Building endowments, gifts of appreciated stock, and staying strong on planned giving

Hello from the community foundation!

It is our pleasure to work with you and so many other nonprofit organizations in our community that are making a huge difference every single day. Whether your organization has already established an endowment fund at the community foundation or you’re considering getting started sometime soon, we are here for you. 

Today, we’re sharing insights related to three areas that we know are on many nonprofit leaders’ minds. 

–Your donors may understand generally the concept of “endowment,” but they may not be fully aware of their options to support your organization in perpetuity. Learn more about how the community foundation can help you structure a donor’s endowment gift to meet a donor’s goals as well as your organization’s objectives for sustaining its mission.

–“But we say it all the time,” you might think when you see reminders to inform donors about the benefits of giving appreciated stock instead of cash. It may be true that you repeat the message over and over, and that’s precisely what you should be doing.

–Planned giving may seem like that one thing you simply cannot take on in the craziness of today’s fundraising environment and the snowballing of community needs. Don’t let yourself off the hook! Planned giving is crucial to your organization's future success, and the community foundation makes it easier.

Thank you for all you do for the community we love. Our team is here as your first call whenever questions about endowments and planned giving land on your radar. We look forward to helping your organization reach both short-term and long-term fundraising goals! 

–Your community foundation team

THIS MONTH’S

TRENDING TOPICS

Building for the future: Two ways to grow endowments

by Staff Name, Director of Charitable Giving

The community foundation is honored to work with so many wonderful nonprofit organizations in our region that are improving quality of life every single day. We know that it’s important for you to grow endowment assets to create a permanent source of support for your mission.

You’ve likely made it a priority to provide ongoing education and information to your donors to help them understand how your endowment works and why it’s so important to the future of your organization. Occasionally, a donor may ask you about the difference between making a gift to support your endowment, or, in the alternative, establishing a separate endowment fund at the community foundation to support your organization. 

Here’s a little background that may help you explain the differences to your donors. In either case, our team can help, so please do reach out. 

Building your endowment fund. Many donors will want to support your endowment fund held at the community foundation. Your board of directors may from time to time elect to make transfers from your organization’s assets to the fund. Your organization’s endowment fund is sometimes referred to as “quasi-endowment” because your board of directors has some degree of flexibility to access the principal for certain stated purposes such as emergencies. Annual distributions to supplement your organization’s budget are often made from the endowment fund based on market value percentages. 

Donor-established endowment fund. Sometimes, a donor would like to support your organization by establishing a separate and permanent endowment at the community foundation, whether during lifetime or through a bequest. In that case, the board of directors and staff at the community foundation will oversee income payments to your organization and also ensure that the principal stays intact in perpetuity. In many cases, a donor will want to structure an endowment gift as a designated fund to benefit your organization while also leaning on the community foundation for support. The donor can name the fund whatever they’d like (e.g., the Smith Family Endowment Fund). 

The community foundation team is experienced at managing the accounting, investment, and distribution aspects of all types of endowment funds. When you work with the community foundation, it’s convenient and rewarding to establish and grow your organization’s endowment, as well as offer donors the option to set up a separate named endowment fund. Both types of gifts help your mission stay strong and improve the quality of life for future generations. 

Gifts of appreciated stock: Say it, and say it again

by Staff Name, Director of Charitable Giving

Repeat, repeat, repeat. You may feel like you are constantly talking with your donors about the benefits of giving appreciated stock. Your talk track may go something like this:

–“Before you reach for your checkbook to make a gift to our endowment fund at the community foundation, consider giving highly-appreciated stock.” 

–“Appreciated stock is frequently a far more advantageous gift to charity than giving cash.” 

–“When you make a gift of shares held for more than one year, you’ll typically be eligible for a charitable deduction at the shares’ fair market value on the date of the gift.” 

–“Plus, our endowment fund is a charity and therefore capital gains tax won’t be triggered on the sale of the shares, leaving the full fair market value available to grow our endowment and pave the way for the future success of our mission.”

–“By contrast, if you’d sold the shares yourself and given the proceeds to our endowment fund, you’d owe capital gains tax. This can be a big hit if you’ve held the shares for many years and they’ve got a low basis.”

–“It’s easy to transfer stock to our endowment fund because we work hand-in-hand with the community foundation team.” 

You say all of this so much that you’re sick of it, so surely your donors are sick of hearing it too, right? Wrong. Your donors don’t live and breathe charitable giving like those of us who work in the nonprofit sector day in and day out. So, not only is the subject matter sometimes challenging, but it’s also likely that donors are not paying attention most of the time. Indeed, a lot of donors are missing out on the benefits of giving stock instead of cash.

Building your endowment fund, like any type of fundraising, is a long game. You have to keep repeating key messages so that the point finally gets across, often when the timing is just right and the topic of tax planning or charitable giving happens to be on a donor’s mind.

The team at the community foundation is always happy to serve as a sounding board for key messages and strategies to build your endowment, one person and one gift at a time, over and over–and over–again. We’re honored to work with you! 

Keep going: Tips to inspire your planned giving efforts

by Staff Name, Director of Charitable Giving

In an environment where immediate community needs are never-ending (and actually seem to be skyrocketing), it’s really hard to carve out energy and time in your fundraising plan to make room for planned giving. We understand! The team at the community foundation knows how crucial it is for our community’s charities to attract as many donor dollars as possible to meet 2025’s mounting demands.

Ignoring a planned giving plan altogether, though, would be a mistake. You’d be sacrificing the long-term longevity of your mission. Intellectually, nonprofit fundraising professionals understand this. It’s just that it seems so hard to do at the moment, in the midst of turbulent times and emotional drain.  

Keep your planned giving spirits high by considering the following:

–Donors’ planned gifts, such as bequests, are often significantly larger than annual donations. For instance, the average charitable bequest can range from $37,000 to $78,360, which is substantially higher than typical annual gifts. That’s because donors can make planned gifts from assets they might not be able to part with during their lifetime, such as naming a charity as beneficiary of a retirement plan.

–You may discover that engaging a donor in planned giving conversations actually enhances the donor’s annual giving and campaign giving. This is because you’re engaging a donor through yet another touchpoint, reinforcing that there are multiple ways to align values and beliefs with thoughtful gifts to support your mission and your endowment. Indeed, donors who arrange for a planned gift may increase their annual giving by up to 75% and beyond!

–Keep in mind that planned gifts are often unrestricted. This allows you to allocate the funds where they are most needed and, importantly, grow your endowment. 

–Pursuing planned gifts may not be as time-consuming as you think, especially given the return on investment often yielded by a planned gift. For instance, according to at least one study, for every dollar spent on promoting bequests, charities can expect an average return of $56.83, significantly higher than other fundraising methods. 

The key is to make it easy. Here’s how:

–Small tweaks to your marketing materials. Try to at least mention the opportunity for planned giving somewhere on each marketing asset. Make sure your website mentions your endowment fund at the community foundation. The same goes for printed materials, one-pagers, email newsletters, and annual appeal letters. Even though you mostly are asking for a current gift, don’t forget to mention that you’re always open to a discussion about endowment gifts through a bequest or beneficiary designation.

–Always mention it, even if briefly. Talk with your major gift donors about the importance of your endowment and operating reserves to the organization’s ability to weather the ups and downs of the market and community needs. Sometimes donors don’t think about the “business” side of nonprofits. Even if your meeting is about something else, you can at least plant seeds.  

–Offer real inspiration. If you can, find a current donor who is open to your organization sharing the story of the donor’s intentions to leave a planned gift to your endowment fund in addition to making regular annual gifts. Role models are powerful. 

We look forward to working with you to help you grow your endowment! The community foundation is committed to your success. We believe in philanthropy’s ability to improve the quality of life in our region through outstanding nonprofit organizations delivering services to people who need it most. Thank you for all you do.

Engaging Gen Z, hard-to-value assets, and tax tips for donors

Hello from the community foundation!

Not a week goes by without our team engaging with dozens of nonprofit partners like you who are making our region a better place to live every single day. It is our honor to help structure endowments and reserve funds to ensure that your missions stay strong for generations to come.

In this issue, we’re highlighting techniques and tips to help you cultivate donors’ gifts, including accepting gifts of hard-to-value assets, reminding donors about important tax rules for charitable deductions, and reviewing the importance of engaging younger generations in your mission.

Please reach out anytime to learn more about these opportunities and anything else that’s crossed your desk related to charitable giving strategies. We’re happy to serve as a sounding board alongside the services we provide to administer your endowment or reserve fund. We appreciate the opportunity to work together!

–Your community foundation team

THIS MONTH’S

TRENDING TOPICS

They’re paying attention: Why you shouldn’t ignore Gen Z donors

by Staff Name, Director of Charitable Giving

As you and your team review lists to identify potential endowment and legacy donors, it’s easy to slip into the habit of zeroing in on donors who are well-established in their careers and businesses, nearing retirement, or already retired. Of course, you’ll want to target these groups because they are likely to have the capacity to make large gifts, and they may be in a position to revise their estate plans or beneficiary designations to include your endowment fund.

But don’t stop there! Expand your endowment and legacy fundraising outreach to include not only Baby Boomers, Gen X, and Millennials, but also Gen Z. Gen Z’s philanthropic engagement defies stereotypes about short-term thinking, with 84% already supporting causes through donations, volunteering, or advocacy—demonstrating a readiness to commit to long-term impact despite their youth. Certainly their financial contributions may be smaller due to early-career stages, but their focus on social justice, climate action, and equity aligns with the legacy-building nature of planned giving.

Here are three strategies to keep in mind:

–As Gen Z donors get into the workforce, they’ll be enrolling in 401(k)s and other retirement programs through their employers. This presents an opportunity for you to educate donors early in their careers about the significant tax benefits of naming a charity as the beneficiary of their retirement plans. 

–Regularly include messaging in your fundraising communications about the importance of your endowment to your mission’s sustainability for generations to come. The role your organization plays in the community’s future is an important message for Gen Z to hear repeatedly. 

–Use messages that demonstrate trust and transparency because these concepts resonate particularly well with Gen Z’s values. This helps signal that your mission is worth supporting long-term, an important factor in light of Gen Z’s eagerness to plan ahead.

Proactively engaging Gen Z now will help your organization secure future revenue and build on young people’s sincere desire to make a difference. Please reach out to the community foundation team to discuss ways you can engage Gen Z to strengthen your endowment and legacy giving strategies.  

Gifts of hard-to-value assets: Worth the effort

by Staff Name, Director of Charitable Giving

The team at the community foundation is always happy to help you evaluate potential gifts to your endowment fund. This is especially the case when a donor proposes giving something other than cash or marketable securities.

When a donor mentions the possibility of giving real estate or closely-held stock, for example, please reach out to our team. One of the benefits of housing your endowment or reserve fund at the community foundation is that we can serve as your back office for complex gifts as well as serving as a sounding board for giving strategies in general. 

One of the most important factors to remember is that valuing and accepting complex gifts like real estate and closely-held stock is not easy! The community foundation will help you make sure that the donor and the donor’s advisors are aware of the IRS’s rigorous requirements for securing a qualified appraisal of a complex gift. Failure to follow these rules could wipe out the otherwise excellent tax benefits to the donor. These assets are called “complex” and “hard-to-value” for a reason! 

Even though complex gifts can present inherent challenges, they’re still worth pursuing. Charities that cultivate hard-to-value assets such as real estate and closely-held stock can unlock significant advantages for both their missions and their donors. Remember that unlike gifts of nonmarketable assets to a private foundation, a donor’s gift of a nonmarketable asset to your endowment fund or other public charity can qualify for a full fair market value charitable deduction, up to 30% of AGI, and also avoid capital gains tax. 

What’s more, beyond real estate and closely-held stock, the community foundation is happy to work with you and a donor to explore gifts of other complex assets, such as cryptocurrency, NFTs, and intellectual property, which expands philanthropic opportunities for donors who are business owners and investors in alternative assets.

Keeping an eye out for opportunities to attract hard-to-value assets will help you build a resilient endowment fund at the community foundation while also empowering your donors to optimize their financial and philanthropic legacies. The community foundation helps you bridge expertise gaps, handle asset liquidation, invest the proceeds, and meet regulatory requirements so that you and your team can focus on donor relationships and impact. Please reach out to talk with our team. 

Tax time tips for your donors

by Staff Name, Director of Charitable Giving

April 15 is right around the corner! Now is a good time to review a few basic tax principles related to charitable giving so that you’re prepared for donor conversations. Tax planning is on their minds, and you don’t want to miss an opportunity to secure a gift to your endowment fund. 

Your donors give for lots of reasons other than a tax deduction.

With taxes on the minds of so many donors this time of year, it’s important to remember that it’s not all about the tax deduction! Charitable giving is a priority for the vast majority of affluent families. Indeed, among people who own investments of $5 million or more, 91% of those surveyed reported that charitable giving is a component of their estate and financial plans. In another study, most affluent investors cited reasons for giving well beyond the possibility of a tax deduction and would not automatically reduce their giving if the charitable income tax deduction went away. During the fundraising process, be aware of donors’ non-tax motivations for giving, such as family traditions, personal experiences, and compassion for your mission. 

Your donors may still default to giving cash, so you have to stay in front of them.

