Tax laws up in the air, philanthropy personalities, and forward-worthy reading material

In this issue, we’re covering topics that tend to be popular as we head into the second half of the year. The summer months are a great time to regroup with your family about your charitable giving plans and also ensure that you’re coordinating with your advisors to accomplish key estate and financial planning priorities before the year-end rush is upon us.

–Election years are interesting for many reasons! For philanthropists and their advisors, election years can be tricky because it’s impossible to predict what might happen with the tax laws. That’s certainly the case in 2024. The community foundation can help you and your advisors navigate various approaches to charitable strategies, even when the tax laws themselves are up in the air. 

–Whether you’ve been involved in philanthropy for many years or just starting out on your charitable giving journey, you’ve likely noticed that there are many, many ways to support the causes you love. The community foundation can help you evaluate various giving vehicles based on your own “charitable giving personality type.” 

–The team at the community foundation wants to help you help your advisors stay up-to-date on legal and tax developments that might impact the charitable giving components in your estate and financial plan. We’re happy to offer tips and reading material to share with your attorneys, accountants, and financial advisors, and our team is always available to join a discussion. 

Whether you’ve already established a donor-advised or other type of fund at the community foundation, arranged for a bequest to the community foundation, or are currently evaluating whether to work with the community foundation, we are here for you! Please reach out anytime to review your charitable plans. We’re here to help you make a difference in our region and support local nonprofits that are working every day to improve the quality of life for so many people. Thank you for the opportunity to work together! 

Up in the air: Charitable planning in a shifting tax landscape

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.

Philanthropy: It’s not one size fits all

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:

–You like to get involved in community activities where you can act independently, rather than scheduling dedicated time.

–You may feel that you often have more money than time.

–You’re happy to write a check or purchase a product that supports a cause.

If you tend toward the “connector” type, this may describe your preferences:

–You like community activities where you can collaborate with friends and family.

–You enjoy the opportunity to meet people who care about a variety of causes, not necessarily a specific charity. 

–You like attending charities’ fundraising events, and you might even regularly promote your favorite causes on social media.

If you’re an “activator” type, here’s what that could look like:

–Your philanthropic passion lies with one or two specific causes.

–You like the idea of playing a small part in “changing the world” and impacting a single issue that could potentially benefit society on a broad scale. 

–You might enjoy serving on charities’ boards of directors.

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! 

Summer reading that’s worth a forward

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:

–Donor-advised funds, which are frequently a better fit for your family than a private foundation

–Field-of-interest funds and designated funds, which enable you to support specific causes and organizations and, if you are 70 ½ or older, can receive a tax-savvy “Qualified Charitable Distribution” from your IRA

–Bequests and other legacy gifts to help ensure that the causes you’ve supported during your lifetime can continue to benefit from your generosity for years to come

–Unrestricted gifts to support the community foundation’s work to grow philanthropy and improve the quality of life in our region across generations, especially as community needs evolve

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):

–For advisors working with clients who support higher education, it’s important to stay on top of the tax treatment of NIL collectives. The team at the community foundation is happy to talk with your advisors about what’s going on here and how they can follow best practices. 

–It’s becoming more and more popular for philanthropists to explore giving cryptocurrency to charitable causes. Encourage your advisors to reach out to the team at the community foundation as they encounter this issue with clients. 

–A focus on donor intent is especially important as cautionary tales emerge in case law. The community foundation is committed to helping advisors help their clients achieve charitable goals. Our knowledgeable staff and independent board of directors are dedicated to carrying out donors’ philanthropic wishes. 

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 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. 

Six tips for smarter giving, summer reading, and team sports

Hello from the community foundation! 

We can hardly believe the year is nearly halfway over. It’s been such a pleasure to talk with so many donors and fund holders about all the ways you are pursuing your charitable giving plans for 2024. We’re equally inspired by those of you who have reached out to learn more about getting involved with the community foundation by setting up a donor-advised fund, field-of-interest fund, endowment fund, or bequest to align with your charitable priorities.

In this issue, we’re covering a few topics that we think are especially appropriate for summertime.

–Midyear is a wonderful time to check in on a quick punch list of “need-to-know” charitable giving tips. We’ve selected six items that every charitably-minded person really ought to be aware of, whether for purposes of current giving or future giving. You can scan our list of six items in six minutes or less! 

–Summer is a great time to dive into deeper reading, while at the same time take a big picture look at industries and issues. We’re doing just that–with philanthropy. Check out our recommendations for studies and articles about the global role of philanthropy and how it hits home through the work of the community foundation.

–It’s not summer without sports! Fittingly, we’re sharing three ways to look at philanthropy as a team effort and perhaps inspire you to add an even bigger dose of collaboration to your charitable giving efforts. Supporting the community, like many worthwhile activities, is better when it’s done together.

Thank you for the opportunity to serve you and other donors and fund holders who care about our community and strive to invest in both present and future needs of our region. We are committed to growing philanthropic resources to improve the quality of life across generations.

–Your community foundation  

Six for the summer: Mid-year reminders about charitable giving

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. 

