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April 2024
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It’s graduation season, and that means education may be on your mind! The Community Foundation can help you make a difference in the lives of young people by funding education. Certainly establishing a scholarship fund at the Community Foundation is one way to accomplish this goal. But that’s not the only way. Here are three ideas to consider as you explore ways to make an impact through education.
Establish a Designated Fund for Educational Institutions A designated fund provides support for specific organizations of your choice. So, for example, if you want to ensure that a particular college or university receives funding each year, you can set up a designated fund to accomplish this. For instance, if your family has supported the same local college for generations, you may want that support to continue. At the same time, you want to be sure that your funds are used effectively. This includes protecting your monetary support from the college's creditors if the college finds itself in financial trouble. A designated fund at the Community Foundation could be the solution. Establish a Field-of-Interest Fund to Support Specific Aspects of Education Through a field-of-interest fund at the Community Foundation, you can establish parameters for grant making according to your wishes. If education is your priority, perhaps over the years you’ve supported a variety of local organizations that provide students with courses, tutoring, mentorship, and social services, ranging from grassroots charities to well-established trade schools and higher education institutions. Establishing a field-of-interest fund activates the Community Foundation’s expertise and research by delegating grant making decisions to the Community Foundation team. This helps donors like you ensure that their dollars will have the greatest impact. Seek the Advice of the Community Foundation for Your Donor-Advised Fund Grantmaking If you have established a donor-advised fund at the Community Foundation, you’ve likely used it over the years to support your alma mater and perhaps other educational institutions. The Community Foundation team would welcome the opportunity to help you think broadly about education, beyond simply four-year institutions. Community colleges, trade schools, vocational programs, and out-of-the-box learning experiences may be a better fit for some students. The Community Foundation can also help you identify charities that support teachers, classrooms, and school districts, all of which need resources to deliver the best possible education to students. We look forward to helping you support education as a major area of charitable interest! And if there’s a graduation in your family this year, congratulations! 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. A donor-advised fund is one of many types of funds you can establish at the Community Foundation. Field-of-interest funds, designated funds, unrestricted funds, and scholarship funds are also popular and can make a big difference in the community while also fulfilling your goals for tax and charitable planning.
If you’ve established a donor-advised fund at the Community Foundation, you know it’s useful because it allows you to make a tax-deductible transfer of cash or marketable securities that is immediately eligible for a charitable deduction. Then, you can recommend donations from the fund to your favorite charities to meet community needs as they emerge. Your gifts to your donor-advised fund are tax deductible transfers to the Community Foundation, which is a charitable organization recognized under Internal Revenue Code Section 501(c)(3). The Community Foundation follows the Internal Revenue Service’s requirements that disbursements from your donor-advised fund meet certain important qualifications to preserve that charitable tax status–for everyone’s benefit. It’s a good idea to periodically review a few types of disbursements that don’t meet the IRS’s rules and therefore are not permissible donations from your donor-advised fund. For example:
We look forward to hearing from you! As always, the Community Foundation team is honored to be your first call when you encounter a question about your donor-advised fund or any other charitable giving opportunity. 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 honored to be your “go-to” resource for all components of your philanthropy. We enjoy talking regularly with individuals, families, and businesses about their goals for charitable giving, tax strategies, ways to support favorite nonprofits, getting children and grandchildren involved in the community, leaving a legacy, and so much more. If you’ve already established a donor-advised fund, field-of-interest fund, designated fund or unrestricted fund at the Community Foundation, you know we’re always here to answer your questions.
What you might not know, though, is that the Community Foundation is also happy to help you keep your attorney, accountant, and financial advisor in the loop. We’d be happy to join you and your advisors at a meeting to discuss your charitable plans. We’re also happy to offer suggestions about which documents and information you’ll want to provide to your advisors. For example, it’s important to provide your attorney with information about your fund – or funds – at the Community Foundation and also provide copies of fund agreements and other documentation. This will help your attorney determine whether and how your fund could be incorporated into your estate plan. Your attorney also needs to be aware of beneficiary designations on retirement plans and IRAs; these vehicles are critical components of an overall estate plan and also are an excellent way to leave a tax-savvy bequest to your fund at the Community Foundation or other charity. Next, your accountant will appreciate knowing about your fund at the Community Foundation, especially as you work together to evaluate the most effective assets to give to charitable causes each year. Your accountant, for instance, may suggest that you give a certain dollar value of appreciated stock to your donor-advised fund in a particular calendar year to maximize itemized deductions and give you the ability to support your favorite charitable causes for several consecutive years at the high levels you intend. Finally, it’s important that your financial advisor understand your charitable intentions and be aware of the vehicles you’ve already established. Your financial advisor can keep an eye out for stock positions that are highly-appreciated, making them ideal gifts to fund your charitable intentions. Your financial advisor will be a key member of the planning team if you were to establish a charitable remainder trust, for example, with the Community Foundation. Not only is it important to determine which assets to use to fund the trust (highly-appreciated real estate, for example), but your financial advisor also will want to weigh in on the projected lifetime income stream from the trust to develop retirement projections that are as accurate as possible. One of the many benefits of being a fund holder at the Community Foundation is your access to a team of professionals who are dedicated to carrying out your charitable wishes. Think of our team as a group of specialists who deeply understand both the tax and mission-based aspects of charitable giving vehicles–and who are enthusiastic about working alongside your legal, tax, and investment advisors to create a philanthropy plan that meets all of your 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. You’re likely very consistent about reminding your donors about the benefits of giving long-term, publicly-traded securities to support your organization’s mission. Don’t ever stop! It’s so easy for a donor to forget about this and write a check, missing out on the opportunity to avoid capital gains tax.