Many donors simply are not aware of the tax benefits of giving highly-appreciated assets to their favorite charities. Even if you feel like you say it a lot, keep saying it! Donors often forget or are in a hurry and end up writing checks and making donations with their credit cards. It’s really important to remind your donors about the benefits of donating non-cash assets such as highly-appreciated publicly-traded stock, or even complex assets (e.g., closely-held business interests and real estate). The community foundation can help you work with donors to give highly-appreciated assets in lieu of cash to your endowment fund. This in turn can help donors reduce–significantly–capital gains tax exposure, and they can calculate the deduction based on the full fair market value of the gifted assets. 

Your donors may not remember the basic rules of deductibility.

It’s important to know that the deductibility rules are different for donors’ gifts to a public charity (such as your endowment fund at the community foundation) on one hand, and their gifts to a private foundation on the other hand. Donors’ gifts to your organization directly, or to your endowment fund, are deductible up to 60% of AGI for cash gifts and 30% of AGI for gifts of other assets. Gifts to private foundations are deductible up to 30% of AGI for cash gifts and 20% of AGI for gifts of other assets. In addition, gifts to public charities of non-marketable assets such as real estate and closely-held stock typically are deductible at fair market value, while the same assets given to a private foundation are deductible at the donor’s cost basis. This difference can be enormous in terms of dollars, so make sure you let your donors know about this if they are planning a major gift.

Make it a habit to repeat the tax basics in your donor communications. This will help you grow your endowment fund not only during tax time, but also throughout the year. As always, the community foundation is here to help! Reach out anytime!

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

Make 2025 great: Donor engagement and endowment fundraising calendar

Make 2025 great: Year-round donor engagement strategies

The team at the community foundation is honored to work with so many charities that are making a big difference in our community every single day. We’re inspired every time we connect with you and your colleagues, whether our interaction is about a grant from a fund at the community foundation, helping you strategize about a major gift to help fund your operating budget, or discussing ways to maximize the growth of your endowment at the community foundation. 

As a gift to you and our other nonprofit partners, we’re dedicating this issue to providing an outreach calendar to inspire your fundraising efforts and donor engagement strategies, especially related to growing your endowment. Whether you decide to use all, some, or none of the suggestions in the calendar, at the very least, we hope the material serves as a jumping off point as you launch full steam ahead in 2025.

Thank you for all you do! 

–Your community foundation

A GIFT FOR YOU

FROM THE COMMUNITY FOUNDATION

Donor Engagement & Endowment Fundraising Outreach Calendar

January

• You’ve likely already reviewed your year-end activity to determine which donors were most active at year-end, and which of these active donors have already established a planned gift or have otherwise supported your endowment.  

• As you finished up your thank you notes, you very likely ran across at least a handful of donors that seemed ready for deeper engagement. Let’s carry that momentum forward! 

February

• Reach out one-by-one to the donors you noted in January as potentially ready for deeper engagement. Messages along the lines of planning for the year ahead and taking advantage of QCDs early in the year will resonate well. 

• Begin planning outreach to donors related to upcoming tax time. This is an excellent time to plant seeds with donors because they will be reviewing last year’s financial and tax matters with their advisors.  

• Consider also deploying content that focuses on involving family in supporting your organization, aligning loosely with Valentine’s Day. You can also showcase heartwarming stories of impact.

March

• Continue your tax-time outreach noted above. 

• Be sure to include reminders about the benefits of giving appreciated stock and the charitable deduction in general. This is important because as your donors review their tax return information for 2024, they may notice instances where they could (should!) have given appreciated stock instead of cash. They might also realize that they should have given more to charity than they did. This can help you generate gifts to your annual fund and endowment.

April

• Continue tax time reminders in all of your one-on-one communications. If you’ve promoted tax messages as noted above for March, you can get even more mileage out of the content by forwarding your March communications to donors in real time as you are on the phone with them. Sometimes people miss things in their email inboxes, but you always get a second chance to send it during a phone conversation or even live during a meeting. 

• If you send an April communication, consider using “spring cleaning” types of themes about getting organized and planning 2025 charitable gifts to your annual fund and endowment fund. This can help increase donor giving during the first half of the year.

May

• This is the time of year that donors may be gearing up for some down time during the summer. This is an excellent time to lean into conversations about bequests, IRA beneficiary designations, and other types of planned gifts to your endowment. 

June

• With tax time behind them, and the year-end rush still months away, donors and their advisors typically have more bandwidth to dig into discussions about including your organization’s endowment in an estate plan. Just because the pace is slower doesn’t mean the energy takes a hit! This is a great time to catch donors in a more relaxed mode. 

• Focus your content on mid-year trends and summer reading ideas to learn about charitable giving.

July

• This is a good time of year to zero in on legislative and tax law updates. By this time in the year, we have a pretty good idea of legislative agendas. Plus, you want donors to start thinking about you for year-end transactions. 

• The community foundation team is always a sounding board and resource for staying up-to-date with tax legislation that could impact your donors’ giving habits.

August

• Make a Will Month is a useful time for bequest and estate planning reminders, incorporating charitable planning into a business succession plan, planned giving, and giving while living. Use these themes in your communications. 

• Content can touch on not only Make a Will Month, but also forecasting the busy third and fourth quarters. Now is the time for donors to discuss endowment gifts, major gifts, and planned gifts.

September

• This is a really busy time of year, but you should not stop the drumbeat! 

• Content can include encouraging donors to start looking at how their giving goals are shaping up for the year. If a donor has expressed intentions to set up a planned gift to your endowment fund, or give to your endowment fund via a Qualified Charitable Distribution, it’s wise to set these transactions in motion now to avoid the year-end rush. 

October

• This is a particularly good time for personal outreach to all donors who have given to your endowment fund in the past or expressed interest in doing so. Work your way through the list, touching base personally with each donor. 

• Consider planning an outreach campaign to drop off holiday cards, cookies, or other small gifts to your legacy endowment donors.

November

• Focus your communications on reminders about the wide variety of assets that can be given to your endowment fund, and year-end deadlines for specific types of gifts such as checks, QCDs, gifts of publicly-traded stock, credit card gifts, etc.

• Emphasize the tax benefits of giving highly-appreciated stock to your endowment fund, as well as the benefits of naming your endowment fund as the beneficiary of an IRA.

December

• Be highly responsive to all donor inquiries; same day responsiveness is crucial, and ideally within the first couple of hours. 

• Focus your marketing content on the importance of endowment giving and additional year-end tips.

Engaging donors' hearts and minds, fundraising tips for board members, and tax laws to watch

Happy New Year! 

Our team at the community foundation is gearing up for a productive 2025. We’re especially focused on helping our nonprofit partners build endowments and grow their donors’ legacy giving. 

The dust may still be settling on 2024’s busy giving season, but January really is the best time to start cultivating major gifts, especially those that involve complexity. This month, we’re sharing insights on how your organization can start the year strong.

Thank you for all you do to support the quality of life for everyone in our region. We’re honored to help your organization tackle complex giving opportunities that will generate resources to fund your mission now and for years to come.

–Your community foundation

THIS MONTH’S

TRENDING TOPICS

Engaging minds and hearts is crucial to attract legacy gifts

by Staff Name, Director of Charitable Giving

Philanthropy professionals have long recognized the importance of emotional engagement in fundraising, particularly during annual campaigns or initiatives focused on immediate donations. Indeed, recent research underscores the critical role of emotional intelligence in successful fundraising. 

When it comes to charitable gift planning, however, such as helping a donor structure a legacy endowment gift, it’s tempting to approach the process as a primarily rational exercise. This is understandable given the complex tax and legal considerations involved in structuring various giving vehicles such as trusts, bequests, foundations, donor-advised funds, and beneficiary designations. Of course, it is crucial to address technical aspects to ensure donors' charitable intentions are fulfilled with tax benefits and financial goals in mind. 

At the same time, you’ll want to be sure that the emotional dimension of charitable gift planning isn’t overlooked. Legacy giving offers psychological benefits. Endowment gifts, in particular, can offer donors a sense of immortality and a way to perpetuate their values beyond their lifetime. No doubt you’ve watched this in action as you’ve helped donors structure legacy gifts to your endowment fund at the community foundation, and perhaps you've even played a role in facilitating a donor’s unique emotional and reflective process when considering such a gift.

Encourage your donors to consider the benefits of a legacy gift:

–Create a lasting impact that aligns with their personal values

–Leave a meaningful legacy that extends beyond their lifetime

–Culminate a long history of support for your organization in a significant way

To maximize success in legacy fundraising, nonprofit organizations should strive to engage both the hearts and minds of your donors. Consider sharing inspiring stories and testimonials that illustrate the long-term impact of legacy gifts. To further build an emotional connection, you might even offer the donor exclusive events or site visits to help donors visualize the future impact of their gifts. On the rational side of the equation, you’ll find that working with the community foundation team helps you provide clear information about the tax and legal aspects of various giving vehicles. Our team can also help you address concerns about administrative complexities and provide support throughout the giving process.

Please reach out anytime to the team at the community foundation to help you implement a balanced approach to tap into donors' emotional desires to make meaningful, lasting gifts while also ensuring that all technical aspects are properly addressed. We are here to help you develop more meaningful connections and ultimately achieve greater success in securing endowment and legacy gifts to keep your mission strong for generations to come.

Five-point formula: Board members and endowment fundraising

by Staff Name, Director of Charitable Giving

Especially at the beginning of a new year, the team at the community foundation fields a lot of questions from fundraising professionals about strategies for increasing gifts to an organization’s endowment fund. Not surprisingly, a very common question is this:

“How can we get our board members more involved in endowment fundraising?”

And of course, that is an important question. Board members’ active participation in endowment fundraising can provide a big boost to achieving your organization’s long-term financial stability.

Here's a five-point formula for getting your board involved in growing your endowment in 2025 and beyond. 

Step 1: Set the stage

Help board members fully understand the importance of endowment fundraising. Let them know that a strong endowment provides financial stability, supports long-term planning, and helps weather economic uncertainties. Start the year with a dedicated segment in your first board meeting to discuss the status of your endowment and its significance to the organization's future. Remember, transparency is key. Be open about your endowment's current status, even if it has been affected by market fluctuations. Honesty builds trust and motivates board members to take action.

Step 2: Inspire action

Present a confident and enthusiastic approach to fundraising for the year ahead. Emphasize that your organization is proactively addressing financial challenges while others might be hesitant. Be sure your board members know that a strong endowment acts as a buffer during economic downturns, ensuring the continuity of your mission.

Step 3: Equip your board members

Your board members certainly do not need to know all the details of how a gift to your endowment can be structured. Indeed, board members don’t need to know any details; they simply need to be armed with just enough information to be able to listen closely for opportunities when a potential donor mentions anything related to charities or financial planning. Then, it is natural for the board member to make an introduction to your team. Jumping off points for an introduction, and suggested board member responses, include: 

–Required Minimum Distributions from an IRA (“There are ways you can send funds from your IRA directly to a charity. I’ll connect you with Sally Jones at ABC Charity. I’m on the board and the organization does amazing work.”)

–Appreciated stock (“You probably already know that appreciated stock makes a great gift to a charity. I’ll connect you with Sally Jones at ABC Charity. I’m on the board and the organization does amazing work.”)

–Upcoming events (“I am on the board of ABC Charity. There’s an event coming up that you’d really enjoy. I’ll connect you with Sally Jones so you can learn more.”)

Step 4: Make it as easy as possible

Keeping it simple is key! Complexity is a known barrier to a donor’s commitment to give. Meet individually with each board member to discuss potential involvement in endowment fundraising efforts. You may be pleasantly surprised to uncover unique skills, connections, or resources that could benefit your endowment strategies. Along these lines, take advantage of events where board members can engage with potential endowment donors in a comfortable setting. Assign specific, manageable tasks to each board member based on skills and preferences, including asking them to seek out specific donors. And, importantly, encourage board members to make their own contributions to the endowment, demonstrating their commitment to the cause. This makes it much easier for a board member to talk with potential donors because they can speak from personal experience. 

Step 5: Celebrate success

Keep the board informed about the progress of endowment fundraising efforts, celebrating successes and addressing challenges. Acknowledge and appreciate the efforts of board members who actively participate in fundraising activities. Remember, activity creates results! If board members are out in the world talking about your organization and the endowment, good things will happen! 

As always, the team at the community foundation is here to serve as a sounding board as you implement strategies to encourage board members to become active participants in endowment fundraising, ensuring the long-term financial health of your organization.

What to watch: Potential tax law changes impacting your fundraising efforts

by Staff Name, Director of Charitable Giving

2025 is shaping up to be a very interesting year for tax policy, to say the least! 

The Republican-led Congress and White House are aiming to use the budget reconciliation process to extend the Tax Cuts and Jobs Act (TCJA) of 2017. This process allows them to bypass typical filibuster rules and require only a simple majority of 51 votes in the Senate. So what does this mean to you and your colleagues and the way you should approach generating support for your endowment fund at the community foundation? 

The community foundation will help keep our nonprofit partners up-to-date on potential tax law changes in 2025 related to the scheduled expiration of provisions in the Tax Cuts and Jobs Act (TCJA) of 2017, and what might happen if the TCJA provisions wind up expiring instead of being extended.