Philanthropy snapshot: A global priority with local impact 

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,

–We really like this post from “across the pond” that analyzes why people give and synthesizes a variety of research studies and articles. Altruism, ego, social dynamics, and FOMO are just a few of the reasons people are motivated to give to charity. For a broad look at the role of philanthropy across the globe, you can check out Indiana University’s research.

–Every June, Giving USA releases its annual statistics on the state of charitable giving. We are looking forward to the 2024 report and digging into the numbers from 2023. Last year’s report showed that while individual giving was down, major gifts were ticking up. We’re curious to see what’s changed!

–Some say context is everything, and that may be why we always enjoy going back to the Smithsonian’s Giving in America exhibit and online resources. Even in its semi-archived and “under construction” format, the site is captivating; every time we revisit the site, something different catches our eye. (This time, we were struck by the side-by-side images from 2014’s Ice Bucket Challenge and the collection box from the early 1800s. And by the way, how can nine years have gone by since the Ice Bucket Challenge?) 

–Coming full circle back to our local community, we’d love to draw your attention to what’s going on this summer at the community foundation. [Add a sentence and link to your own stories on your website.]

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! 

Philanthropy: A team sport

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:

–Serving on the board of directors of a charitable organization is a rewarding activity for many people. And, many people complement their board service with financial support. Dialogue among board members, leveraging board members’ talents, and collective board oversight are important components of a well-run nonprofit organization. Charities are counting on board members’ objective voices in the boardroom, board members’ constructive questions, and the board’s dedication to ensuring that public trust in the charity is maintained. 

–For many people, involving other family members in charitable giving is one of the most rewarding ways to instill philanthropic values and transfer these values across generations. Whether you’re teaching young children about the importance of helping people in need, or joining with siblings to develop a grant-making strategy for a family donor-advised fund at the community foundation, you’re experiencing the joy of working together to make a difference in the lives of others. 

–Working with the community foundation is itself a collaborative activity. When you organize your giving through a donor-advised or other type of fund, you are working with multiple professionals on our team to help you plan your annual gifts, evaluate impact, structure tax-savvy contributions of appreciated stock, and so much more. Plus, the community foundation team often works alongside your attorney, accountant, and financial advisor to ensure that both your financial and community goals are top of mind.

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 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. 

Keeping advisors informed, donor-advised fund do's and don'ts, and creative ways to give to education

Greetings from the community foundation!

We are so grateful for the opportunity to work together! 

Many of you have established funds at the community foundation to support the causes you love. Others are serving on boards of directors of local nonprofits. Some of you are involved in discussions with your family and your advisors about establishing a fund at the community foundation to fulfill your philanthropic goals.

Wherever you are in your charitable giving process, we are here to support you, including through articles and resources that can help you shape your philanthropy plan. In this issue, we’re happy to share information about the following:

–The team at the community foundation can help you keep your advisors up-to-date on your charitable plans, including the funds you’ve established and your intentions to support your favorite charities’ campaigns. Reach out anytime if you’d like to review the various elements of your philanthropic activities. We will help you identify what your attorney, accountant, and financial advisor need to know.

–Donor-advised funds are one of many fund types you can establish at the community foundation to organize your giving. (Many families establish field-of-interest funds, designated funds, and unrestricted funds alongside their donor-advised fund to round out their philanthropy.) Review a few reminders about what your donor-advised fund can and can’t do.  

–A scholarship fund isn't the only way to achieve your charitable goals for funding education. Learn about how the community foundation can help you pursue areas of interest that support education in creative ways. You may be pleasantly surprised to discover the variety of options.  

We look forward to continuing to serve you. If we’re not yet working together, we hope you’ll reach out with questions about the topics below or anything else that captures your attention and imagination in the world of philanthropy.

With gratitude,

Your community foundation

Charitable planning: Keep your advisors informed

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 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. 

Donor-advised fund do’s and don’ts

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:

–A donor-advised fund cannot be used explicitly to satisfy a personal pledge to a charitable organization, such as to a capital campaign. The team at the community foundation is happy to work with you to develop ways you can achieve your intentions to support your favorite organization’s fundraising goals. Please reach out if you are in this situation.

–Because donor-advised funds at the community foundation fall under a different (and more favorable) set of IRS rules than private foundations, a donor-advised fund is restricted from supporting a private family foundation. Please reach out to the community foundation team to learn more about this requirement. We’d love to explore how your donor-advised fund and your private family foundation can work together to achieve your charitable goals. Some fund holders even decide to close their private foundation and consolidate their giving with the community foundation to achieve greater impact, save on expenses, and achieve better tax results.

–A donor-advised fund can’t be used to buy tickets to fundraising events, such as galas and golf tournaments, where the cost of the ticket is not fully tax deductible. The reason for this is that the IRS views the taxpayer as receiving benefits from the event (food, drinks, swag), and this “private benefit” muddies the waters of tax deductibility. Even if a portion of the ticket is deductible according to the charity, it’s still not a permissible distribution from a donor-advised fund. Please reach out to the team at the community foundation if you’re asked to sponsor a charity’s fundraiser. We are happy to discuss solutions to achieve both your charitable goals and goals for getting involved with the event. 

