can serve as the hub of your family’s philanthropy by administering a wide range of charitable giving vehicles, including:
Along these lines, some of you have requested that we provide a reading list to pass along to your advisors to help them stay up-to-date on legal and tax issues impacting charitable giving. Here are a few suggestions you could forward to your advisors (or simply forward this email):
As always, please let us know if you’d like our team to be part of a conversation with your advisors. We welcome the opportunity to serve as the go-to charitable giving resource as you build a comprehensive financial and estate plan that includes philanthropy. 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.  It’s an election year, which means you may have more questions than answers as you work with your advisors to build out your financial and estate plans. In particular, the looming sunset of key provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 has created a tremendous amount of ambiguity.
For many taxpayers, the potential sunset of the TCJA’s higher estate tax exemption is top of mind. Unless Congress intervenes, the exemption is set to fall after December 31, 2025 from roughly $27 million per couple to approximately $14 million per couple (depending on inflation adjustments). No one has a crystal ball, and it is impossible at this point to know whether or when you should implement planning strategies to address potential changes in the law. Nevertheless, if you are among those who would be affected by the estate tax exemption’s precipitous drop, it’s important to know that charitable strategies can fit nicely into a gifting plan that would help offset the sunset’s impact. If you’re a business owner, for example, you could explore launching a gifting program now to transfer shares of the business not only to your heirs to take advantage of the higher exemption, but also to a donor-advised or other fund at the Community Foundation. With these gifts, you could reduce the value of your taxable estate while also executing a business transition and philanthropy plan that aligns with your overall intentions regardless of the tax laws. Along those lines, some families may decide to lean into annual exclusion gifts ($18,000 per gifting spouse per recipient in 2024) to family members and other individuals to reduce taxable estates without eating into the lifetime gift and estate tax exemptions. If you’re considering ramping up your annual exclusion gifts, you might consider adopting a parallel strategy for charitable gifts. Gifts to charities are deductible for gift and estate tax purposes (as well as for income tax purposes) and therefore will also reduce the value of your taxable estate without using your exemption. Some philanthropists report that they like the idea of making annual exclusion gifts to family members, and, while they’re at it, making stock gifts of an equal amount into a donor-advised fund at the Community Foundation. Given the uncertainty about what might happen with the estate tax exemption, some people are updating their estate plans to increase a bequest to a donor-advised or other fund at the Community Foundation. This would help blunt the impact of estate taxes, and the bequest can be adjusted during lifetime as planning goals and estate tax laws evolve. The Community Foundation is here for you! Our team is happy to help you navigate the opportunities and pitfalls presented by potential changes in the tax law. It is our pleasure to work with you and your family to maximize your charitable goals. 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.  Without legislation to prevent it, the sunsetting of current estate tax laws at the end of 2025 will dramatically reduce the federal estate tax exemption from $13.61 million per person in 2024 to approximately $7 million in 2026 (this includes adjustments for inflation). This change would affect many high net-worth individuals and families, likely exposing many more estates to federal estate taxes.
It is impossible to predict whether or not legislation will prevent the sunset. Even so, it is important for advisors to prepare for client discussions and start considering estate planning strategies now, especially techniques that incorporate multi-generational gifts and charitable planning. Indeed, for a client who is charitably-inclined, making larger lifetime gifts to charity and arranging for charitable bequests will help reduce the client’s taxable estate because of the charitable estate and gift tax deduction. Donor-advised, field-of-interest, designated, unrestricted, and endowment funds at the Community Foundation are flexible and effective charitable recipients of both lifetime and estate gifts. For some clients, you may wish to begin exploring a comprehensive, multi-generational wealth transfer plan, potentially using key tax-planning vehicles: Charitable lead trust Charitable lead trusts (CLTs) may be particularly effective in the current environment. These trusts can provide income to your client’s fund at the Community Foundation for a set period of time, with the remaining assets passing to family members. Right now, the higher exemption allows for potentially significant initial funding of such trusts. This is because the value of the remainder interest counts toward the client’s estate and gift tax exemption. Generation-skipping trust A generation-skipping trust is an irrevocable trust that can benefit a client’s grandchildren and later generations. This trust utilizes a client’s generation-skipping transfer (GST) tax exemption (which parallels the estate and gift tax exemption). This type of trust could allow a client to take advantage of the higher exemption before it potentially decreases in 2026. It is possible under some states’ laws for these trusts to go on for many generations in a “dynasty” format, such that each generation benefits from the trust’s income (and potentially principal for health and education) without the trust’s assets being included in the beneficiaries’ estates for estate tax purposes. Multi-generational fund at the Community Foundation Alongside a charitable lead trust or generation-skipping trust, or as a standalone, a client can establish a donor-advised fund at the Community Foundation that can function much like a family foundation, with successive generations serving as advisors, or the Community Foundation stepping in after the first or second generation, to recommend grants from the fund to carry on a tradition of supporting the causes that have been most important to the client during the client’s lifetime. The team at the Community Foundation looks forward to working with you to achieve your clients’ long-term charitable goals, even in the midst of uncertainty concerning the estate tax laws. 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.  Your clients who are corporate executives have likely wondered at some point about the benefits of aligning their companies with philanthropy, whether specific causes or particular organizations.