Here are three things that are important to know: 

Potential reduction in estate and gift tax exemption

The estate and gift tax exemption is slated to decrease significantly at midnight on December 31, 2025. Currently, the exemption is $13.99 million per person. After 2025, this could be reduced to approximately $7 million per individual and $14 million per couple. This change may impact charitable giving strategies, particularly for high net-worth donors who use estate planning as part of their philanthropic efforts.

Changes to charitable deduction limits

The TCJA temporarily increased the deduction limit for cash contributions to public charities from 50% to 60% of adjusted gross income (AGI). If this provision expires, the limit may revert to 50% of AGI. This reduction could affect the tax benefits for donors making large charitable contributions, potentially influencing their giving decisions.

Increase in standard deduction and impact on itemized deductions

The TCJA significantly increased the standard deduction, which led to a reduction in the number of taxpayers itemizing deductions. If these provisions expire, the standard deduction could revert to lower pre-TCJA levels. This change might increase the number of taxpayers who itemize, potentially making charitable deductions more attractive for a broader range of donors. However, it's important to note that the overall impact on charitable giving could be complex, as it may be influenced by other factors such as changes in tax rates and the reinstatement of certain itemized deductions.

These potential changes underscore the importance for charity fundraisers to stay informed about tax law developments and to work closely with donors and their financial advisors to navigate the evolving landscape of charitable giving strategies.

For context, if you like to get in the weeds, we recommend taking a look at a recent study that breaks down the flow of capital into the nonprofit sector.

Please reach out anytime to discuss strategies for growing your endowment even in the midst of tax policy discussions at the federal level. We will help you navigate uncertainty about what changes may be ushered in by lawmakers as the new administration steps in and Congress gets back in session. It’s critical to keep up the momentum of regular donor cultivation, and, as always, we are here to inspire and support you along the way! 

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

Crypto gifts, timing of bequest distributions, and inspiring charitable children

Cryptocurrency: Likely a “no” for endowment investing, but a big “yes” for gifts

Growing your endowment fund at the community foundation is no doubt a top priority. Through your endowment fund, your donors have a meaningful opportunity to ensure that your mission stays strong for generations to come.

As always, the team at the community foundation is happy to be a sounding board on tricky issues like cryptocurrency so you don’t find yourself scrambling to answer donor questions.

Here’s what you and your board of directors need to know:

The high volatility of cryptocurrencies, coupled with regulatory uncertainty and cybersecurity risks, generally makes them an unsuitable investment for charities’ endowments, and that is certainly the case for your endowment fund at the community foundation. Indeed, the community foundation and its board of directors takes seriously the fiduciary responsibility to manage funds prudently, and the speculative nature of crypto investments could jeopardize your organization's financial stability.

At the same time, your fundraising team may wish to actively encourage cryptocurrency donations to your endowment fund at the community foundation. Notably:

–Even across the globe, the average crypto donation is significantly larger than traditional gifts, sometimes up to five times the size. 

–Accepting crypto donations allows nonprofits to tap into a new demographic of donors who are typically younger, forward-thinking, and tech-savvy individuals–who are often quite affluent. 

–Don’t overlook the potentially compelling tax benefits for crypto donors. Because the IRS treats cryptocurrency as property, donors may be able to avoid capital gains tax and benefit from a favorable income tax deduction when they donate appreciated crypto assets. 

The community foundation can help you work through the sometimes tricky process of accepting cryptocurrency gifts into your endowment fund, including what types of gifts the fund will accept, how long the fund will hold the asset, and completing all the technical steps required for a cryptocurrency transfer by leveraging the services of a qualified intermediary. Please reach out anytime to learn how your organization’s endowment can grow by appropriately embracing cryptocurrency donations. 

Show me the money: When does your endowment fund actually receive a bequest?

For decades, bequests have been a small but relatively steady component of total charitable giving in the United States. You certainly understand the importance of bequests to growing your endowment fund at the community foundation. To that end, your fundraising materials likely include language to encourage donors to include endowment bequests in their wills or trusts. A donor can leave a particular dollar amount through a “specific” bequest, or leave a portion of the estate or trust remaining after taxes, expenses, and distributions to family and other beneficiaries (known as a “residuary” bequest). A donor can also name your organization’s endowment fund as the beneficiary of an IRA or other retirement plan. 

So, after a donor passes away, when does your endowment fund actually receive the money? It depends on the type of bequest, and the money rarely arrives quickly. But, the community foundation can help. For example:

–If a donor names your endowment fund at the community foundation as the beneficiary of an IRA, the community foundation will pursue a transfer of the proceeds from the IRA administrator as quickly as possible. 

–In the case of a donor who names your endowment fund as the recipient of a bequest in the donor’s will, which is subject to probate, full distribution of a residuary charitable bequest will typically occur after the probate process is completed. A specific bequest of a certain dollar amount may be released in a “partial distribution” earlier in the probate process. A complete probate process can take several months or even more than a year, depending on the complexity of the estate

–If a donor has left a charitable bequest in a trust rather than a will, and therefore the estate is not subject to probate, distribution of the bequest may happen faster, but still, especially in the case of a residuary bequest, the trustees will want to ensure that all expenses, taxes, and other liabilities of the deceased donor can be covered before the trustee makes any distributions to beneficiaries, including to your endowment fund at the community foundation.

One of the benefits of working with the community foundation is that the community foundation team will take the lead on pursuing distributions from donors’ bequests to your organization’s endowment fund. Please reach out anytime with questions and to learn more!   

Charitable children: Inspiring donor engagement to grow your endowment

Year-end gifts are a crucial component of every nonprofit organization’s operating budget, and December is a wildly busy time! Even with so many transactions flying around, it’s still important not to lose sight of the relationship side of fundraising, especially so that you and your team can continue to intentionally and methodically cultivate gifts to your endowment fund at the community foundation.

More than half of nonprofit organizations say they don’t have donor engagement plans. That’s a lot of missed opportunities! Enhancing donor engagement by creating entry points for their children is a strategy that can deliver a lot of good throughout the year, year after year. 

Here are three ways to plant seeds with donors about how leaving a legacy to your organization’s endowment creates meaningful opportunities for family engagement:

Help donors celebrate their legacies. Encourage donors to talk with their children about why they’ve chosen to support your organization over the years, and why they are particularly interested in ensuring that your mission stays strong for generations to come. Offer your donors tangible examples of how your mission could help their children–and their children’s children and grandchildren–at critical junctures many years in the future. This helps reinforce the power of endowment giving across generations. 

Offer site visits, with a twist. Naturally, you and your colleagues regularly encourage donors to see your work up close. But have you considered encouraging donors to bring their teenage or adult children along to a site visit? And have you made sure that during the site visit, you are pointing out longstanding programs that are made possible only because of gifts to your endowment fund over the years? Wrapping these two elements into your site visit strategies can give your endowment fundraising an instant boost. 

Make it easy for young donors to donate to your endowment. It’s never too early to start talking about endowment gifts! If your fundraising strategy includes outreach to children of current donors, or emerging philanthropists in general, be sure your communications and marketing materials include at least basic language about supporting your endowment. You want all of your donors to see that giving to your endowment fund at the community foundation is always an option, at every stage of a donor’s philanthropic journey. 

Please reach out to the team at the community foundation to explore these and other ideas for engaging young givers in your endowment-building efforts. We are here to help! 

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

Election aftermath, year-end reminders, and planned giving for executives

2024 elections: What will happen when the dust settles

Whew, what a year! Naturally, it will take time to determine how the aftermath of the 2024 elections will impact charitable giving. As the philanthropic sector waits patiently for clarity, here are a few points to keep in mind:

–Don’t get discouraged about year-end fundraising. Keep moving full steam ahead! The 2024 U.S. presidential election is not expected to significantly affect charitable giving for the year because many donors are likely to continue their support. Indeed, looking back, charitable donations have increased in nine of the last 10 election years. 2008 was the only exception, but that is understandable due to the financial crisis. 

–Remember that in general, confidence overall tends to increase after an election, which means that your donors may be more likely–or at least probably won’t be less likely–to consider supporting your organization. If you continue to confidently share information with donors about the impact of your programs, you’ll inspire donors to give with confidence, too.

–Tax laws will be up in the air for months after the elections as the budget reconciliation process moves forward. This means you ought to keep talking about the potential sunset of the estate tax exemption and encourage donors to consider charitable giving as a solid planning technique in their estate plans. Remember that your donors care about your mission, and saving taxes is not the only reason they give. That said, potential tax law changes can be an effective catalyst to start a conversation because it’s on your donors’ minds.

Please reach out to the team at the community foundation! We’re happy to serve as a sounding board for strategies to build your endowment and maximize year-end giving, whether it’s an election year or not. We are here for you, always. 

Crucial year-end reminders to boost your endowment

As your donors gear up for the giving season, it’s critical that you stay in front of them with simple, concise messages about how they can support your organization’s annual campaign as well as your endowment. Here are three very important reminders that surprisingly are still overlooked by many donors. 

–Promote gifts of appreciated stock! Giving appreciated stock is still one of the most tax-savvy ways for donors to support your organization because capital gains tax can be avoided. This is a no-brainer for fundraisers, but it is not automatic for donors who don’t deal with charitable giving every day. Donors tend to reach for the checkbook, which means they may miss out on significant tax benefits, especially because the 2024 stock market has been good to many donors’ holdings. As always, the community foundation can help you facilitate gifts of appreciated stock to your endowment fund or even to your general operating fund. 

–Keep mentioning the QCD. Yes, it may feel like a broken record to us, but truly, many eligible donors are still confused by, or totally unaware of, this great opportunity. Make sure your year-end communications include simple messages directed to donors over 70 ½, encouraging them to consider a Qualified Charitable Distribution–up to $105,000 per taxpayer–from an IRA. Distributions can flow either directly to your organization or to your organization’s endowment fund at the community foundation. Ask your donors to consult their tax advisors to evaluate whether the QCD is a good fit, and as always, reach out to the community foundation for assistance.

–Encourage your donors to watch the calendar. Some types of gifts, including QCDs, require several steps to execute. The community foundation is happy to help, and our team can work swiftly, but it’s best to allow at least a couple of weeks to ensure that all the i’s are dotted and t’s are crossed. Remind donors that cash gifts via checks in the mail need to be postmarked or hand-delivered to your office no later than December 31. Gifts of marketable securities also need to be fully transferred by December 31, so make sure your donors contact you in plenty of time for you to process and receive transfers either through the community foundation or directly.

We look forward to working with you and your colleagues to finish 2024 strong! 

Five reasons your planned giving strategy should include corporate executives

Corporate philanthropy increased to more than $36 billion according to recently-reported statistics, and although it represents the smallest share of total giving compared to other sources, your planned giving strategy should not overlook the corporate angle, especially as it relates to building your endowment fund at the community foundation. If you’re not careful, you may leave money on the table!  

Here are five reasons you should involve corporate executives in your planned giving outreach:

They’ve got big potential. Corporate executives often have significant wealth that could translate into sizable planned gifts for your endowment fund. Executives’ capacity to give through estate plans or other planned giving vehicles may far exceed what they can donate annually from income. Many executives may not yet have considered planned giving options because they are not familiar with the wide range of options. 

They like tax benefits. Executives tend to be very tuned into tax strategies. And of course, planned gifts can offer substantial tax advantages for executives and other high-net worth individuals. It’s always worth mentioning how planned giving could reduce a tax burden while also supporting your organization. An executive may not realize, for example, that leaving a gift to your organization’s endowment fund at the community foundation via an IRA beneficiary designation avoids both estate tax and income tax. 

Legacies could be their thing. Many executives are interested in creating a lasting legacy, especially if they’ve dedicated their careers to building a company with a strong local presence. Planned gifts to your endowment fund at the community foundation allow executives to make a major impact through a cause that aligns with their personal and corporate values.

They lead by example. One of the hallmarks of respected executives is, of course, leadership. Many executives have spent their careers leading by example. When executives make planned gifts, it can inspire and encourage others in the company–and executives in other companies–to consider similar donations. And of course, their participation lends credibility to your organization and endowment fund.

They want to help. Executives often have valuable professional expertise and networks that could benefit your organization beyond financial contributions. Engaging executives in planned giving discussions may lead to other forms of involvement, or at the very least, deepen their ongoing advocacy for your organization. Plus, an executive's personal planned gift could complement or enhance a company's existing corporate philanthropy efforts, aligning the company even more deeply with your organization.

Please reach out to the team at the community foundation to discuss these ideas and more! It’s our pleasure to help you engage corporate executives in planned giving discussions. We’re excited about helping you cultivate transformational gifts to your endowment fund that can pave the way for your mission’s future.

Building donors' endowment-giving habits, embracing small gifts, and annual appeals

Regular endowment gifts: Inspiring donors’ habits

You and your team are certainly familiar with annual giving strategies to encourage donors to regularly support your operating budget. When it comes to endowment fundraising, though, many organizations tend to think about endowment campaigns as isolated events every few years, perhaps executed alongside a capital campaign.

As the fundraising environment gets tougher, especially in an election year, take a look at your approach to engaging donors in endowment giving on a regular basis, not just during the occasional campaign every few years. Indeed, national annual events like DAF Day, National Estate Planning Awareness Week, National Philanthropy Day, and GivingTuesday create strong opportunities to engage your donors in endowment-focused conversations. 