Non-cash gifts also include assets beyond just publicly-traded stock. Remember that the community foundation can work with you to accept donors’ gifts to your endowment fund of many types of assets, including: Closely-Held Business Interests With proper planning, a donor can transfer shares of a closely-held business to your organization’s endowment fund at the community foundation. QCDs from IRAs A Qualified Charitable Distribution (“QCD”) is a very smart way for a donor who has reached the age of 70 ½ to give to your endowment fund. A donor can direct up to $105,000 from an IRA every year. Together, married couples can direct twice that amount. The donor avoids income tax on the funds distributed to your endowment fund. Real Estate Your endowment fund at the community foundation can receive a tax-deductible gift of a donor’s real estate, such as farmland or commercial property, avoiding capital gains tax and reducing the value of the donor’s taxable estate. Life Insurance For some donors, naming your organization’s endowment fund at the community foundation as the beneficiary of a life insurance policy is an effective way to leave a bequest. And, in the case of whole life policies, it may be possible and advantageous for the donor to not only name the endowment fund as beneficiary, but also transfer the policy itself and make annual, tax-deductible contributions to the community foundation to cover the premium. And that’s not all! Oil and gas interests, cryptocurrency, and collectibles are among the other assets that can make effective gifts to charity. Please reach out to the team at the Community Foundation to learn how we can help you accept non-cash, non-marketable gifts into your endowment fund. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. It’s common practice for fundraisers and other philanthropy professionals to use the term “planned giving,” but do your donors know what you mean? Certainly, some donors understand the term, especially those who’ve served on your board or who’ve worked with you to establish a bequest. But many donors – and especially prospective donors – could benefit from an explanation that avoids the confusion of industry jargon.
To that end, in your fundraising communications, you might consider providing background to help orient your donors to the purpose of planned giving before you dive into defining it or describing it. For example:
Clear, concise, and simple communication with donors will help your fundraising efforts. Indeed, a new study sheds light on the elements of communication that can help increase donor trust, including emphasizing good stewardship and solid decision-making practices. Consider adopting techniques to improve donors’ understanding of your message. For example:
By communicating clearly with your donors, omitting jargon, and sharing stories to demonstrate the value of a donor’s investment, you’ll go a long way toward improving your fundraising efforts to build long-term support for your organization and its mission, especially through planned gifts that demand a high degree of donor trust. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. 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. Charitable Giving in an Election Year
While charitable giving historically has been resilient in the midst of elections, it’s worth bearing in mind that some sources predict that political donations will eat into your clients’ budgets for charitable gifts. As you talk with clients about their philanthropy plans for 2024, you might pass along these trends so your clients can factor into their target gift amounts the potentially greater demand for funding community organizations. This is also a good time to remind clients that political donations are not tax deductible. This may seem elementary, but it still trips up some people who don’t track the rules closely. Rounding Up at the Register Although the majority of your clients’ charitable giving is likely strategic, including giving through a donor-advised or other type of fund at the Community Foundation, there are definitely exceptions in any household. One of those exceptions for many of your clients may be a form of giving called “checkout charity.” The spare change really does add up–to the tune of $749 million nationwide in 2022 alone! Legal Pitfalls for Nonprofits As you counsel your clients who are on the boards of nonprofit organizations, or perhaps even lead them, be aware of a handful of legal issues that are surfacing as areas of concern, including the always-relevant topics of employees versus independent contractors and unrelated business activities, as well as emerging issues related to artificial intelligence. 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. When your client is getting ready to make a contribution to a fund at the Community Foundation or other charity, remind them not to automatically reach for the checkbook! Here are other (and typically more tax-savvy) options to consider.
