 As you and your team build momentum implementing your 2024 fundraising plan, keep in mind that many individual donors look at the same criteria used by foundations to determine whether to support a charitable organization. You may not even be aware that a prospective donor is conducting due diligence. Especially when a donor is considering making a large gift or setting up a bequest, gaining the donor’s confidence is key.
The team at the Community Foundation is always happy to serve as a sounding board as you strive to continuously improve your organization’s governance and operational documentation. Here are 3 items you might consider reviewing as you do a little spring cleaning. Governing Documents Make sure your articles of incorporation are up-to-date and reflective of your current mission. Donors who are considering a large gift will want to see that your legal documents are in ship shape, especially with respect to the language required to achieve Section 501(c)(3) status. If you’re in doubt, consult the IRS’s suggested language. You’ll also want to review your bylaws. Bylaws can become outdated, in some cases due to technology. For example, you’ll want your bylaws to include permission to use up-to-date mechanisms to gain board approval, such as through an online poll in lieu of an in-person meeting. Tax Returns You’re no doubt on top of the need to file the annual Form 990 tax return. Make it a point, though, to check for consistency between your Form 990 and the Form 1023 you filed (likely years ago) to secure the IRS Determination Letter granting charitable status. Make sure your organization’s charitable purpose is still stated correctly. Consistency across key documents is important to a lot of large donors. Indeed, many donors review the Form 990 carefully before they decide to make a gift. Make sure yours is accurate and compelling. Gift Acceptance Policy Make sure you’ve recently reviewed your policies for how your organization handles the acceptance of certain gifts, especially if they fall in the category of “Non-Standard Contributions” as defined by the IRS. Gifts of hard-to-value assets should not be undertaken lightly. We encourage you to reach out to the Community Foundation to assist in establishing a gift acceptance policy that will protect your organization and empower your fundraisers to engage in successful conversations with donors. To that end, the Community Foundation offers nonprofit organizations the opportunity to establish endowments and reserve funds to benefit from the Community Foundation’s governance and oversight, especially related to accepting complex gifts, as well as relying on the Community Foundation for all of the policies and administration associated with an endowment or reserve. We look forward to working with you! 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.  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.  Events are back! Yes, it’s true! If it feels like events are hot again, you are right! A recent OneCause study showed that 83% of charities are planning an in-person event for 2024, and one-third are planning a hybrid event. Check in with the team at the Community Foundation for ideas about how to include endowment fundraising in your event strategy.
Wealth transfer is happening. The wealth transfer hype continues, and the media seems to report new twists on a regular basis, including statistics about how Generation X’s and Millennials’ particular circumstances figure into the equation. The bottom line remains, though, that the next several years are critical to build and execute your endowment-building strategy. Please reach out to the Community Foundation for help with endowment gifts of complex assets, such as real estate, or tried-and-true gifts, such as highly-appreciated stock. Cause marketing considerations. Interested in aligning with a business or a brand? Cause marketing is not for every organization, but if you do decide to venture in, be sure to brush up on the rules and legal issues. Cause marketing can be a good way to amp up your organization’s brand, and, with savvy planning, you can leverage the increased visibility to grow your endowment. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.  February – and early in the year in general – is a good time to make sure your plans are in place to grow your endowment. As you and your team work together to reach out to donors this month, consider the ways your endowment fundraising communications help you build the long-term relationships with donors that ultimately result in both current and planned gifts to your endowment fund at the Community Foundation.
Valentine’s Day itself is an opportunity to truly reflect on “long term” commitments. Endowments, of course, are intended to last in perpetuity... and the earliest valentines go back to the 1400s when an imprisoned medieval duke sent one to his wife. That brings new meaning to “standing the test of time!” Formalizing your organization’s endowment, especially through establishing an endowment fund at the Community Foundation, helps your organization attract donors’ investable gifts that can produce sustainable returns while the principal or endowed amount remains intact. This quarter, make it a priority to remind your donors about the various ways they can give to your endowment fund at the Community Foundation:
As always, the Community Foundation is here to assist with any type of gift to your endowment fund, whether the gift is simple or complex. Like relationships in your life, endowments need nurturing, and not just during Valentine’s Day month! The team at the Community Foundation welcomes the opportunity to help your endowment thrive in perpetuity. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.  As you review your donor lists and plan 2024 cultivation activities, pay particular attention to donors you know are over the age of 70 ½. That’s because these donors are eligible to make what’s known as a “Qualified Charitable Distribution,” or “QCD,” to your organization’s endowment fund at the Community Foundation directly from the donor’s IRA.