The team at the community foundation is happy to offer ideas for ways to make regular, consistent giving to your endowment fund an attractive–and even habit-forming–practice among your donors. Whether a donor’s cadence of contributions is monthly, quarterly, semi-annually, or annually, the consistency delivers many benefits. Of course, your endowment will grow, which is a huge benefit. But your organization also will benefit from the communications and engagement opportunities. Here’s how: 

–As individual donors’ contributions to your endowment fund grow over time, you’re able to show them how they’ve personally helped build that all-important nest egg to ensure that your organization’s mission stays strong. 

–Consider periodically letting individual donors know just how much they’ve contributed to your endowment fund over time, and translate that amount into the income you’re able to devote each year to improving lives. When a donor sees what a big difference this can make in perpetuity, they’ll be pleased and maybe even surprised.

–Showing these results during a donor’s lifetime is an excellent platform for a serious discussion about the donor leaving a significant bequest to your endowment. It’s much easier for a donor to envision the future impact of an endowment gift when they’ve witnessed present impact. 

Reach out anytime to the team at the community foundation. We’re happy to help you establish endowment-building strategies to ensure that your mission stays strong for generations. If your organization has not yet established an endowment fund at the community foundation, please reach out. There’s no better time than the present to begin paving the way for a bright future.

All are welcome: Embrace small gifts to boost your endowment’s future

Every organization dreams of that game-changing, multi-million dollar endowment bequest that comes as a complete surprise. Often it can seem totally random when we hear about a donor who leaves a major gift to a charity in a will, trust, or beneficiary designation. And sometimes it is unexpected. But in many cases, the “surprise” should not have come as a surprise because it was the result of years of careful seed-planting and intentional relationship-building.

Of course, nonprofit fundraising professionals are well aware that cultivating small gifts can lead to large bequests. The question is, though, how can you give your organization the very best chance of receiving a gift like this? Not surprisingly, it all starts with small steps that add up to big steps. Intellectually, we understand this. But it can be so hard to be patient. Stick with it, though! Never give up on letting your donors know that any size gift makes a difference. 

Here are suggested messages you can use to encourage donors to consider making small gifts to your endowment fund:

We want to help you support our organization’s endowment fund at a financial level that meets your charitable giving budget. At every level of giving, your endowment support is a catalyst for improving quality of life. Whether your gift to our endowment fund is a $250 credit card donation, a $2500 check, $25,000 worth of appreciated stock, or much more through a bequest or IRA beneficiary designation, you’re making a difference. We’re grateful for your support because it helps ensure that our organization’s mission stays strong for years to come. 

As you look ahead toward your year-end giving, you might be considering transferring highly-appreciated stock to your donor-advised fund at the community foundation. Remember that our organization’s endowment fund is held at the community foundation, too, making it very easy for you to use your donor-advised fund to support our endowment through year-end gifts of any amount. 

Consider that small donations from a large number of people can make a huge difference. Please help us spread the word! Forward our emails, share our posts on social media, and tell your family and friends that every dollar given to our organization’s endowment fund paves the way for a brighter future in our community. 

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 inspire your donors to support your endowment fund at every level. 

Tips for your endowment’s annual appeal

2024 is rapidly drawing to a close! You’re likely making plans to send a letter to your donors asking them to consider making a gift as part of your annual appeal strategy. Don’t miss this opportunity to weave in messages about your endowment fund at the community foundation and how important it is for donors to support both current and future needs of your organization.

Here are a few tips and suggestions for crafting an annual appeal letter to inspire both current and endowment gifts.  

Cast a wide net

Somewhere in your letter, be sure to illustrate the various ways donors can support your mission. For example, you could consider language like this:

Our community is better because of donors like you who’ve included our organization in your philanthropy plans and charitable giving practices. Perhaps you give every year. Perhaps you’ve established a designated fund at the community foundation to support our organization. Or maybe you’ve already made arrangements for a major gift to our endowment fund at the community foundation. You might have even updated your estate plan to leave a bequest or IRA beneficiary designation to our endowment fund. Whatever way you’ve chosen to support our mission, we’re grateful! 

Offer specifics

Let donors know about a few of the very specific ways your organization has been making a difference. For example:

Thanks to our donors’ generosity in building our endowment fund over the years, our organization was able to add two case managers to our team this year. This, in turn, means that we can ensure that nearly 50 additional children can receive the care they need. Donor support has also enabled us to provide our case managers with iPads, vastly increasing the efficiency of reports and communication, which in turn means we have more time to spend one-on-one with the children we serve.  

Tell them exactly what to do

A call to action is essential, of course, but make sure you offer options to make it as easy as possible for donors to make a gift. Offering options also shows that you are flexible and signals to donors that you’re open to a live conversation, which is the gold standard. Consider the following example:

We’d be honored to receive your gift in whatever way works best for you. You can donate online at [include URL] or mail a check to the address below. And, importantly, we’d be happy to receive your gift of appreciated securities, which can be highly tax-advantageous. Please reach out today to talk about a potential stock gift. We work with the community foundation to make it easy and seamless for you to make a gift to our organization’s current programs, endowment fund, or both. 

For more ideas about how to engage donors through your annual appeal letter, please reach out! The team at the community foundation is honored to be your partner as you grow your endowment fund and expand your organization’s ability to serve our community.

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

Unrestricted giving myths, your friend the donor-advised fund, and going big with planned giving

Unrestricted gifts: Helping your donors break through the myths

The team at the community foundation frequently hears from nonprofit professionals about how difficult it is to communicate to donors the value and importance of unrestricted gifts. This is especially the case when you and your colleagues are striving to attract dollars to boost your operating reserve or endowment fund.

Here are five cut-and-paste talking points you can use in your donor communications to help break through the myths that often surround unrestricted giving. 

Myth: A charity can use unrestricted dollars for anything it wants. 

Reality: When a donor makes an unrestricted gift to a charity, it means that the charity has the flexibility to use the funds where they are needed most within the charity’s overall mission. A charity has a legal and ethical responsibility to use all donations–whether unrestricted or restricted–to carry out its charitable purpose. 

Myth: Unrestricted gifts have to be big to make a difference.

Reality: Any size unrestricted donation, whether to a charity’s current programs and operations or to its endowment fund, is meaningful. To fund their missions, charities rely on all levels of donations from a wide variety of donors. Even very small donations help charities build relationships with new donors and expand the circle of awareness. 

Myth: Donations that are restricted to supporting actual programs make the biggest difference.

Reality: A charity is like any other organization, whether for-profit or nonprofit, in that there are critically important expenses required to do its work. Rent, utilities, technology, and insurance aren’t technically “program” expenses, but without these expenses, a charity cannot function. Unrestricted gifts often help support these essential line items in a charity’s budget. 

Myth: It’s hard to see the impact of unrestricted gifts.

Reality: Unrestricted gifts are vital for a charity’s overall sustainability and allow it to carry on year after year. Indeed, a donor who gives an unrestricted gift can look at the entirety of the organization’s impact and know that the gift helped make it all possible. 

Myth: An unrestricted gift is not a “strategic” philanthropic investment.

Reality: Unrestricted gifts are arguably the most strategic type of giving because they demonstrate trust in the charity’s leadership to make the best decisions in carrying out the charity’s mission. An unrestricted gift also sends a signal to other donors that the organization’s leadership and staff are strong, which in turn attracts more support. 

Please reach out to the community foundation for more ideas about how you can communicate the value of unrestricted and endowment giving to your donors. We are here to help! 

Donor-advised funds: Your new best friend?

A donor-advised fund is one of many types of funds that an individual, family, or business can establish with the community foundation. You’re likely more aware of donor-advised funds than other types of funds because they are frequently covered in financial media and also because your organization might have received grants from donor-advised funds. 

The team at the community foundation is happy to talk anytime to help demystify these popular vehicles. At the very least, however, you’ll want to check out the recently-released DAF Fundraising Report that sheds new light on the overall role of donor-advised funds in philanthropy and the significant value donor-advised funds provide to charities. 

For example, the report revealed that when a donor starts giving from a donor-advised fund, their annual giving increases by 96%! Donor-advised funds are also helping keep philanthropy strong. According to the report, the number of donors using donor-advised funds has grown by 79% in an environment where the number of other types of donors has declined by 6%. 

It’s absolutely worth your time to learn the basics of how a donor-advised fund works. You and your team also should consider developing strategies to identify and cultivate relationships with your donors who are using their donor-advised funds to support your organization. Dollars in donor-advised funds are already set aside for charitable giving, and it’s very convenient for donors to use their funds to support favorite organizations–like yours.

It’s also important to know that the team at the community foundation encourages donors to give directly to their favorite charities when that’s the best strategy to achieve a donor’s estate planning, tax, and charitable goals. Many times, though, both the donor and the charity benefit from the donor using a donor-advised or other type of fund at the community foundation. Examples include cases where the donor wants to give a complex asset, such as real estate or closely-held stock, or needs to plan out several years of giving to address fluctuating income levels and tax liability. 

We are always happy to review how the community foundation works with donors through donor-advised funds and other vehicles to support your organization and others in the community. We look forward to hearing from you! 

Planned giving and big gifts go hand in hand

The news about large gifts keeps coming! And “big bet” philanthropy in general has been in the news recently, reportedly because donors’ approach to giving at scale is changing thanks to a greater focus on relying on the experts in organizations to deploy resources for maximum impact and trusting them to do so. It’s also encouraging that donors are trending toward giving gifts in dollar amounts that are appropriate to tackle the scale of the challenge to be addressed rather than basing donations solely on the organization's current capacity and budget. 

The team at the community foundation can help you maximize your ability to receive large gifts to your reserve fund or endowment fund. We do this by offering structure and services for you to house your fund with us. This, in turn, allows our team to help you with crucial fundamentals for planned giving tools to attract and accept large gifts, including:

–Support to accept complex gifts of alternative assets, such as real estate, closely-held stock, and even large blocks of publicly-traded stock

–Support to establish and administer charitable planning vehicles to benefit your organization, such as charitable remainder trusts and designated funds

–Support to help a donor establish a bequest to your organization in a will, trust, or–and especially tax-savvy for the donor–via beneficiary designation on an IRA or other qualified retirement plan

Indeed, planned giving, especially via bequests, continues to be an important source of funds for nonprofit organizations across the country. Some researchers have estimated that the historical average size of a charitable bequest falls somewhere between $37,000 and $78,360. That’s hundreds of times larger than the average one-time donation a living donor typically makes, which historically has been identified as hovering a bit over $100. 

Please reach out to the team at the community foundation to learn how we can help you grow your organization’s endowment or reserve fund. If your organization has not yet established its fund with the community foundation, let’s talk! Now is the time to make sure your planned giving and endowment infrastructure is firmly in place so you can lean into the “big bet” philanthropy trend. 

Make-A-Will Month, the power of friends and family, and endowment FAQs

In a pinch? Three Make-A-Will Month messages you can use right now

As you implement strategies to attract gifts to your endowment fund at the community foundation, it’s critical to regularly encourage donors to check their estate plans to be sure they’ve incorporated their intended bequests. Now is an especially good time to get the word out because August is national Make-A-Will Month.

Here are three cut-and-paste messages you can use in your communications with donors, whether those are broad communications such as website pages or one-on-one emails to particular donors.  

• Money, mortality, and family relationships 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. Don’t delay! Reviewing your wills, trusts, and beneficiary designations not only gives you peace of mind, but also lets you explore ways to include a bequest to [ABC Charity]’s endowment fund at the community foundation. Please reach out. We’d love to work with you and your advisors to establish a legacy that will benefit the community for years to come. We’re so grateful for everything you do to help [ABC Charity]’s mission stay strong.  

• 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 [ABC Charity]’s endowment fund at the community foundation is the most tax-efficient, streamlined way to establish a philanthropic legacy. A bequest like this avoids not only estate tax, but also income tax on the retirement plan distributions. Reach out to learn more! 

• 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 represent generous acts of clear distribution and conflict avoidance for your family and loved ones. An estate plan allows you to demonstrate how much you care about the people in your life as well as your charitable passions. We’d love to work with you and your advisors to include [ABC Charity]’s endowment fund in your estate plan.

As always, please reach out to the team at the community foundation! We are here to help you build your endowment fund. We appreciate the opportunity to work with organizations like yours that are making such a big difference in the quality of life in our community. 

Friends and family: Endowment-building thrives on relationships

“You can’t make old friends” isn’t just the title of an album; it’s an important reminder that long-term relationships are the key to successful endowment building. That’s common sense, of course, but sometimes it’s hard to put this principle into action. You’re ready now to grow your endowment fund at the community foundation, and you wish your donors shared your sense of urgency! 

There are no silver bullets or magic tricks or secret sauces to make donor relationships grow faster, but it might help to understand how your donors’ emotions factor into decision-making about when–and to what extent–they will make a financial commitment to your endowment. 

Along those lines, the team at the community foundation really enjoyed a recent article in the Stanford Social Innovation Review offering suggestions for ways to approach philanthropy so that it is “relational,” including thinking in terms of "we" instead of "us” or “them" and moving away from hierarchical models achieving impact. 

As you update your endowment-building plans, consider three ideas inspired by principles of relational philanthropy. 