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. 

Getting creative: Three ways to support education

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 grant making.

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 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. 

The power of endowment gifts, treating your community like family, and the business of giving

Greetings from the community foundation! 

We’re honored to work with you and so many other individuals, families, and businesses who’ve made charitable giving a priority and share our commitment to improving the quality of life for everyone in our region.

If you’ve already established a fund at the community foundation, thank you for the opportunity to be of service! If you’re considering whether to begin working with us, thank you for including the community foundation as you explore your options. We look forward to learning more about how we can help achieve your charitable objectives in ways that align with your financial and estate planning objectives.

In this issue, we’re covering three frequently-requested topics:

–Perhaps you’ve always been intrigued by the possibility of establishing an endowment to create a permanent source of philanthropic support for the community you love, but you thought the process might be difficult or daunting. When you work with the community foundation, it’s easy–and enjoyable–to structure your endowment as your gift to improve the quality of life for future generations. 

–Thinking about the community when you’re updating your estate plan can help you leave a robust charitable legacy. Discover how the community foundation’s services and tools help giving become a family affair–and why you’re not alone if your community features prominently among your estate plan’s beneficiaries, right alongside your children and grandchildren. 

–Working with the community foundation isn’t just for individuals and families. We also help facilitate corporate philanthropy for businesses of all sizes. Learn how the team at the community foundation can help your business give back to the community where your customers and employees live and work.

Four FAQs to help you establish an endowment

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! 

Estate planning: Your kids … and your community

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.

Establish an 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. 

Establish a 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.

Establish a 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. 

In the business of giving

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 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. 

Making regular donor-advised fund contributions, meetings focused on you, and what’s up in Washington

Greetings from the community foundation! 

We hope you are doing well! 

At the community foundation, we’re hard at work supporting you and your charitable giving endeavors. We hope you know you can always count on us as a guide and resource for you, no matter your situation. Whether you established a fund at the community foundation years ago or are currently in the process of exploring establishing a fund to organize your giving, we’re here as a resource for your philanthropy. 

Here’s what’s coming up in this issue: 

–Getting into the habit of setting up regular contributions to your donor-advised fund helps your financial planning and also helps you support your favorite causes well into the future. We’re sharing a step-by-step guide for establishing recurring contributions to your donor-advised fund at the community foundation.

–The team at the community foundation welcomes the opportunity to meet in person, or over Zoom if that is easier for you. Charitable giving is important and everyone’s approach to philanthropy is different. We take our relationships with fund holders seriously and strive to understand and serve your unique charitable giving priorities. And that’s what you can expect when you meet with our team.  

–Donor-advised funds are just one of many types of funds you can establish with the community foundation. Donor-advised funds are popular because of the flexibility they offer to help you support the important work of your favorite charities. Our team stays up-to-date on the latest donor-advised fund trends and developments, and we’ll keep you up-to-date too! 

Thank you for the opportunity to work together! We are grateful! 

–Your community foundation

Full circle: Grow your philanthropy through recurring giving to your donor-advised fund

Developing a practice of regular contributions to your donor-advised fund at the community foundation not only allows you to systematically build a philanthropic nest egg for your annual giving to favorite charities, but also paves the way for your future legacy bequests. Whether your cadence of contributions is monthly, quarterly, semi-annually, or annually, the consistency delivers many benefits. For instance: 

–As your donor-advised fund grows, it allows you to be nimble with your giving and meet the urgent needs of the community as they arise. For the community as a whole, this type of donor support and stability gives many nonprofit organizations’ leaders the peace of mind and security of knowing that important programs can continue through good times and bad.

–Recurring giving to your donor-advised fund also helps build ultimate capacity to ensure that your principles and dedication to altruistic endeavors endure long beyond your life. Many fund holders at the community foundation have included provisions in their donor-advised fund documents to leave all or a portion of the donor-advised fund remaining at their death to an unrestricted or area of interest fund at the community foundation. 

–Talking about your recurring support through the community foundation helps to create a giving culture within your family. Over time, your children and grandchildren will learn that philanthropy is an important family tradition and that charitable giving is a critical source of funding for programs that improve the quality of life for so many people in our region. Your donor-advised fund at the community foundation offers ongoing flexibility to fulfill your own charitable goals as well as the goals of the next generation. 

The team at the community foundation is happy to work with you and your advisors to determine the best way for you to make regular contributions to your fund, especially if your priority is to give highly-appreciated stock to take advantage of the opportunity to avoid income tax on capital gains.

We look forward to talking with you about how recurring donations to your existing donor-advised fund (or a new donor-advised fund if you’re considering it) might be a fit for you and your charitable plans.

Our door is always open: What to expect when you meet with the community foundation team

At the community foundation, we are honored to work with generous individuals and families like so many of you who’ve established funds to support the causes you care about and the needs of our community both now and in the future. We’re also inspired by those of you who are getting to know the community foundation and considering establishing a donor-advised or other type of fund. 

