Tips for giving retirement assets to charity
The Covid era is sometimes referred to as the Great Resignation because of the large number of people who have exited the workforce in the last couple of years. Some are referring to this period as the Great Retirement, considering that, as Goldman Sachs estimated, more than half of the people leaving the workforce were over the age of 55.
For people exiting the workforce, now is a good time to review charitable giving priorities. If you are recently retired, you may find that you have more money in motion, from 401(k)s rolling over into IRAs, to being motivated to ensure that your financial and estate plans are in good shape, including the ability to fund your charitable priorities.
All of this means it’s a great time to review the various ways you can gift retirement assets to charitable organizations, including to a fund at the community foundation. Here’s a quick checklist:
–Cashing out. Of course, you can always contribute retirement assets (IRAs, 401(k)s and 403(b)s) by simply cashing them out and paying the income tax, and then donating the rest to charity. Almost certainly, though, in most cases, this is not a good tax strategy.
–Gifts upon death. When you designate a charitable organization, such as a fund at the community foundation, as the beneficiary of your retirement plans, you can potentially reap huge tax rewards in terms of avoiding estate taxes and income taxes attributable to the retirement assets.
–Lifetime gifts. The Internal Revenue Code contains special provisions for Qualified Charitable Distributions ("QCDs") that may allow you (if you are over 70 ½) to give up to $100,000 from an IRA directly to a charity (with some exclusions, such as donor-advised funds) and avoid paying income taxes on the distribution. You can work with the community foundation to establish a field-of-interest fund or designated fund to receive your QCDs.
–Avoid “gotchas.” Remember that you may not stay retired! Going back into the workforce presents unique tax challenges, such as the tax implications of “rehiring” and its impact on Qualified Charitable Distributions.
Just (be)cause it’s popular, should you do it?
If you’re considering launching a cause marketing program in your own company, or if you’re simply curious as a consumer to learn more about how exactly cause marketing works, you are not alone! From Starbucks to Subway, companies are aligning with causes to help boost their brands and, simultaneously, boost their social impact.
Cause marketing’s growth has been fueled in large part by consumers. Indeed, 72% of consumers in the United States report that they are inclined to buy products from companies whose values align with theirs. Consumers feel they’re helping address global issues when they support companies that align with causes.
You’ll be glad to know that cause marketing is subject to legal standards that apply generally to preventing consumers from being misled by false claims and advertising, including ensuring that the money winds up in the right place.
If you tend to be a cautious consumer, here’s what to look for if you’re considering whether to purchase a product that supports a cause:
–Does the cause resonate with you? You’ll feel better about your purchase if you care even just a little bit about the cause.
–Does the cause seem to be aligned with the brand? For example, a pet food company that supports animal shelters makes sense. But maybe it does not make sense if a pet food company is supporting the arts. It still might be a fit; it’s simply worth considering.
–Do you really need or want the product? This seems obvious, but it is amazing how frequently we overlook this basic threshold!
–Does the fine print on the product packaging, or perhaps a write up on the company's website, sound legitimate in terms of the company’s commitment and support of the cause it’s promoting?
As always, the community foundation is here to connect you with causes you care about. So if cause marketing has inspired you, please reach out! We’ll help you turn that philanthropic passion into local action.
Adult children and parents: Yes you can build a philanthropy plan, together
More and more often, philanthropic families are working together across generations to build lasting legacies to support the causes they care about. At the same time, the common communications challenges between parents and their adult children don’t magically go away, even when the subject of conversation is as uplifting as charitable giving.
If you are a parent of adult children, or if you are one of those adult children, it will not surprise you to read a few of the typical complaints parents and adult children express about each other. According to Jane Adams, a columnist for Psychology Today, those complaints include offering unwanted advice, thinking they know everything, bringing up unwelcome subjects, invoking feelings of guilt, and the ever-popular catch-all, pushing each other’s buttons.
What’s a family to do, then, when the overall goal is to develop and implement a family charitable giving plan that will stand the test of time and make a difference in the community?
First, consider involving a neutral third party, even informally. Certainly the community foundation can play that role if you choose to establish your family philanthropy structure in the form of a donor-advised or other type of fund. This third party can play a significant role, such as serving as facilitator of every family meeting, or a minor role behind-the-scenes, such as offering advice and coaching to members of the family as you navigate philanthropy plans.
Second, keep family discussions focused on the work. The task of developing and implementing a family philanthropy plan can be daunting. On one hand, you’re dealing with the reality that the needs in your community keep growing and philanthropic support is critical to sustain a thriving region. On the other hand, your resources, like everyone else’s, are limited, and you must balance community needs with the need to narrow the focus areas of your family’s philanthropy to make the biggest impact possible with your limited time and money.
Third, commit as a family to a few ground rules for when you are discussing philanthropic matters. Even one ground rule–”We will not push each other’s buttons,” for example–might do the trick to keep communications flowing positively. Or you can adopt more detailed norms, such as:
–“We will be specific in our communications and provide as much detail as possible for our grant recommendations and other suggestions.”
–“We will be authentic. We commit to always staying in tune with how much we care about improving the quality of life in our community.”
–“We promise to keep in touch with all members of the family who are involved in our philanthropic planning so that no one feels left out, whether we keep in touch in person or virtually.”
The team at the community foundation is always happy to work with you and your family to explore ways you can bring your own family’s philanthropic passions to life. We encourage you to reach out.
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 newsletter 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.