Focus on donor loyalty and trust

Keep an eye toward creating long-term, mutually beneficial relationships with donors. Trust fosters donor loyalty, encouraging recurring and more substantial contributions over time, which is crucial to ultimately securing an endowment gift. To achieve this, you need to understand what benefits the donor is seeking by supporting your organization. Is it recognition? The knowledge that they’re part of something bigger than themselves? Confidence that a problem they’ve personally wrestled with will be solved for others? The donor’s perspective matters.

Inspire donor advocacy

It’s one thing for donors to feel personally connected to your organization. It’s an entirely bigger thing for them to become advocates. When a donor is so dedicated to your mission that they actively encourage their friends and family to also support your organization, you know you’ve got a friend for life. Asking this type of donor for a commitment to your endowment is likely to achieve a high rate of success. Pay close attention to which donors are regularly referring new donors to your organization, whether by offering up prospect names directly or inviting prospects to join the donor’s table at your organization’s annual event. 

Know your audience

Large-scale communications platforms such as email campaigns, social media, and your website are important tools in all fundraising activities, including securing endowment gifts. An endowment gift is a big ask, though, so make sure to layer in highly personal outreach to your donors, in addition to general messaging. One-by-one communication across channels allows you to demonstrate your organization’s understanding of donors' individual preferences for their involvement.

As always, please reach out to the community foundation anytime you have questions about best practices for growing your endowment fund. If your organization has not yet established its endowment fund at the community foundation and you’d like to learn more, we’d welcome the opportunity to talk with your team and board of directors. We look forward to continuing to work side-by-side to improve the quality of life in our community through the power of philanthropy. 

Speed round: Five fast FAQs about endowments

The word “endowment” can be intimidating, even for the most seasoned fundraising and planned giving professionals–and certainly for donors! But it doesn’t have to be that way. “Endowment” is such an important concept to secure your organization’s future, and it’s worth striving to simplify the basic points for your team and your donors.  

Here are answers to five frequently-asked questions about your endowment fund at the community foundation that may help you communicate with your staff, board, and donors. Please copy, paste, edit, and deploy as you wish! 

What does “endowment” mean?

“Endowment” refers to a designated pool of assets that are invested (in our organization’s case, 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 support our organization’s mission, and the rest of the assets remain invested to grow in perpetuity. 

Why is our endowment fund so important to the future of our organization?

The assets set aside in our endowment fund produce an income stream that helps support our mission now and in the decades ahead, allowing us to deliver on our mission consistently over time, especially as needs shift and the fundraising environment ebbs and flows. Plus, the growth of the endowment itself can provide increasing levels of support each year. 

How can donors stay involved even after they make an endowment gift?

Our team is happy to keep donors informed about the positive change in the community that is occurring thanks to distributions from the endowment fund. We’re happy to continue to keep a donor’s children and grandchildren informed, too, beyond a donor’s lifetime. In this way, a donor’s legacy continues through the generations. 

Who decides how the endowment distributions get used each year?

Our organization’s board of directors reviews endowment income each year as part of a careful budget process. It’s very clear that certain dollars are flowing into the budget from endowment income. Our independent board of directors, together with staff, develops and oversees a budget to meet our organization’s mission for the coming year.

How can a donor make an endowment gift?

A donor certainly may transfer cash to the endowment fund. Even better for tax purposes, a donor can transfer appreciated stock or real estate. A donor can also work with estate planning and financial advisors to structure a bequest to the endowment fund. Our team works with the professionals at the community foundation to help each donor design a gift to achieve both the donor’s tax goals and charitable giving goals. For instance, many advisors highly recommend a bequest through an IRA beneficiary designation because of the multiple tax benefits. Related, if a donor is over 70 ½, making a “Qualified Charitable Distribution” from an IRA directly to our organization’s endowment fund is a very effective charitable planning tool to reduce income tax and, if applicable, also satisfy Required Minimum Distributions.

The community foundation team looks forward to working with you and your donors to establish meaningful endowment gifts that support your organization’s mission for generations to come. Thank you for the opportunity to work together!

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

Stack the stats in your favor, trends among millionaire donors, and sunset reminders

Fundraising: Stack the stats in your favor

By the time summer rolls around, reflecting on what happened last year may feel like cognitive whiplash. That’s not the case, though, with the statistics from the annual Giving USA report that are released every June for the prior year. The team at the community foundation reviews the findings closely so that we can identify trends and strategies that could help you and other nonprofits strengthen fundraising and stewardship practices and build financial resources to support the community for generations to come. 

You’re likely aware that the recently-released Giving USA report for 2023 reveals that while charitable giving in the U.S. increased to $557.16 billion, the increase failed to keep pace with inflation. When adjusted for inflation, total giving declined by 2.1% year-over-year. 

While the news is disappointing in some ways, it actually presents a terrific opportunity to communicate a positive set of messages to your donors. Here’s an example of a four-point messaging platform that might be a fit for your outreach strategy: 

–Acknowledge that fundraising has been tough for organizations across the board, and that’s why you’re so grateful for their continued support. Cite the Giving USA statistics to show donors that you’re on top of the issues. (You can also reference another recent study showing that trust in nonprofits has increased!)

–Let your donors know that the drop in giving is no match for the passion and commitment of your organization’s staff and board to ensure that the mission stays strong through best-in-class fundraising and stewardship strategies.

–Remind donors that it’s been a great year so far for many stocks! Encourage your donors to review their portfolios to identify highly-appreciated positions, and ask them to consider making a stock gift to your organization’s endowment fund at the community foundation, avoiding capital gains tax in the process.

–Suggest that your donors consider a planned gift to your endowment fund at the community foundation so that your organization is better prepared to weather the inevitable ups and downs of giving in the years ahead. Remember, a planned gift, such as a bequest or a beneficiary designation on an IRA, does not impact a donor’s wallet today. 

As always, please reach out to the community foundation for ideas and strategies. We are here to help you build your reserves and endowment funds. It’s our honor to support your work to improve the quality of life for so many people in our region. 

Self-made: Charitable motivations of do-it-yourself millionaires

A recent study sheds light on how high net-worth people who’ve made their own money tend to approach philanthropy. As it turns out, self-made millionaires are more likely to give to charity than those who inherited their wealth–a whopping 93% reported doing so. People with legacy wealth are still likely to be philanthropic, but only 74% reported that they give to charity.

So what does this mean for your fundraising and stewardship practices, especially as you strive to build your endowment fund at the community foundation? As you’re building donor engagement strategies and expanding your roster of supporters, don’t just focus on “old money.” Consider three strategies to jumpstart your endowment-building efforts by engaging self-made donors:

Track local companies. In every community across America, local entrepreneurs have started enterprises from scratch. In addition, more and more of your donors are investing in private markets instead of simply limiting their strategies to stocks listed on the exchanges. (Indeed, the number of publicly-traded companies has declined significantly since the mid-1990s.) The result of these two trends is that a large portion of many donors’ wealth is represented by closely-held stock in businesses they’ve started or in which they are investors. Make sure local companies and the people involved are on your prospect list. 

Talk the talk with entrepreneurs. Pay careful attention to the messages you use to engage entrepreneurs and people who own their own companies. These donors are likely to appreciate the investment characteristics of endowment gifts because they understand that an endowment’s long-term value is human-centered and not simply a financial strategy. Stay close to local companies and their owners as potential major donors, especially for long-term endowment giving. 

Understand gifts of closely-held stock. The team at the community foundation can help you tap into the increased popularity and tax benefits of donors giving closely-held business interests to support favorite charitable causes such as your organization. We can help you navigate a thoughtful stewardship process to encourage a closely-held business owner to consider a gift of ownership interests to your endowment fund at the community foundation, whether during the owner's lifetime in anticipation of a future (but yet-to-be-determined) exit, or upon death in the form of a bequest. 

We look forward to discussing the ways self-made millionaires can help your organization thrive for generations to come. Please reach out anytime to strategize with our team. We are here for you!

Estate tax exemption sunset: A broken record you need to know

We’re giving you fair warning that the team at the community foundation is not going to stay quiet when it comes to emphasizing the importance of understanding at least the basics of the estate tax exemption sunset. Yes, we will be that broken record! 

As a reminder, the estate tax exemption is the total amount a taxpayer can leave to family and other individuals during life and at death before the hefty federal gift and estate tax kicks in. This exemption is scheduled to drop big time after December 25, 2025. For 2024, the estate tax exemption is $13.61 million per individual, or $27.22 million per married couple. (Later this year, the IRS will issue inflation adjustments for 2025.) For 2026, without legislation to prevent it, the exemption is scheduled to fall back to 2017 levels. Adjusted for inflation, this would total roughly $7 million per person. 

Of course, no one will know for sure that the estate tax exemption is sunsetting until it actually sunsets. Certainly the upcoming election could impact the likelihood that Congress will intervene and extend the tax cuts from 2017 that increased the estate tax exemption in the first place. 

In any event, it is essential that you and your team understand what’s going on here so that you can be prepared to encourage your donors to discuss planning options with their advisors over the coming months while the issue is in limbo. You want your donors to know that you are on top of it! 

The net-net here is that a lot more people–including many of your donors–could be subject to estate tax in the not-too-distant future. This, in turn, means that your endowment fundraising strategies could get a shot in the arm as your donors work with their advisors to plan gifts and bequests to decrease their taxable estates through the charitable deduction. 

At the very least, the estate tax exemption is a fantastic conversation piece for your donor meetings, regardless of whether the sunset actually occurs at the end of next year. Potential tax increases tend to get donors’ attention, and you want to be right there in the mix to ensure that gifts to your endowment fund are on the radar. 

Please reach out to the community foundation team! We’d love to help you seize this opportunity.

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

Summer fundraising, talking about endowments, and trends to watch

Doubling down: Summer development tips

Even with many of your donors traveling or taking time off, summer is not the time for stewardship and fundraising to move to the back burner. Especially because endowment gifts and complex charitable giving structures take time to establish, mid-year presents an excellent opportunity to double down on development efforts.

For example, always remind your donors to give appreciated stock instead of cash. Absolutely it feels like you are a broken record! You mention the benefits of giving appreciated stock all the time in your donor communications. But it really can’t be overstated. Donors are so tempted to reach for the checkbook for charitable giving, even when they are making a gift to your organization’s endowment fund at the community foundation.

Emphasize to your donors that not only will transfers be eligible for a charitable deduction at fair market value (if the donor held the shares for more than one year), but also your organization won’t pay income tax on the capital gains. This means the donor will be making a much bigger gift than if the donor had sold the stock, paid the tax, and supported your organization out of the proceeds. 

The community foundation is always happy to help you process gifts of appreciated stock, especially when a donor wants to give a large block of a single stock to support your organization as well as others. 

And keep talking about QCDs! Donors who are 70 ½ or older absolutely must consider giving from an IRA. Certainly you mention this a lot in your discussions with donors, but sometimes donors are not ready to hear it, especially if they are on the cusp of reaching 70 ½ but aren’t there yet. They will listen differently when they’ve actually hit the age. As you know, a QCD allows a donor to direct $105,000 from an IRA to your organization, penalty-free. If a donor is subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. That means the donor can avoid income tax on the funds distributed to charity. The community foundation is happy to help you work with donors and their advisors to determine whether a QCD is a good fit to help maximize charitable giving.

Your endowment: Helpful language to engage donors

Your donors are likely very familiar with the term “endowment,” but they might not know how it works or how important it is to help sustain your mission for the long term. If you’ve established your organization’s endowment fund at the community foundation, we’re happy to help you communicate the benefits of endowment gifts to interested donors who may be new to providing this type of support.

For example, you can include language in your communications along these lines: 

“Endowment” is the word often used to refer to a designated pool of assets that are invested by and tracked separately such that a modest portion (usually based on a percentage) of the assets are distributed each year for charitable purposes, 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 our organization.

And this: 

Our organization has established its endowment fund at the community foundation, where the team is experienced at managing the accounting, investment, and distribution aspects of endowment funds. Working alongside the community foundation, our board and staff are committed to keeping a finger on the pulse of our community’s greatest needs and maintaining a deep understanding of how our organization can meet those needs now and well into the future when priorities emerge that simply could not have been predicted. Distributions from our endowment fund are reviewed and approved by an independent board of directors to ensure that they fulfill our organization’s mission-focused goals for establishing the endowment in the first place.

And this:

When you support our endowment fund through gifts of stock, bequests in your will, beneficiary designations on your retirement plans, or even gifts of real estate and other complex assets, you are helping pave the way for our organization’s long-term stability to continue to improve the quality of life in our region. What’s more, we can work with you and your advisors to structure endowment gifts that meet your own estate planning and tax objectives.

As always, please reach out to the team at the community foundation for ideas about growing your endowment. We are here for our community, and we are here for you! 

Trends worth watching

The team at the community foundation is committed to keeping an eye out for trends and developments that impact charitable giving and your ability to raise funds for your organization’s mission.  

Here are three developments you'll want to track: 

–Although you and your donors certainly anticipate that your organization will thrive for years to come, there is no crystal ball. Sometimes, the unexpected happens and the viability of a nonprofit organization is threatened or called into question. It is especially important to consider these issues when planning for large endowment gifts. That’s why so many nonprofit organizations consult the community foundation about how to structure donors’ endowment gifts to ensure that the mission is served, regardless of what might happen to a particular entity. Please reach out as you work with your donors on major bequests. We can help ensure that both the donor’s intent and your mission are served across generations. 