Wherever you are in the stages of your philanthropic planning, the team at the community foundation is here for you and considers our relationship to be personal. That’s why we welcome the opportunity to meet in person with our fund holders and prospective fund holders. Here are a few insights into what those meetings are all about.

You can expect personal, dedicated service. Unlike corporate donor-advised fund platforms where the help of a dedicated donor services team can be rare, the staff at the community foundation is here to help you every step of the way along your charitable giving journey. Our team is happy to meet with you one-on-one, and we are also happy to join a meeting with you and your legal, tax, or financial advisor to assess your current situation and determine the best charitable tax strategy for you. This includes evaluating the best assets to give to your fund or funds at the community foundation, including publicly-traded stock and even other noncash assets such as real estate or closely-held stock. 

We care about your intentions for your fund. The team at the community foundation wants to understand the areas of interest that are a priority for you, whether that’s the arts, health care, social services, the environment, education, community development, or something else. We also want to understand the role you envision for the successor advisors you’ve named in the fund documentation, such as your children, who will make decisions about the fund when you are no longer living or able to manage the fund yourself. 

We will help you establish additional funds to meet your goals. Sometimes when the team at the community foundation is working with a fund holder to understand the intentions for a donor-advised fund, we discover that it’s worth adding one or more additional funds to complement the donor-advised fund structure already in place. For example, some fund holders decide to also establish a designated fund for a particular nonprofit organization or an unrestricted fund to support the community foundation’s mission in perpetuity. Many times, fund holders decide to make recurring contributions over time to multiple funds at the community foundation to achieve their various philanthropy goals. 

We make the paperwork a breeze. As you know if you’ve already established a donor-advised fund at the community foundation, the paperwork is straightforward and not at all cumbersome. As we’re exploring updating your existing donor-advised fund, setting up a new donor-advised fund, or adding additional types of funds to your portfolio, we’ll prepare simple documentation to capture your wishes, collect important contact information, and address your vision for your fund or funds both during and after your lifetime. 

We’re always here to strategize about your giving options. As you periodically review your assets and financial situation with your advisors, keep an eye out for appreciated assets that could be ideal to give to your fund or funds at the community foundation because of the potential capital gains tax savings. The community foundation can work with you and your advisors on contributions of a wide variety of assets to help you achieve your tax and estate planning goals. We are happy to go over the appraisal and documentation requirements for gifts of nonmarketable assets such as closely-held stock and real estate. 

We’ll let you know about educational opportunities and gatherings with other fund holders. During our meeting, we’ll share a calendar of upcoming events and ways you can learn more about the causes you care about and what’s going on in the community overall. Our team is here to help you stay up-to-date and on the various ways you can support the community by working with the community foundation and partnering with other fund holders.

Thank you for your commitment to philanthropy! If you’re already a fund holder, we are grateful that you’ve made the choice to organize your giving by working with the community foundation. If you’re considering getting started, we look forward to continuing the conversation! In either case, we look forward to seeing you soon! 

What’s up in Washington: A quick update on donor-advised funds

In our last newsletter, we shared that our team is closely tracking the IRS’s proposed regulations concerning donor-advised funds, issued in November 2023. Certainly these regulations are just “proposed”; it is unclear whether and to what extent they will become final. 

If you routinely read financial publications, you may have seen articles about these proposed regulations and speculation about what they might mean for charitable planning. At this point, it is anyone’s guess! You can rest assured that the community foundation team is on top of the issues, and we will update all of our fund holders as more information becomes available. Indeed, you may have seen the news that the IRS has scheduled public hearings on the proposed donor-advised fund regulations, set for May 6, 2024, so it’s not likely we’ll hear anything definitive for several months.

In the meantime, you might enjoy reading up on donor-advised funds and the many ways they can help grow philanthropy. The Donor Advised Fund Research Collaborative’s recently-released study of donor-advised funds is full of statistics and insights about the popularity of donor-advised funds and how they help grow philanthropy. 

We’ll keep you posted! 

Big and small gifts, estate planning and showing you care, and what happens with a bequest

Estate planning: One of the best ways to show you care 

Money, mortality, and family relationships. Each of those topics alone can be tough for anyone to address head on, and when you combine them, it’s no wonder so many people put off setting up or updating their estate plans. Establishing a will, trust, and beneficiary designations forces a person to confront decisions about the ultimate division of their assets, and many people think estate planning is more expensive or more of a hassle than it really is. 

But, getting your affairs in order–well before you need to due to age or illness–is truly a gift to your heirs. It’s extremely stressful for surviving spouses, children, and other loved ones to be faced with the emotional stress and workload of financial disorganization and uncertainty, on top of dealing with grief. Updating your estate plan also allows you to make arrangements for gifts upon your death to your favorite charities.  

Many people choose to support their favorite charities in an estate plan through a beneficiary designation. As you work with your attorney and other advisors, be sure to review the beneficiary designations on your insurance policies and retirement plans. 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 and 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, 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. 