In general, a community engagement strategy can be good for business, if well-executed. For example, almost half of consumers view a brand favorably when the brand supports a charitable cause. Community engagement programs can help with employee retention, too. But what are the risks involved in mixing business with charity? In the spirit of aligning doing good with doing well, some companies would love to set up their own nonprofit organizations as “charitable arms” of their enterprises. Corporate leadership may like the idea of efficiency, control, and tight alignment between the company’s offerings and the charity’s mission. For example, a company that makes swimming pools might think it’s a great idea to set up a charity to build swimming pools at community centers to give more kids access to water sports. The company would like to donate tax-deductible dollars to the charity and ask its suppliers and customers to do the same. The company’s executives would serve on the board of the charity, and the charity would purchase swimming pools from the company to carry out its mission. Is this a good idea? No. This strategy plays fast and loose with the rules. Beyond setting up an obvious conflict of interest, this practice would mean that a company effectively would be using charitable funds to benefit itself. This is not a “charitable purpose” in the eyes of the IRS and could result in the loss of the charity’s tax exemption. Plus, if the news got out about this structure, the company could suffer reputational damage. The company, its executives, and the community are all better off if the company pursues more transparent and ethical charitable strategies such as establishing a corporate fund at the Community Foundation, setting up a volunteer program for employees, establishing a matching gifts program, or aligning with wholly-independent charities on cause-related marketing partnerships. Reach out to the Community Foundation to learn more about effective corporate philanthropy strategies. We are here to help as you work with your clients to achieve their charitable goals both at home and in the workplace. 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.  You’re well aware that donating highly-appreciated stock to a fund at the Community Foundation offers significant advantages for your clients over making cash gifts. Communicating this benefit, however, can be challenging when clients have emotional attachments to their shares.
How can you overcome this hurdle and help optimize your clients' charitable giving strategies? Start by understanding the reasons a client might be reluctant to part with certain stocks in the first place:
Emotional ties like these can create psychological barriers to effective charitable planning. There is, however, a potential solution that can satisfy both your clients' emotional needs and their philanthropic goals: The client donates shares of the highly-appreciated, emotionally significant stock to their fund at the Community Foundation, and then the client purchases shares of the same stock in their personal investment portfolio. Here’s why this can be such an effective strategy:
As you share this strategy with a client, be sure to acknowledge the emotional value of the stock and emphasize the client’s opportunity to maintain ownership in the company. Building on this, you can show the client how the tax benefits of giving stock allow the client to make an even bigger difference than if they’d given cash instead. As always, the Community Foundation can help you assist your clients with selecting the best assets to give to charity, evaluate tax implications of various giving strategies, and structure gifts to achieve strong community benefit. We look forward to a 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.  We’re giving you fair warning that the team at the Community Foundation is not going to stay quiet when it comes to emphasizing the importance of understanding at least the basics of the estate tax exemption sunset. Yes, we will be that broken record!