–Be prepared to help donors with planning issues to address the anticipated changes to the estate tax exemption at the end of next year. The estate tax exemption is 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–including many of your donors–could be subject to estate tax in the not-too-distant future. The team at the community foundation is happy to help develop strategies for maximizing endowment gifts as the sunset draws near. Please reach out! 

–You’ll want to pay attention to the latest fundraising statistics, simply to be aware of what’s going on in the nonprofit sector overall. For example, while the number of new donors is up, donor retention rates continue to suffer. This does not need to be the case, however, for your organization; strong donor stewardship practices can significantly increase donor retention and even increase large gifts to your endowment. Please reach out to the community foundation for ideas on how to grow your endowment fund.

Thank you, as always, for the opportunity to work together! It is our honor to be your partner in philanthropy and community impact.  

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

Donors' due diligence, avoiding jargon, and non-marketable gift reminders

Be prepared: Tips for donors’ due diligence

As you and your team build momentum implementing your 2024 fundraising plan, keep in mind that many individual donors look at the same criteria used by foundations to determine whether to support a charitable organization. You may not even be aware that a prospective donor is conducting due diligence. Especially when a donor is considering making a large gift or setting up a bequest, gaining the donor’s confidence is key.

The team at the community foundation is always happy to serve as a sounding board as you strive to continuously improve your organization’s governance and operational documentation. 

Here are three items you might consider reviewing as you do a little spring cleaning.

Governing documents

Make sure your articles of incorporation are up-to-date and reflective of your current mission. Donors who are considering a large gift will want to see that your legal documents are in ship shape, especially with respect to the language required to achieve Section 501(c)(3) status. If you’re in doubt, consult the IRS’s suggested language. You’ll also want to review your bylaws. Bylaws can become outdated, in some cases due to technology. For example, you’ll want your bylaws to include permission to use up-to-date mechanisms to gain board approval, such as through an online poll in lieu of an in-person meeting. 

Tax returns

You’re no doubt on top of the need to file the annual Form 990 tax return. Make it a point, though, to check for consistency between your Form 990 and the Form 1023 you filed (likely years ago) to secure the IRS Determination Letter granting charitable status. Make sure your organization’s charitable purpose is still stated correctly. Consistency across key documents is important to a lot of large donors. Indeed, many donors review the Form 990 carefully before they decide to make a gift. Make sure yours is accurate and compelling. 

Gift acceptance policy

Make sure you’ve recently reviewed your policies for how your organization handles the acceptance of certain gifts, especially if they fall in the category of “Non-Standard Contributions” as defined by the IRS. Gifts of hard-to-value assets should not be undertaken lightly. We encourage you to reach out to the community foundation to assist in establishing a gift acceptance policy that will protect your organization and empower your fundraisers to engage in successful conversations with donors. To that end, the community foundation offers nonprofit organizations the opportunity to establish endowments and reserve funds to benefit from the community foundation’s governance and oversight, especially related to accepting complex gifts, as well as relying on the community foundation for all of the policies and administration associated with an endowment or reserve.  

We look forward to working with you!

“Planned giving”: Do your donors get it?

It’s common practice for fundraisers and other philanthropy professionals to use the term “planned giving,” but do your donors know what you mean? Certainly, some donors understand the term, especially those who’ve served on your board or who’ve worked with you to establish a bequest. But many donors–and especially prospective donors–could benefit from an explanation that avoids the confusion of industry jargon. 

To that end, in your fundraising communications, you might consider providing background to help orient your donors to the purpose of planned giving before you dive into defining it or describing it. For example:

–You could explain that a donor who writes checks or gives stock is making what’s sometimes referred to as a “current gift.” 

–You can further explain that many donors repeat these types of gifts every year so that they become “annual gifts.” 

–Next, you can draw a distinction between current or annual gifts and future gifts, outlining that well-structured future transfers to your organization are often referred to as “planned gifts” because, well, they require planning! 

–Be sure to let donors know that planned gifts are important to help the organization build its endowment and ensure that its mission stays strong for generations to come.

Clear, concise, and simple communication with donors will help your fundraising efforts. Indeed, a new study sheds light on the elements of communication that can help increase donor trust, including emphasizing good stewardship and solid decision-making practices. 

Consider adopting techniques to improve donors’ understanding of your message. For example:

–Use genuine, relatable storytelling to demonstrate the importance of your organization’s work, and share perspectives of the most affected people. Because you’re asking donors to consider gifts beyond their lifetime, be sure to illustrate the long-term, unpredictable needs facing the communities you serve and your organization's ability to address them.

–Provide plenty of context, including details that improve believability. Don’t assume that the donor is familiar with what your organization actually does. Illustrate the organization’s commitment to service as a non-negotiable core value that will continue to persist far into the future. 

–Live up to your position as a trusted messenger by sharing vivid details and inclusive viewpoints to build transparent relationships. Skipping details and getting straight to the result creates a missed opportunity to educate donors about the level of work required to achieve impact and the need for financial support through endowment and other long-term gifts. 

By communicating clearly with your donors, omitting jargon, and sharing stories to demonstrate the value of a donor’s investment, you’ll go a long way toward improving your fundraising efforts to build long-term support for your organization and its mission, especially through planned gifts that demand a high degree of donor trust. 

Reminders about non-cash and non-marketable gifts 

You’re likely very consistent about reminding your donors about the benefits of giving long-term, publicly-traded securities to support your organization’s mission. Don’t ever stop! It’s so easy for a donor to forget about this and write a check, missing out on the opportunity to avoid capital gains tax.

Non-cash gifts also include assets beyond just publicly-traded stock. Remember that the community foundation can work with you to accept donors’ gifts to your endowment fund of many types of assets, including:  

Closely-held business interests

With proper planning, a donor can transfer shares of a closely-held business to your organization’s endowment fund at the community foundation.

QCDs from IRAs

A Qualified Charitable Distribution (“QCD”) is a very smart way for a donor who has reached the age of 70 ½ to give to your endowment fund. A donor can direct up to $105,000 from an IRA every year. Together, married couples can direct twice that amount. The donor avoids income tax on the funds distributed to your endowment fund. 

Real estate 

Your endowment fund at the community foundation can receive a tax-deductible gift of a donor’s real estate, such as farmland or commercial property, avoiding capital gains tax and reducing the value of the donor’s taxable estate. 

Life insurance

For some donors, naming your organization’s endowment fund at the community foundation as the beneficiary of a life insurance policy is an effective way to leave a bequest. And, in the case of whole life policies, it may be possible and advantageous for the donor to not only name the endowment fund as beneficiary, but also transfer the policy itself and make annual, tax-deductible contributions to the community foundation to cover the premium. 

And that’s not all! Oil and gas interests, cryptocurrency, and collectibles are among the other assets that can make effective gifts to charity. Please reach out to the team at the community foundation to learn how we can help you accept non-cash, non-marketable gifts into your endowment fund. 

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

Planned giving playbook: Real estate jumpstarts a major gift

Planned giving playbook: A charitable remainder trust case study

Many of our nonprofit partners have requested that the community foundation team provide a detailed example of how a complex gift comes to life and how you and your team can seize the opportunity. We’re pleased to share this playbook to illustrate a situation where a charitable remainder trust is an ideal planned gift for a major donor. We’re also highlighting how–and when–the community foundation can step in to help in situations like this. 

Remember, whether your organization currently houses its endowment or reserve fund at the community foundation, or whether your staff and board are considering it, our team is here to help. We’re just a phone call or email away, and we look forward to hearing from you! 

Without further ado, here we go! 

A major donor is in your office, dropping hints

Imagine that you’re meeting with a long-time donor, Tom Browning. Tom is a 67-year-old real estate investor. Tom is a widower. Tom has supported your organization for many years. Indeed, your records show that your organization consistently receives donations from a donor-advised fund at the community foundation established years ago by Tom and his wife, Paige.

Since Paige passed away last year, Tom has been spending more time volunteering at your organization, and he’s commented several times recently that he might be considering a major gift.

Tom mentions a piece of real estate, and you think this may be your moment!

After the two of you catch up on your organization’s latest news, Tom says this: “I’ve got a prime tract of land I bought for $200,000 just 10 years ago, and now I am sure I could sell it for $2 million because the market is still pretty strong for new residential development in that particular area. I need to act fast, though, because I think the real estate boom is waning. Oh, and there’s no mortgage on the property. And I would love for your organization to get a portion of the proceeds.”

Wow! This is exciting! You might be tempted to encourage Tom to list the property for sale immediately. Before you do that, though, stop for a moment and consider that you might be able to save Tom a lot of money and also help him expand the pattern of philanthropic support that he and Paige established years ago. So instead of jumping right into a discussion about the sale of the property, you call the team at the community foundation to see if they can help. 

The community foundation jumps in to assist.

Moments later, you’ve got the community foundation on speaker phone and the conversation continues with something like this: 

“Great to talk with you both,” the community foundation professional says. “Let’s definitely put our heads together here because it sounds like there is a way for Tom to use this real estate opportunity to fund his favorite charitable causes, including this organization.” 

The community foundation professional continues gathering information. “Now, remind me,” the community foundation professional asks Tom, “does this property produce any income for you right now?” 

“Unfortunately, no,” Tom replies. “I’ve never had time to develop the land, so it just sits there. At least the value has been going up–at least for now.”

“Ah,” responds the community foundation professional. “With the technique I have in mind, you may be able to secure an income stream for the rest of your life, in addition to funding your charitable goals, capitalizing on the property’s high value, and gaining tax benefits.”

“That sounds great,” is Tom’s response, which you predicted. 

A strategy emerges

You, Tom, and the community foundation professional begin to discuss the advantages of Tom setting up a charitable remainder trust (“CRT”). A CRT is a “split interest” charitable planning tool that allows a donor like Tom to transfer an asset (in this case, real estate) to an irrevocable trust, receive income for life, and earmark what’s left (the “remainder”) to pass to charities of choice. 

In Tom’s case, the fund he and his wife established years ago at the community foundation can serve as the recipient of the assets remaining in the trust following Tom’s death. The terms of the fund can be updated, alongside creating the CRT, to accommodate Tom’s intentions for distributions to your organization and Tom’s other favorite charities, too. In this way, Tom can achieve his goal to leave a meaningful legacy to all of his favorite causes.

Here’s why this works so well

Because the charitable remainder trust qualifies as a charitable entity under the Internal Revenue Code, here’s what happens from a tax perspective:

–When Tom transfers the property to the trust at a fair market value of $2 million with a cost basis of $200,000, and then the trust sells the property, the trust itself does not pay tax on the $1.8 million capital gain. Tom would have had to pay this tax if he had sold the property himself. 

–This leaves the full $2 million in the trust to be invested for growth, subject to Tom’s lifetime income payments. 

–Tom is eligible for a potentially significant charitable income tax deduction of the fair market value of the property given to the trust, minus the present value of the retained income stream.

–Lifetime payments to Tom (in an annual amount equal to at least 5% of trust assets) generally are subject to income tax during each year of the distributions, but the overall income tax hit to Tom likely will be less than if he had transacted an outright sale. 

–Because the charitable remainder trust is an irrevocable trust, the property and the sale proceeds (other than what winds up in Tom’s estate from any unspent income stream payments) are excluded from Tom’s estate for estate tax purposes. 

Contrast this with an alternative scenario in which Tom had sold the property, realized a $1.8 million capital gain, paid tax on that gain, and made gifts to charities from what was left, holding back enough to live on. And, in that situation, the proceeds would be included in Tom’s estate tax purposes. Ouch! 

The net-net

Your meeting with Tom, with the community foundation professional on speaker phone, is an excellent reminder of how the community foundation can serve as your partner in securing major gifts and bequests. The community foundation serves as trustee of many charitable remainder trusts and would be happy to do so in a situation like the one with Tom. 

Note also that a donor’s fund at the community foundation can be an excellent landing spot for complex gifts that a donor wants to make to your organization as well as to other organizations. The community foundation will administer the gift and distribute the assets according to the donor’s wishes. This relieves a donor of the quandary of having just a single piece of property to give but multiple charities the donor would like support.

The team at the community foundation is here for you! We look forward to getting that call the next time you have a donor like Tom in your office–or anytime you have a question about a complex gift or charitable giving strategy. 

Giving may be on the upswing

Despite what some people viewed as a softening in charitable giving over the last couple of years, philanthropy now appears to be on the upswing and is expected to rise by 4.2%. This is good context for your work with donors, especially as donors strive to engage their children and grandchildren in the family’s philanthropic endeavors, paying particular attention to the changing preferences and giving styles of younger generations.   

Jumpstart gifts of stock, donor-advised fund statistics, and updating your board of directors

Jumpstart endowment growth with donors’ gifts of stock

Most of your donors have been made aware, often repeatedly, that giving highly-appreciated stock to favorite charities is a very tax-effective strategy. Indeed, gifts of shares held for more than a year are typically deductible by the donor at fair market value. When the charity sells the shares, the charity receives 100 cents on the dollar because nonprofit organizations don’t pay income tax. The net-net here is that the donor (1) benefits from a favorable income tax deduction, (2) avoids the capital gains tax that would have been triggered if the donor had sold the shares and used the cash proceeds to make the gift to charity, and (3) maximizes value for the charity. 