Please reach out to the team at the community foundation as you work with your advisors on your estate plan. We can:

–Review the many tax benefits of naming your fund at the community foundation as a beneficiary of your IRA or other tax-deferred retirement account

–Provide bequest language for your will or trust, properly describing your fund using the correct legal terms 

–Provide language for a beneficiary designation, again properly describing your fund using the correct legal terms 

–Work with you to update the terms of your donor-advised fund so that your wishes are carried out following your death, whether that is naming specific charities to receive distributions or naming your children as successor advisors to your fund

We’ve all heard stories about the sad consequences of someone not having an estate plan, or even having out-of-date beneficiary designations. Estate planning documents, including wills, trusts, and beneficiary designations, often turn out to represent generous acts of clear distribution and conflict avoidance. An estate plan allows you to demonstrate how much you care about the people in your life as well as your charitable passions. 

Big or small, every gift matters

Simplicity, efficiency, and effectiveness have long been cornerstones of working with the community foundation to carry out charitable goals. Time and time again at the community foundation, we see how easily donors who’ve established a donor-advised or other type of fund are able to not only fulfill their big-picture charitable goals, but to act quickly to respond to critical needs in the community as they occur.. 

Indeed, the flexibility of working with the community foundation allows you to support the causes you love at a financial level that meets your charitable giving budget. Early in the year, many of our fund holders transfer highly-appreciated stock to their donor-advised fund, for example, at the community foundation so that they are prepared to activate their annual giving right away. 

At every level of giving, philanthropy is a catalyst for improving quality of life. Indeed, anyone with a willingness to give can be a philanthropist. Whether you’re using your donor-advised fund to give $250 to a college or university, $2500 to a food bank, or $25,000 to an art museum’s endowment, you’re making a difference.

Consider that small donations from a large number of people can make a huge difference. This is especially true for responses to disasters and humanitarian tragedies. On the other end of the spectrum, very large donations to an organization can transform its ability to scale and serve a much greater population. 

In so many ways, whether gifts are large or small or somewhere in between, philanthropy creates the margin of excellence that helps communities, families, and individuals thrive. The team at the community foundation is here to help you achieve satisfaction and impact with your giving at any level. 

What happens when I leave a bequest to my fund at the community foundation? 

Many donors and fund holders at the community foundation have updated their estate plans to leave a bequest to their donor-advised or other type of fund. 

Some bequests take the form of a “specific bequest,” which means that the fund at the community foundation receives a specific amount of money from the donor’s probate estate or trust. For example, for a specific bequest, your advisor might include a provision in your will as follows:

I bequeath $15,000 to The Community Foundation (taxpayer ID number and/or mailing address), a tax exempt organization under Internal Revenue Code Section 501(c)(3), to be added to the [Name of Your Fund], a component fund of The Community Foundation, and I direct that this bequest become part of the Fund. 

In these situations the community foundation will be ready to receive your bequest, typically as soon as the estate is settled. 

In other situations, you may want to leave a bequest of a portion of the remainder of your estate after all specific bequests, expenses, and taxes have been paid. These types of bequests are called “residuary” bequests. The language can look something like this:

I leave all the rest and residue of my property, both real and personal, of whatever nature and wherever situated, and assets, including all real and personal property, tangible or intangible, to The Community Foundation (taxpayer ID number and/or mailing address), a tax exempt organization under Internal Revenue Code Section 501(c)(3), to be added to the [Name of Your Fund], a component fund of The Community Foundation, and I direct that this bequest become part of the Fund.

Because the amount of a residuary bequest cannot be determined until all of the assets in an estate have been identified and valued, and all expenses and taxes have been paid, the designated charity (in this example, your fund at the community foundation) will not receive the full amount of a residuary bequest until the estate is completely settled. Typically, however, the estate’s personal representative or trustee will make what is known as a “partial distribution” to the residuary beneficiary (or beneficiaries as the case may be), as soon as the personal representative has enough information about the assets and liabilities to confidently do so.

When you leave a residuary bequest to your fund at the community foundation, our team will be involved at various steps during the administration of your estate until final distribution. For example, the community foundation will receive regular communications about the estate related to assets, expenses, taxes, and periodic accountings. The community foundation will execute documents, such as receipts, related to distributions and other estate transactions.

The team at the community foundation looks forward to working with you and your advisors to establish bequests to fulfill your charitable legacies. 

Tax tips for a new year, planned giving pointers, and providing guidance for loved ones

Happy New Year from the community foundation! 

We hope your 2024 is off to a good start!

Many of you have been fund holders and fund advisors at the community foundation for years, and we are grateful. Some of you established a donor-advised fund, field-of-interest fund, scholarship fund, or unrestricted fund in 2023, and we’re so glad you did. Others of you are evaluating whether to start a fund at the community foundation in 2024. We are here to answer your questions, and we look forward to working together!

Here’s what we’re covering in this issue:

>>As you build your charitable plans for 2024, remember that you can work with the community foundation to achieve your goals for supporting favorite charities with gifts this year and also establish plans to ensure that your support for these causes continues far into the future through tax-savvy “planned giving” techniques. 