You’ve likely heard a lot about QCDs because they are becoming a very popular financial and charitable planning tool. At the same time, QCDs are growing as the source of more and more confusion. Here are answers to the questions donors might ask you about QCDs so that your team can be prepared to answer them. As always, please do not hesitate to reach out to the Community Foundation for assistance. “Is an IRA (Individual Retirement Account) the only eligible source for Qualified Charitable Distributions?” Short answer: Almost. Long answer: An individual can make a Qualified Charitable Distribution directly to an eligible charity from a traditional IRA or an inherited IRA. If the individual’s employer is no longer contributing to a Simplified Employee Pension (SEP) plan or a Savings Incentive Match Plan for Employees (SIMPLE) IRA, the individual may use those accounts as well. In theory, a Roth IRA could be used to make a QCD, but it is rarely advantageous to do that because Roth IRA distributions are already tax-free. “What is the difference between a QCD and an RMD?” Short answer: Quite a bit! But a QCD can count toward an RMD. Long answer: Everyone must start taking Required Minimum Distributions (“RMDs”) from their qualified retirement plans, including IRAs, when they reach the age of 73. RMDs are taxable income. The Qualified Charitable Distribution, by contrast, is a distribution directly from certain types of qualified retirement plans (such as IRAs) to certain types of charities. When a taxpayer follows the rules, a QCD can count toward the taxpayer’s RMD for that year. And because the QCD goes directly to charity, the taxpayer is not taxed on that distribution. “Can a donor make a Qualified Charitable Distribution even if the donor is not yet required to take Required Minimum Distributions?” Short answer: Yes–within a very narrow age window. Long answer: RMDs and QCDs are both distributions that impact retirement-age taxpayers, and it would seem logical that the age thresholds would be the same. Under the SECURE Act, though, the required date for starting RMDs was shifted from 70 ½ to 72 and is now up to 73 (which is better for taxpayers who want to delay taxable income). A corresponding shift was not made to the eligible age for executing QCDs; that age is still 70 ½ (which benefits taxpayers who wish to access IRA funds to make charitable gifts even before they are required to take RMDs). The IRS’s rules for QCDs are captured in Internal Revenue Code Section 408 and summarized on pages 14 and 15 in Publication 590-B in its FAQs publication. “Can a donor direct a QCD to a fund at the Community Foundation?” Short answer: Yes, if it’s a qualifying fund. Long answer: While donor-advised funds are not eligible recipients of Qualified Charitable Distributions, other types of funds at the Community Foundation can receive QCDs. These funds include endowment funds established by nonprofit organizations. “How much can a donor give through a QCD?” Short answer: $105,000 per year. Long answer: A Qualified Charitable Distribution permits a donor (and a spouse from a spouse’s own IRA or IRAs) to transfer up to $105,000 each year from an IRA (or multiple IRAs) to a qualified charity. So, a married couple may be eligible to direct up to a total of $210,000 per year to charity from IRAs and avoid significant income tax liability. The Community Foundation is here to help you and your team tap into the potential of QCDs to grow your endowment fund. Please reach out! We’d love to talk about a QCD strategy for 2024 and beyond. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.  A new year ushers in a fresh batch of resolutions and goals. It’s also a time when new questions pop onto the radar. That’s certainly the case even in these early days of 2024. Here are a few of the top questions we’re already hearing from our nonprofit partners, along with answers to help you navigate the year ahead.
 More often than not, boards of directors of nonprofit organizations are made up of business and community leaders who are not typically embedded in the day-to-day operations of charitable organizations. That’s why it’s important to focus on continuous learning opportunities for your board members, including (and especially) board members’ roles in maintaining your organization’s financial stability.
An endowment is a key component of achieving that financial stability, and, if your organization has established its endowment or reserve fund at the community foundation, you’re likely in close touch with the team at the community foundation about keeping your board members informed about endowment-building strategies and successes. We are happy to help!  Millennials and Generation Z are already focused on retirement, and 30% of them are setting their sights on becoming millionaires to achieve their goals. What this means for you and other charitable organizations is that it’s likely a smart move to expand your planned giving outreach strategies to include younger donors, as well as the traditional audience of generations who are retired or approaching retirement. Indeed, many of your younger donors are increasingly becoming investment savvy and will understand the value of planning ahead.
Because younger generations are often motivated to give online and inspired by social media, your planned giving strategies should be tailored accordingly. Many planned giving techniques are complex, which is understandable considering the various legal and tax considerations that factor into structuring a bequest, charitable remainder trust, or beneficiary designation of a retirement plan or life insurance policy. Try to do whatever you can, though, to keep your language and promotional materials simple to match the preferences of this audience and the channels where they receive information.  As a nonprofit, two constants you likely face are (1) more demand for your services and (2) rising operating costs. Fundraising can help satisfy the “more demand” part of this equation, but that typically requires more budget, which means more marketing and … well, you get the point.
The community foundation team is your partner! We are here to help you grow your endowment at the community foundation in both traditional and creative ways. That means we’re here to help you accept and administer gifts of complex assets, such as closely-held stock and real estate, as well as help your board understand the importance of an endowment and best practices for investment and spending policies to ensure that your mission stays strong for generations. |
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