So, with all of these benefits, why do so many donors forget about giving stock when they’re ready to make a gift to your organization or your organization’s endowment fund at the community foundation? Sometimes a donor is in a hurry, doesn’t think it through, and writes a check before realizing that it would have been better to give stock. Sometimes a donor assumes it will be too much of a hassle to pursue a stock gift. Most of the time, though, a donor simply forgets.

This is why it is so important for your organization to mention the benefits of giving stock in nearly every fundraising communication. At any point in time, during any year and any month, regardless of whether the stock market as a whole is up or down, at least a few of your donors will be sitting on highly-appreciated stock. Those are the donors who need to hear the message. Already in 2024, for example, several stocks are hitting milestone one-year performance marks. Assure your donors that giving stock to your endowment fund is very easy. Seamless processing for stock gifts is one of the many benefits of establishing your organization’s endowment fund with the community foundation. 

As always, please reach out to the community foundation for ideas and strategies to build your endowment fund through donors’ gifts of stock. We’d love to help you seize the opportunity! 

How donor-advised funds help charities stay afloat

You’re no doubt familiar with donor-advised funds, especially if some of your donors use their donor-advised funds at the community foundation to support your organization. What you might not know is that the national average annual “pay-out rate” for all donor-advised funds is 18%, and most donor-advised funds make at least one grant per year. Furthermore, donor-advised funds help many individuals and families get involved in organized giving at a low barrier to entry. Indeed, nearly half of all donor-advised funds carry balances less than $50,000. To dive deeper into these and other insights, we suggest taking a look at the Donor Advised Fund Research Collaborative’s recently-released study.

At the community foundation, we are committed to growing philanthropy, connecting donors to the causes they care about, and leading on critical community issues. An important part of our mission is offering donors a wide range of ways to give to the charities that are most important to them. In many cases, establishing a donor-advised fund, field-of-interest fund, designated fund, or other type of fund at the community foundation helps a donor unlock assets for charitable purposes that would otherwise be difficult to tap. This is especially the case with highly-appreciated, noncash assets such as closely-held stock and real estate. We also make it easy for donors to structure long-term giving plans and bequests so that they can maximize their support for you and other favorite nonprofit organizations and involve their families, too.

Please reach out anytime if you’d like to learn more about the community foundation’s mission to grow philanthropy for our entire region. 

Your endowment fund: A primer for your board of directors

If your organization has established an endowment or agency fund with the community foundation, your staff and board of directors are already experiencing the benefits of our relationship. We are here to help you grow critical financial resources to support your important mission well into the future. 

Many nonprofit organizations who work with our team appreciate the opportunity to periodically review with their directors the benefits of working with the community foundation, whether at a board meeting or in a board communication. Here are points you can include in your next endowment update to your directors:

–The organization has established a fund at the community foundation because of the community foundation’s services to help charities efficiently and effectively set aside endowment reserves and rainy day funds.

–The team at the community foundation is adept at navigating the specific accounting standards that are unique to this type of arrangement. The community foundation’s depth and breadth of experience allows the organization’s staff and board of directors to focus on deepening relationships with donors and carrying out its mission in the community. 

–The community foundation team helps nonprofit organizations establish and regularly update investment policies and gift acceptance policies, making it easier for the staff and board to engage in fundraising discussions. Our team is happy to attend a board meeting to review planned giving and endowment-building strategies. 

–The community foundation team can help your organization accept and process donors’ gifts of highly-appreciated stock, real estate, closely-held stock, and other complex assets, giving your fundraising a big boost. 

An endowment or agency fund at the community foundation is a powerful tool to help secure your organization’s financial future for generations to come. Thank you for the opportunity to serve as your behind-the-scenes back office. If your organization has not yet established a fund at the community foundation, please reach out. We’d love to explore how the community foundation’s tools and services can help you grow donors’ support for your mission. 

Five common donor questions about QCDs and more love for your endowment

QCDs: Five questions your donors may be asking

As you review your donor lists and plan 2024 cultivation activities, pay particular attention to donors you know are over the age of 70 ½. That’s because these donors are eligible to make what’s known as a “Qualified Charitable Distribution,” or “QCD,” to your organization’s endowment fund at the community foundation directly from the donor’s IRA. 

You’ve likely heard a lot about QCDs because they are becoming a very popular financial and charitable planning tool. At the same time, QCDs are growing as the source of more and more confusion.

Here are answers to the questions donors might ask you about QCDs so that your team can be prepared to answer them. As always, please do not hesitate to reach out to the community foundation for assistance.

“Is an IRA (Individual Retirement Account) the only eligible source for Qualified Charitable Distributions?”

Short answer: Almost.

Long answer: An individual can make a Qualified Charitable Distribution directly to an eligible charity from a traditional IRA or an inherited IRA. If the individual’s employer is no longer contributing to a Simplified Employee Pension (SEP) plan or a Savings Incentive Match Plan for Employees (SIMPLE) IRA, the individual may use those accounts as well. In theory, a Roth IRA could be used to make a QCD, but it is rarely advantageous to do that because Roth IRA distributions are already tax-free.

“What is the difference between a QCD and an RMD?”

Short answer: Quite a bit! But a QCD can count toward an RMD. 

Long answer: Everyone must start taking Required Minimum Distributions (“RMDs”) from their qualified retirement plans, including IRAs, when they reach the age of 73. RMDs are taxable income. The Qualified Charitable Distribution, by contrast, is a distribution directly from certain types of qualified retirement plans (such as IRAs) to certain types of charities. When a taxpayer follows the rules, a QCD can count toward the taxpayer’s RMD for that year. And because the QCD goes directly to charity, the taxpayer is not taxed on that distribution.      

“Can a donor make a Qualified Charitable Distribution even if the donor is not yet required to take Required Minimum Distributions?” 

Short answer: Yes–within a very narrow age window. 

Long answer: RMDs and QCDs are both distributions that impact retirement-age taxpayers, and it would seem logical that the age thresholds would be the same. Under the SECURE Act, though, the required date for starting RMDs was shifted from 70 ½ to 72 and is now up to 73 (which is better for taxpayers who want to delay taxable income). A corresponding shift was not made to the eligible age for executing QCDs; that age is still 70 ½ (which benefits taxpayers who wish to access IRA funds to make charitable gifts even before they are required to take RMDs).

The IRS’s rules for QCDs are captured in Internal Revenue Code Section 408 and summarized on pages 14 and 15 in Publication 590-B in its FAQs publication. 

“Can a donor direct a QCD to a fund at the community foundation?”

Short answer: Yes, if it’s a qualifying fund.

Long answer: While donor-advised funds are not eligible recipients of Qualified Charitable Distributions, other types of funds at the community foundation can receive QCDs. These funds include endowment funds established by nonprofit organizations. 

“How much can a donor give through a QCD?” 

Short answer: $105,000 per year.

Long answer: A Qualified Charitable Distribution permits a donor (and a spouse from a spouse’s own IRA or IRAs) to transfer up to $105,000 each year from an IRA (or multiple IRAs) to a qualified charity. So, a married couple may be eligible to direct up to a total of $210,000 per year to charity from IRAs and avoid significant income tax liability. 

The community foundation is here to help you and your team tap into the potential of QCDs to grow your endowment fund. Please reach out! We’d love to talk about a QCD strategy for 2024 and beyond.

More love for your endowment

February–and early in the year in general–is a good time to make sure your plans are in place to grow your endowment. As you and your team work together to reach out to donors this month, consider the ways your endowment fundraising communications help you build the long-term relationships with donors that ultimately result in both current and planned gifts to your endowment fund at the community foundation. 

Indeed, Valentine’s Day itself is an opportunity to truly reflect on “long term” commitments. Endowments, of course, are intended to last in perpetuity … and the earliest valentines go back to the 1400s when an imprisoned medieval duke sent one to his wife. That brings new meaning to “standing the test of time”! 

Formalizing your organization’s endowment, especially through establishing an endowment fund at the community foundation, helps your organization attract donors’ investable gifts that can produce sustainable returns while the principal or endowed amount remains intact. 

This quarter, make it a priority to remind your donors about the various ways they can give to your endowment fund at the community foundation:

–Gifts of highly-appreciated stock

–Gifts of life insurance

–Retirement plan beneficiary designations

–Qualified Charitable Distributions from an IRA (for donors who are over the age of 70 ½) 

–Gifts of closely-held stock

–Gifts of real estate

–Bequest in a will or trust

–Charitable remainder trusts

–Charitable gift annuities

As always, the community foundation is here to assist with any type of gift to your endowment fund, whether the gift is simple or complex. Like relationships in your life, endowments need nurturing, and not just during Valentine’s Day month! The team at the community foundation welcomes the opportunity to help your endowment thrive in perpetuity. 

What’s worth noting

Events are back! Yes, it’s true! If it feels like events are hot again, you are right! A recent OneCause study showed that 83% of charities are planning an in-person event for 2024, and one-third are planning a hybrid event. Check in with the team at the community foundation for ideas about how to include endowment fundraising in your event strategy.  

Wealth transfer is happening. The wealth transfer hype continues, and the media seems to report new twists on a regular basis, including statistics about how Generation X’s and Millennials’ particular circumstances figure into the equation. The bottom line remains, though, that the next several years are critical to build and execute your endowment-building strategy. Please reach out to the community foundation for help with endowment gifts of complex assets, such as real estate, or tried-and-true gifts, such as highly-appreciated stock.  

Cause marketing considerations. Interested in aligning with a business or a brand? Cause marketing is not for every organization, but if you do decide to venture in, be sure to brush up on the rules and legal issues. Cause marketing can be a good way to amp up your organization’s brand, and, with savvy planning, you can leverage the increased visibility to grow your endowment. Reach out to our team for ideas! 

Giving trends, younger donors, and endowment basics

It’s never too early to plant seeds for planned giving

Millennials and Generation Z are already focused on retirement, and 30% of them are setting their sights on becoming millionaires to achieve their goals. What this means for you and other charitable organizations is that it’s likely a smart move to expand your planned giving outreach strategies to include younger donors, as well as the traditional audience of generations who are retired or approaching retirement. Indeed, many of your younger donors are increasingly becoming investment savvy and will understand the value of planning ahead.  

Because younger generations are often motivated to give online and inspired by social media, your planned giving strategies should be tailored accordingly. Many planned giving techniques are complex, which is understandable considering the various legal and tax considerations that factor into structuring a bequest, charitable remainder trust, or beneficiary designation of a retirement plan or life insurance policy. Try to do whatever you can, though, to keep your language and promotional materials simple to match the preferences of this audience and the channels where they receive information.

For example:

–When you use social media, try to keep your language short, sweet, and to the point. Instead of throwing out terms such as “bequest” and “charitable remainder trust,” tap into younger generations’ motivation to make a “lasting impact” by “getting organized” and “planning ahead.” 

–You can appeal to younger generations’ desire to be financially savvy by referencing various ways a young donor can use techniques to make a difference in the causes they care about and tap into tax savings strategies at the same time. 

–You might also consider publishing stories about younger donors to your organization who’ve already structured their estate plans to make sure they’re taking care of your organization and others they care about. 

–Recognize that young people may start new jobs frequently, and this gives you an excellent opportunity to mention the benefits of naming your endowment fund at the community foundation as the beneficiary of an employer-sponsored 401(k) plan. 

As always, please reach out to the team at the community foundation. We are here to help you grow your endowment or reserve funds in whatever way we can to keep your mission strong and thriving for generations to come in our community.

Back to basics: An endowment refresher course

More often than not, boards of directors of nonprofit organizations are made up of business and community leaders who are not typically embedded in the day-to-day operations of charitable organizations. That’s why it’s important to focus on continuous learning opportunities for your board members, including (and especially) board members’ roles in maintaining your organization’s financial stability. 

An endowment is a key component of achieving that financial stability, and, if your organization has established its endowment or reserve fund at the community foundation, you’re likely in close touch with the team at the community foundation about keeping your board members informed about endowment-building strategies and successes. We are happy to help! 

At your next board meeting, consider reminding your directors about the reasons your donors make gifts to your organization’s endowment fund at the community foundation. Here’s a list of talking points to help get you started:

–The donor wants to leave a legacy to the community after the donor’s death so that the donor’s commitment to your mission continues beyond the donor’s lifetime.

–The donor wants to ensure that family members can experience the joy of giving for years to come by setting up long-term support for your organization, such as a gift to your endowment fund, or even a designated fund. at the community foundation, which include guidance for connection points for family members to stay involved.

–The donor wants to make the most of tax benefits associated with setting up a future gift to your organization, including avoiding capital gains tax, securing an income tax deduction up front, and even retaining a life income stream.

–The donor owns certain assets that are not suitable to leave to family members but would make ideal gifts to charity, especially by making a gift to your endowment fund at the community foundation.

Not only will a list like this help remind your board of directors that you have an endowment in the first place, but it also may trigger directors’ ideas for prospective endowment donors, and perhaps even inspire a board member to make a current gift or structure a planned gift to your endowment. 

We look forward to continuing to work together to grow your endowment and support your mission! 

FAQs to ring in the new year

A new year ushers in a fresh batch of resolutions and goals. It’s also a time when new questions pop onto the radar. That’s certainly the case even in these early days of 2024. Here are a few of the top questions we’re already hearing from our nonprofit partners, along with answers to help you navigate the year ahead.