>>Don’t leave your loved ones in the dark. As you compile lists of financial and personal information, be sure to include information about your donor-advised or other type of fund at the community foundation. Our team can help document your intentions.

>>The new year brings new numbers! Be sure you’re up to date on the various IRS thresholds and inflation adjustments that could impact your charitable giving and tax planning through your fund or funds at the community foundation.  

As always, please reach out anytime! 

Your community foundation

Planned giving pointers

As you’ve chatted over the years with the professionals working at your favorite nonprofits, you’ve likely heard the term “planned giving.” You may have even wondered what the term means–even if you have already structured so-called “planned gifts” to support your favorite charities! 

Here are a few pointers to help break down the concept of planned giving, along with ways the community foundation can help you achieve your charitable goals.

It may help to think of “planned giving” in contrast to what’s sometimes called “current” or “annual” giving. For example, when you write a check (or, ideally, give highly-appreciated stock) to a charitable organization such as your fund at the community foundation, you’re transferring those funds right away in a relatively straightforward manner. You also may be making annual gifts to several charities, and from time to time you may also make gifts to a favorite charity’s endowment or reserve fund at the community foundation. 

By contrast, a “planned gift” is more complex and forward-looking than current or annual support of your favorite charitable causes. Making structured future transfers to charity is often referred to as “planned giving” because, well, these gifts require planning. Here are examples of common “planned gifts”: 

–A bequest in your will or trust allows you to name a charity, such as your fund at the community foundation, to receive a certain dollar amount, or a percentage of your estate, following your death. The team at the community foundation can work with you and your advisors to include a bequest in your estate plan using the proper bequest language. 

–Beneficiary designations on life insurance policies, and especially on retirement plans, can be effective tools for making bequests. The team at the community foundation can work with you and your advisors to complete the paperwork required to properly designate your fund at the community foundation as the beneficiary of life insurance or IRA assets, including reviewing with you the many tax benefits of using retirement plans to fund your bequests. 

–Setting up a charitable trust, such a charitable remainder trust, is often an effective way for you to ensure that money will flow from your estate to a charity, such as your fund at the community foundation, in a way that meets both your philanthropic intentions and your financial goals (including retaining an income stream and triggering an up-front charitable income tax deduction). A charitable gift annuity is another type of “split interest” arrangement, whereby you can retain an income stream and designate a charitable beneficiary to receive a future gift. Charitable trusts are complex, and we’re here to walk you and your advisors through the process every step of the way. 

Please contact the team at the community foundation. We’d love to work with you to set up planned gifts to support your favorite causes, as well as work together to ensure that you’ll meet your charitable goals for current giving in 2024. 

Providing guidance for loved ones about your charitable giving

Whatever their age or health status, most people are aware that they need to document important financial and personal information for loved ones, just in case the unexpected occurs. We’ve all heard stories about someone’s family member who passed away and left little, if any, information about where to find bank accounts, passwords, estate planning documents, life insurance policies, and other information. No one wants to leave their loved ones in the lurch with scant information, but it’s often hard to get motivated to write it all down in one place.

The start of a new year is an excellent time to get organized and provide your next of kin or key advisors with the information they’d need to take care of your affairs if something were to happen to you. The list of “must haves” includes the obvious: Will, trust, power of attorney, birth certificate and marriage license, titles to cars and boats, deeds to property, car keys, bank accounts, investments and advisor contact information, life insurance policies and contact information for the agent, funeral wishes, and, critically, passcodes and passwords to devices and accounts. 

What might not be obvious, though, is that you also ought to leave your loved ones with information about your charitable giving, including details about favorite charities you’ve supported over the years and information about your donor-advised or other type of fund (or funds) at the community foundation. In many instances, one member of a family has managed a family’s or a couple’s donor-advised fund, for example, while others have not been as involved in the mechanics. Be sure to include your funds at the community foundation on your list of key information, and include the community foundation’s contact information. You might also like to include a copy of your donor-advised fund agreement outlining successor advisors, as well as login credentials to the community foundation’s online fund portal. 

The team at the community foundation is happy to help you put together documentation about your donor-advised fund and charitable wishes to include with the information you provide to your loved ones so they are not completely lost as they navigate how to carry out your philanthropic wishes. Even better, we’re happy to work with you anytime to show your family members exactly how your donor-advised or other type of fund works so that they are involved and participating with you in your philanthropic pursuits during your lifetime.

Making it easy for you to share the joy of giving, and also helping ensure that family members have the information they need, are top priorities at the community foundation. We are honored to work with you to help make your philanthropy easy, effective, and rewarding for everyone involved.

Clean slate: Tips for charitable giving in 2024

A new year is such a great time to plan and reboot. Cliche as it may be to talk about resolutions this time of year, it’s tough to deny that January represents a clean slate for “to do” lists, goals, and your overall mindset.

As you think about your 2024 charitable giving goals and priorities, here are a few items to consider: 

You may have more capacity to give to charity.