As a reminder, the estate tax exemption is the total amount a taxpayer can leave to family and other individuals during life and at death before the hefty federal gift and estate tax kicks in. This exemption is scheduled to drop big time after December 25, 2025. For 2024, the estate tax exemption is $13.61 million per individual, or $27.22 million per married couple. (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, this would total roughly $7 million per person. Of course, no one will know for sure that the estate tax exemption is sunsetting until it actually sunsets. Certainly the upcoming election could impact the likelihood that Congress will intervene and extend the tax cuts from 2017 that increased the estate tax exemption in the first place. In any event, it is essential that you and your team understand what’s going on here so that you can be prepared to encourage your donors to discuss planning options with their advisors over the coming months while the issue is in limbo. You want your donors to know that you are on top of it! The net-net here is that a lot more people – including many of your donors – could be subject to estate tax in the not-too-distant future. This, in turn, means that your endowment fundraising strategies could get a shot in the arm as your donors work with their advisors to plan gifts and bequests to decrease their taxable estates through the charitable deduction. At the very least, the estate tax exemption is a fantastic conversation piece for your donor meetings, regardless of whether the sunset actually occurs at the end of next year. Potential tax increases tend to get donors’ attention, and you want to be right there in the mix to ensure that gifts to your endowment fund are on the radar. Please reach out to the Community Foundation team! We’d love to help you seize this opportunity. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.  A recent study sheds light on how high net-worth people who’ve made their own money tend to approach philanthropy. As it turns out, self-made millionaires are more likely to give to charity than those who inherited their wealth – a whopping 93% reported doing so. People with legacy wealth are still likely to be philanthropic, but only 74% reported that they give to charity.
So what does this mean for your fundraising and stewardship practices, especially as you strive to build your endowment fund at the Community Foundation? As you’re building donor engagement strategies and expanding your roster of supporters, don’t just focus on “old money.” Consider three strategies to jumpstart your endowment-building efforts by engaging self-made donors: Track local companies. In every community across America, local entrepreneurs have started enterprises from scratch. In addition, more and more of your donors are investing in private markets instead of simply limiting their strategies to stocks listed on the exchanges. (Indeed, the number of publicly-traded companies has declined significantly since the mid-1990s.) The result of these two trends is that a large portion of many donors’ wealth is represented by closely-held stock in businesses they’ve started or in which they are investors. Make sure local companies and the people involved in them are on your prospect list. Talk the talk with entrepreneurs. Pay careful attention to the messages you use to engage entrepreneurs and people who own their own companies. These donors are likely to appreciate the investment characteristics of endowment gifts because they understand that an endowment’s long-term value is human-centered and not simply a financial strategy. Stay close to local companies and their owners as potential major donors, especially for long-term endowment giving. Understand gifts of closely-held stock. The team at the Community Foundation can help you tap into the increased popularity and tax benefits of donors giving closely-held business interests to support favorite charitable causes such as your organization. We can help you navigate a thoughtful stewardship process to encourage a closely-held business owner to consider a gift of ownership interests to your endowment fund at the Community Foundation, whether during the owner's lifetime in anticipation of a future (but yet-to-be-determined) exit, or upon death in the form of a bequest. We look forward to discussing the ways self-made millionaires can help your organization thrive for generations to come. Please reach out anytime to strategize with our team. We are here for you! This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.  By the time summer rolls around, reflecting on what happened last year may feel like cognitive whiplash. That’s not the case, though, with the statistics from the annual Giving USA report that are released every June for the prior year. The team at the Community Foundation reviews the findings closely so that we can identify trends and strategies that could help you and other nonprofits strengthen fundraising and stewardship practices and build financial resources to support the community for generations to come.
You’re likely aware that the recently-released Giving USA report for 2023 reveals that while charitable giving in the U.S. increased to $557.16 billion, the increase failed to keep pace with inflation. When adjusted for inflation, total giving declined by 2.1% year-over-year. While the news is disappointing in some ways, it actually presents a terrific opportunity to communicate a positive set of messages to your donors. Here’s an example of a four-point messaging platform that might be a fit for your outreach strategy:
As always, please reach out to the Community Foundation for ideas and strategies. We are here to help you build your reserves and endowment funds. It’s our honor to support your work to improve the quality of life for so many people in our region. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. |
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