Marketable Securities Gifts of long-term appreciated stock to a donor-advised or other type of fund at the Community Foundation is always one of the most tax-savvy ways to support favorite charitable causes because capital gains tax can be avoided. Gifts of publicly-traded stock, for example, are easy to transfer to a fund. The Community Foundation team can provide you and your clients with transfer instructions to make the process simple. As is the case with a cash gift, the Community Foundation will provide a receipt for tax purposes, and the gift of stock will be valued at the shares’ fair market value on the date of transfer. When the Community Foundation sells the shares, the proceeds flow into the client’s fund without any reduction for capital gains taxes. This is because the Community Foundation is a 501(c)(3) charitable organization and therefore does not pay income tax. That would not have been the case, however, if the client had sold the stock first and then transferred the proceeds to a fund at the Community Foundation; the client would owe capital gains tax on the sale. Especially in cases where the client has held the stock a long time and it’s gone up significantly in value, the capital gains hit can be big. Closely-Held Business Interests The Community Foundation team is happy to work with you and your client to explore how the client might give shares of a closely-held business to a fund at the Community Foundation. Not only will transfers be eligible for a charitable deduction during the year of transfer (and at fair market value if the shares are held for more than one year), but also these gifts could potentially reduce income tax burdens triggered upon a future sale of the business. Be sure to talk with our team well before any potential sale is in the works; otherwise, you could lose out on tax benefits. Gifts of closely-held business interests are powerful but can be tricky to administer. QCDs from IRAs As always, keep in mind that the Qualified Charitable Distribution (“QCD”) is a very smart way to support charitable causes. If your client is over the age of 70 ½, the client can direct up to $105,000 (in 2024) from an IRA to certain charities, including a field-of-interest, designated, unrestricted, or scholarship fund at the Community Foundation. If your client is subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. That means your client avoids income tax on the funds distributed to charity. Our team can work with you and your client to go over the rules for QCDs and evaluate whether the QCD is a good fit. Real Estate Your client’s fund at the Community Foundation can receive a tax-deductible gift of real estate, such as farmland or commercial property, in a variety of ways. An outright gift is always an option; lifetime gifts of real estate held by the client for more than one year are deductible for income tax purposes at 100% of the fair market value of the property on the date of the gift, which also avoids capital gains tax and reduces the value of your client’s taxable estate. Other ways to give real estate include a bargain sale or a transfer to a charitable remainder trust which produces lifetime income for the client and the client’s family. Life Insurance Don’t overlook life insurance as an effective charitable giving tool, whether by naming a client’s fund at the Community Foundation as the beneficiary or, in the case of whole life policies, naming the fund as beneficiary and transferring the policy itself. If your client transfers a policy, the client may be able to make annual, tax-deductible contributions to the Community Foundation to cover the premiums. Other “Alternative” Assets The Community Foundation is happy to work with you and your clients to explore options for giving other non-cash assets to funds at the Community Foundation, including:
We look forward to working with you to explore all the options! 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. The Community Foundation is committed to providing timely updates on legal and policy developments to help you and other professionals who advise philanthropic clients stay on top of best practices in charitable planning. In that spirit, donor-advised funds and the rules governing these vehicles are topics that are popping up more frequently in financial and even mainstream media. Our team is closely watching these regulatory developments.
As background, in November 2023, the Internal Revenue Service issued proposed regulations that would change the way donor-advised funds are defined and how they operate. Especially leading up to the May 6, 2024 public hearings, the proposed regulations have created quite a buzz. If you’d not yet heard about the proposed regulations, the April 19, 2024 letter to Treasury Secretary Janet Yellen, signed by 33 members of Ways and Means, might have grabbed your attention. The letter lays out concerns that “these regulations could have the unintended consequence of impeding charitable giving in our communities, particularly at our local community foundations.” You’ll hear from us when (and if) the proposed regulations, or some version thereof, go into effect and what to do about it. As you track the issue, however, it’s important to remember that a donor-advised fund is just one of many types of funds your clients can establish at the Community Foundation. Consider:
We look forward to helping you serve your charitable clients regardless of where the proposed regulations ultimately land. And 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. The Community Foundation of Grand Forks, East Grand Forks and Region has named 13 recipients of the 2024 Iseminger Endowment for the Arts Program. This program offers financial support for regional organizations who will provide exposure and access to artistic and cultural experiences which generate growth and creativity for all ages. This year’s grant program consisted of funding from two separate pools:
"The Community Foundation works diligently to support programs that offer low-cost educational and artistic experiences to our region’s families, to increase access for both artists and diverse audiences, and to encourage the growth of our community’s creative and cultural sectors," said the Community Foundation’s Executive Director Becca Baumbach.
Grants from the Iseminger Endowment for the Arts illustrate a diverse range of creative opportunities that will educate, entertain, and inspire the communities of the upper Red River Valley. Over the next 12 months, it is projected that these grantees will offer opportunities to over 11,600 professional artists and aspiring creatives and will welcome nearly 52,700 visitors and audience members to their facilities and venues. 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. |