The IRS issued inflation adjustments for important thresholds such as the standard deduction, Social Security cost-of-living adjustments, annual exclusion gifts, Required Minimum Distributions, Qualified Charitable Distributions, and levels of income for each tax bracket. Talk with your advisors about how these adjustments might impact your charitable giving goals–or even create opportunities for you to do more to support your favorite causes in 2024.

You may soon get a charitable deduction even if you do not itemize.

Many eyes are on the Charitable Act, which, if passed, would allow even non-itemizers to deduct certain charitable gifts on their income tax returns. This legislation has generated strong public support; 77% of Americans are reportedly in favor of the proposed “universal” charitable deduction.

You’ll likely still receive requests to fund disaster relief efforts.

Disaster giving is likely to remain high on the fundraising radar, meaning you will likely continue to get requests for donations to support disaster-related causes. As always, please reach out to the community foundation to strategize about effective deployment of your charitable dollars to help people who need it most in the wake of disasters and humanitarian crises. 

This is a good time to review your estate plan without being rushed.

The beginning of the year is an excellent time to be sure your estate plan is in order. Many people scramble at the end of the year to execute tax planning transactions, which is understandable, but this often leaves little time for a thoughtful, strategic evaluation of the various components that make up a comprehensive estate plan, including financial planning, retirement planning, tax planning, investments and wealth management, business succession planning, planning for disability, evaluating wills and trusts as children get older and needs change, and, of course, charitable planning. 

Reach out to the team at the community foundation as you and your advisors evaluate the steps you’d like to take in 2024. We’re here to help ensure that you achieve your charitable giving goals in the most tax-savvy and impact-minded way possible so that you can continue to help the causes you care about the most.

This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.  

Structured family philanthropy, think "hub" not autopilot, and what's up with the sunset

Your donor-advised fund: Think “hub,” not “autopilot”

Perhaps you established a donor-advised fund at the community foundation years ago, or you set up a donor-advised fund more recently. Or maybe you are considering establishing a donor-advised fund at the community foundation this year to help you keep your giving more organized and involve your children and grandchildren in your philanthropic priorities.

Whatever the case may be in your situation, it’s a great idea to consider a few best practices for ensuring that your donor-advised fund is making the biggest difference possible for the causes you care about. Life gets busy, the months fly by, and it's tempting to put your donor-advised fund on autopilot. But that would be a missed opportunity. 

By now, you likely know that a donor-advised fund at the community foundation offers the convenience of a one-stop-shop: You make tax-deductible contributions of cash (or, ideally, appreciated stock) to the fund, and then recommend grants to your favorite charities. Make sure you’re leveraging your donor-advised fund to execute the full range of your charitable giving each year. You’ll find it so much easier to keep track over time of where you’re giving, and how much. 

As the hub of your charitable giving, the community foundation certainly makes it easy for you to use your donor-advised fund for your annual giving to charities. But that’s not all. As you work closely with the community foundation, you’re likely to discover even more ways our team can support your philanthropic activities:

–We can help you establish a designated or field-of-interest fund to complement 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. If you are over the age of 70½ and you own one or more IRAs, your designated fund or field-of-interest fund can receive Qualified Charitable Distributions up to $100,000 per year per spouse, bypassing your taxable income.

–We can work with you and your attorney to help you establish a bequest in your estate plan to support your favorite causes beyond your lifetime. Many fund holders at the community foundation name their donor-advised funds, field-of-interest funds, designated funds, or even the community foundation itself, as beneficiaries in their wills and trusts, and especially as beneficiaries of IRAs and other qualified plans because doing so delivers significant tax benefits. What’s more, the community foundation offers opportunities for our legacy donors to get together and learn from each other as a group. If you’re not involved as a legacy donor already, please reach out and we’ll fill you in! 

–We can help you and your family learn more about your favorite nonprofit organizations and the issues they are addressing so that you can become more informed and effective philanthropists in our community. The community foundation team’s unparalleled, deep knowledge of local issues and organizations is a real advantage for you and your family. When you better understand the needs of the community and how your favorite nonprofits are addressing those needs, you’ll be better equipped to structure your giving so that it makes a difference in measurable ways. You’ll enjoy your charitable giving a lot more, too.   

We hope you’ll consider your donor-advised fund–and your connection with the community foundation–as the hub of your philanthropy. The team at the community foundation is here to help you make the most of your donor-advised fund and related strategies so that you’re not only putting your money to work to improve the quality of life in our community, but you’re also achieving financial and philanthropic goals for your overall charitable giving. 

Structured philanthropy: A process relieves the pressure

Helping families create a meaningful structure for their philanthropy has long been a hallmark service of the community foundation. That structure and the resulting discipline are increasingly important as both wealth and charitable giving more frequently span multiple generations. Indeed, spontaneous and unstructured conversations around wealth and philanthropy can be a source of family discord. 

By being part of the discussion–whether formally or informally, at the table or behind the scenes–the team at the community foundation can help families resolve issues and smooth out the edges around common intra-family challenges, including communication, decision-making, and charitable giving. 

Here are a few of the ways the team at the community foundation can help:

–Serving as a coach to foster thoughtful, intentional, and inclusive family conversations, even if the community foundation team member is serving simply in an “ice-breaker” role. 

–Offering guidance from the position of a facilitator to assure that all voices are heard, particularly as views across generations can differ. 

–Helping a family structure a series of discussions that employ a phased-in or “dimmer-switch” approach, beginning with values-centered discussions to identify common ground and progressing to systematic funding and allocation conversations and decisions. 

The community foundation can work with a family under a variety of circumstances. For example:

–Some families enjoy organizing their charitable giving through both a private foundation and a donor-advised fund at the community foundation. The team at the community foundation can serve as a sounding board for grant making from both vehicles and also work with a family’s tax advisors to help optimize the role and use of each vehicle. 

–Many families have found that a donor-advised fund at the community foundation meets all of their charitable giving needs, and they appreciate the community foundation taking on the administrative burden associated with tax filings and administration. In some cases, a family decides to close their private foundation altogether and transfer the assets to a donor-advised fund at the community foundation. 

–Some families leverage the community foundation for the full suite of its charitable giving services, often using a donor-advised fund in much the same way they’d use a private family foundation, only with increased privacy and no need to create a separate legal entity, thanks to the community foundation’s umbrella 501(c)(3) status.  

By consulting with the team at the community foundation, and leaning into the structure that’s right for them, families can help their favorite community causes—and keep the peace across generations. 

Three things every philanthropist must know about the gift and estate tax sunset

The shorter days of fall and winter aren’t the only sunsets creeping up on people these days. If you’ve met with your estate planning attorney and tax advisors recently, you’re probably aware that the gift and estate tax exemption–the total amount you can leave to family and other beneficiaries during life and at death before the hefty federal gift and estate tax kicks in–is about to drop, rather precipitously. 

Without legislation to prevent it, on January 1, 2026, the exemption will drop from $12,920,000 per person (that’s the 2023 exemption) to about half of that amount, depending on annual inflation increases. As the date gets closer, tax planning decisions get tougher. Make aggressive moves now to activate gifts to family members? Or hold out to see if legislation intervenes to prevent the sunset? 

Understandably, some philanthropists are beginning to get concerned about what their legacy might look like when (and if) the exemption drops. Add to that uncertainty the fact that a person’s date of death is among life’s great unknowns, it’s no wonder that for the relatively few taxpayers who may be impacted by gift and estate taxes—at least for now—there’s both concern and confusion. 

Here’s a quick review of the facts: 

–For 2023, the estate tax exemption is $12.92 million per individual, $25.84 million per married couple, and for 2024, the exemption rises to $13.61 million and $27.22 million, respectively, adjusted for inflation, as recently announced by the IRS. 

–The IRS will issue inflation adjustments for 2025, too. 

–For 2026, the exemption is scheduled to fall back to 2017 levels, adjusted for inflation, which would roughly total $7 million per person. 

Here are a few strategies you might consider evaluating with your tax advisors now to advance your estate plan and your philanthropy plan:

–If you are a business owner, you could explore launching a gifting program to transfer shares of your business not only to heirs, taking advantage of the higher exemption, but also to your donor-advised or other fund at the community foundation. The objective here would be to begin intentionally reducing the value of your estate, assuming that the estate tax exemption limit will drop, while also executing a business transition plan that meets your overall intentions regardless of the tax laws. (As with any gift of a hard-to-value asset, securing a qualified appraisal is essential, as is timing; shares can’t be gifted to a charity if a sale is effectively already in process. The IRS watches both very closely.)

–Annual exclusion gifts ($17,000 per gifting spouse per recipient in 2023, increasing to $18,000 in 2024) to family members and other individuals are an effective way to reduce the value of a taxable estate without eating into the lifetime gift and estate tax exemption. Indeed, many philanthropic individuals use the annual exclusion technique as inspiration for their charitable gifts. Gifts to charities are deductible for gift and estate tax purposes (as well as for income tax purposes) and therefore also serve to reduce the value of a taxable estate without eating into the exemption. Some philanthropists report that they like the idea of making annual exclusion gifts to each family member and then using their donor-advised fund at the community foundation to make annual exclusion-amount gifts to each of the charities they support. 

–Work with your tax advisors and the team at the community foundation to run various financial scenarios to determine whether the exemption sunset will affect you and if so, to what extent. If you find yourself looking at a potentially significant taxable estate in a couple of years, consider increasing your bequests to your donor-advised or other fund at the community foundation. Amounts passing to the community foundation or other qualified charity upon your death are not subject to estate tax. This means your charitable priorities will receive 100 cents on every dollar in the taxable portion of your estate, while your family and other beneficiaries could receive 60 cents on the dollar–or even less. 

As always, the team at the community foundation is here to help you navigate the opportunities and pitfalls presented by changes in the tax law. It is our pleasure to work with you and your advisors to maximize your charitable goals.