“Okay, what’s this we’re hearing about the Corporate Transparency Act, and does our organization need to do anything about it?”

New laws known as the Corporate Transparency Act are now in effect. These provisions were enacted as part of the Anti-Money Laundering Act of 2020. The purpose of the law is to build a national registry of “beneficial owners” of businesses for which ownership information is not otherwise readily available (e.g., as is the case for public companies). The main purpose of the Act is to help prevent people from concealing their ownership in business entities that are used for money laundering, financing terrorism, tax fraud, and other illegal activities. The good news for charities is that 501(c)(3) organizations are exempt from the Act. 

What are a few fundraising trends we should be watching this year?

Not surprisingly, challenges with fundraising–in some cases reminiscent of the financial crisis era–are causing organizations and their boards of directors to stay laser-focused on development techniques that can break through the noise to cultivate new donors and more deeply engage current donors. Leveraging influencer strategies, instilling trust among your donors, and understanding how donor-advised funds work (give our team a call anytime!) are making the list of priorities for 2024 development plans. 

“How can we make sure we’re not violating donor intent?”

Donor intent issues have been in the news recently, and charities are asking what they can do to ensure that their organizations don’t run afoul of the rules. The bottom line here is that you need to be careful, especially when you are raising money for your endowment fund or setting up planned gifts. If a donor expresses interest in restricting a gift to your organization in any way, consider reaching out to the team at the community foundation for help. In many cases, we can work with you and the donor to establish a fund at the community foundation to achieve the donor’s intentions, secure resources to support your mission, and reduce the risk of misunderstandings and legal trouble.  

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

Direct mail, business owners as endowment donors, and a few cautions

Looks good on paper: Boost your endowment through a creative approach to direct mail

As a nonprofit, two constants you likely face are (1) more demand for your services and (2) rising operating costs. Fundraising can help satisfy the “more demand” part of this equation, but that typically requires more budget, which means more marketing and … well, you get the point.

The community foundation team is your partner! We are here to help you grow your endowment or reserve fund at the community foundation in both traditional and creative ways. That means we’re here to help you accept and administer gifts of complex assets, such as closely-held stock and real estate, as well as help your board understand the importance of an endowment and best practices for investment and spending policies to ensure that your mission stays strong for generations. 

In the spirit of celebrating traditional ways to grow your endowment, let’s revisit a tried-and-true fundraising method: direct mail. You’re well aware that in any type of sales, fundraising or otherwise, multiple touchpoints are typically required to make an impression–especially when your goal is to inspire a donor to support your endowment with a major or planned gift. Direct mail is a useful tactic to help diversify your multidimensional endowment-building fundraising program. 

To that end, you might be surprised to learn that many nonprofits are exploring ways to offset rising marketing and fundraising costs and increases in postal rates (even for nonprofits) by asking donors or vendors to sponsor an occasional or ongoing direct mail program to boost the nonprofit’s endowment. 

If this technique sparks your interest, here are a few potential in-kind supporters of your next direct mail campaign:

–A local supplier of paper—stationery and envelopes—who may have surplus paper stock remaining from another project or who can negotiate a favorable rate from a wholesaler or manufacturer. 

–A local print production or mail house that does the actual printing and mailing. Perhaps they can reduce pricing to a per-piece rate that satisfactorily covers their labor and overhead. 

–A generous donor who can cover your organization’s hard costs from their donor-advised fund at the community foundation. Though it may at first blush seem a reach, there likely are donors who will appreciate the intention and purposefulness behind your ask, knowing that the mailing’s results can help cover the increased costs that come with more demand for your overall services. And, some may appreciate a line or two of donor recognition on the piece, which can be subtle yet impactful. 

Please reach out to the community foundation to dig deeper into this idea. We are happy to strategize about how you can approach existing or prospective donors to creatively fund a direct mail campaign to build your endowment, which in turn will help fulfill your organization’s mission for years to come. 

How a business owner donor can help build your endowment

If you’ve not reviewed your donor lists recently to identify which donors own their own businesses, now may be a good time to do just that. Business owners make great donors not only because they understand how hard it is to build and grow an organization, but also because they have the ability in some situations to make endowment gifts of ownership shares in the business itself. 

Many business owners are already thinking about an exit strategy, even if they are years away from retirement or a sale. Well before your business owner donors start putting out feelers to potential acquirers, you and your team, with the help of the community foundation, may wish to talk with the donor about the benefits of contributing an ownership interest in their business to your organization’s endowment or reserve fund at the community foundation. 

Indeed, if a donor has owned a business for several years–or decades–the donor could be sitting on substantial unrealized capital gains thanks to the increasing value of the business over time. Upon a sale, capital gains tax will be triggered, reducing the proceeds the donor gets to keep. No capital gains tax will apply, however, to the sale of any portion of the business held by your organization’s endowment or reserve fund at the community foundation. Because of the favorable rules governing the taxation of charitable organizations, your organization’s fund is likely to net 100 cents on the dollar for the portion it owns. 

What’s more, you may be surprised by some donors’ desire and willingness to get creative with business succession planning that wraps a charitable component into a traditionally private business venture to preserve a public benefit. 

If you talk with a donor who owns a business and the donor likes the idea of potentially giving a portion of the business to your endowment, please reach out to the team at the community foundation. We can help you, the donor, and the donor’s advisors evaluate options and ultimately prepare for the transaction, including reminding advisors to secure a proper valuation for the charitable deduction at the time a portion of the business interest is contributed to the endowment or reserve fund. 

Next, caution your donor to be careful not to start negotiating for the company’s sale before they’ve talked with you and with their tax advisors. Otherwise, the well-meaning donor might get caught in the IRS’s step-transaction trap that is a risk with any pre-sale gift to charity of real estate, closely-held stock, or other alternative asset.    

Finally, keep in mind that gifting shares of a business could become an especially important strategy for more of your donors as the anticipated reduction (by half!) of the estate tax exemption scheduled for 2026 draws closer. 

Giving shares of a closely-held business to your organization’s endowment may initially sound complex to your donor. The team at the community foundation is here to help you, your donor, and the donor’s advisors navigate the charitable components of what could turn out to be a significant boost to your organization’s endowment and long-term financial stability.

Cautions that caught our attention

Nonprofit organizations and their board of directors are constantly navigating the many IRS rules and regulations that govern 501(c)(3) organizations–both their tax exempt status and their eligibility to receive tax-deductible contributions from taxpayers. In a dynamic environment where tax rulings and reform are constant, as well as the reality of ever-present general business risks affecting for-profits and nonprofits alike, vigilance is a must. 

Here are three important reminders to ensure that your organization maintains its good standing.  

Private inurement is a real no-no. The IRS takes the concept of “private inurement” very seriously in its regulation of nonprofits. As in, if you do it, you’re out. Most nonprofits are well aware that they will be putting their 501(c)(3) exempt status at risk if they play fast and loose with the rules for preventing undue benefit to a private person. After all, charities are established for the public good, and public good and private profit do not mix. We really like this article because it breaks down private inurement in a fun way (if that’s possible with tax law!) while still making the point that this issue is critical for all charitable organizations. 

Zero in on donor retention with planned giving. If it feels like donors are getting harder to come by, it’s not your imagination. Indeed, a recent study shows that the total number of donors in the United States fell by 10 percent, with a 3.1 percent decline in the number of major donors who give between $5,000 and $50,000. Certainly this trend is making it harder for your organization and other charities to meet fundraising goals, but you can do something about it. The study also indicated that donor retention rates fell by 3.5 percent. So, consider doubling down on efforts to retain your donors, perhaps by ensuring that every communication includes one or more mentions of your organization’s ongoing and long-term priorities and how planned giving can make a big difference. This could send a powerful signal to your donors that you view them as partners in your effort to improve the quality of life in our community, not just as supporters of annual budget needs. 

Tighten up volunteer protocols. As the population ages and volunteering among seniors stays strong, make sure your volunteer practices, guidelines, and risk management protocols are in ship shape. Volunteers can make a major positive difference in your organization’s ability to deliver on its mission, and you don’t want any risk slip-ups to stand in your way. 

A message from the community foundation

At the community foundation, we are dedicated to growing philanthropy in our region by engaging a broad and diverse donor base. We provide tools and services to help donors establish charitable giving plans and structures to maximize their ability to support the organizations they care about–you–now and for years to come.

A crucial component of our work is helping you and other nonprofit organizations grow your endowment funds and reserve funds by providing back office services to handle the administrative side of these funds so you can focus on your mission, fundraising, and engaging donors. For example:

–The team at the community foundation is adept at navigating the specific accounting standards that are unique to endowments, reserve funds, and donor-designated funds. 

–The community foundation team can help you establish investment policies and gift acceptance policies, making it easier for you to engage donors in productive fundraising discussions. 

–The community foundation is committed to offering investment options that empower your organization to exercise outstanding stewardship of the funds donors have entrusted to your board and staff to support your organization’s mission. 

–The community foundation’s staff is familiar with a wide range of planned giving structures and techniques and can serve as a sounding board for your fundraising efforts.

We look forward to working with you as 2023 draws to a close and as you pursue your mission in 2024 and all the months and years ahead. 

Thank you for your partnership.

Maximize matching gifts, why give, and rallying your donors

Don’t forget the match

Your organization and other nonprofits may still be reeling from the news a few months ago that charitable giving took a big hit in 2022. You’ve also no doubt been watching the markets rally off and on this year and kept your fingers crossed that inflation may have abated somewhat. Given these headwinds, most certainly your development team is laser-focused on cultivating individual and family donors for both year-end gifts as well as for long-term support, including encouraging donors to support your organization’s agency or endowment fund at the community foundation.

As you gear up for holiday season giving campaigns, don’t forget about corporate giving and matching gifts programs. Although corporate giving was down in 2022 when adjusted for inflation right along with the rest of giving, it’s nevertheless a category that should not be overlooked. Especially with corporate downsizing and some headquarters moving across state lines, you’ll want to keep the dialogue going with business leaders and associates of large employers in our region.

Ask individual donors whether their year-end gift might be eligible for a corporate match. Many employees are not even aware that their company offers a matching gifts program. Encourage your donors to investigate and tap into this benefit. Mentioning matching gifts programs in your letters, emails, and social posts will help ensure that your year-end communications aren’t inadvertently causing you to miss out on corporate and employee giving to your organization.

Given the overall decline in giving, the potential of matching gifts is perhaps, well, unmatched. Nearly 80 percent of the 26 million individuals working for a company with a matching gifts program are either unaware of their company’s match or lack specific information; 84 percent of donors are more likely to donate when a match is offered; and 33 percent would give more knowing that a gift would be matched and doubled. Yup. That’s a lot of potential to grow your annual fund or boost the assets in your endowment fund at the community foundation. We look forward to helping you grow!

Advocacy opportunity: It’s time to rally your donors

No doubt, you and your board members are watching to see what happens with theCharitable Act. If passed, this legislation would allow taxpayers to deduct a portion of their charitable contributions that exceed the standard deduction. 

Proposed in early 2023, the measure could help offset the decline in giving by 21 million households (!) following the 2017 increases to the standard deduction. The proposed law is based on a similar pandemic-era law permitting non-itemizers to deduct up to $300 more than the standard deduction for their gifts to a qualified charitable organization. Commonly known as the “universal charitable deduction,” the amount was doubled to $600 (per person) for 2021 … and then the law expired. 

Under the current proposal, single filers could potentially deduct up to $4,600 ($9,200 for joint filers) above the standard deduction, for starters, and deduct approximately one-third of the prevailing standard deduction amount in future years. Research indicates that most Americans support the expansion, and financial models cite a potential $17 billion increase in annual giving to charities. The measure has bipartisan support in the Senate. 

During the giving season, you might consider asking your donors to reach out to their elected officials in support of the legislation. A groundswell of grassroots support will go a long way to increasing the changes that the law is passed. 

Why give?

When individuals and families support the charities they care about, all boats rise. Encouraging philanthropic behavior can be a tough nut to crack when people don’t fully grasp the positive impact of the social sector on the quality of life in our community–and the impact on their own lives. As giving season gets into full swing, consider layering in messages to your donors that cause them to reflect on how the nonprofit sector (whether your organization or another nonprofit) has made a difference for them personally.

For example, you could include an article containing the following (or similar) message points in your next newsletter:

Many of you have your own stories about how philanthropy has touched your lives–on the receiving end.

–Your child’s life was saved because of a cutting-edge rare disease treatment that would not have been invented but for academic research supported by charitable dollars.
–You might not have recovered from a rough childhood without the help of a nonprofit social service agency that provided much-needed counseling.
–Your graphic design business wouldn’t have done nearly as well if charitable dollars hadn’t supported the local arts district to incubate talent.
–Your software start up would never have gotten off the ground if you hadn’t been part of a nonprofit mentorship program to teach you how to scale.
–You wouldn’t have your dog if a nonprofit rescue shelter hadn’t saved him from being euthanized.
–You would have lost valuable work days if a nonprofit hospice organization hadn’t been there to help take care of your dying parent.    

Philanthropy matters. Every gift counts. We’re honored to be a part of your family’s holiday giving traditions.

You’ll tailor the words to your own donor audience, but you get the idea. The point here is that you are making an emotional connection and inspiring your donors to reflect on the value charitable giving has brought to their own lives. That inspiration, in turn, can be channeled into support for your organization’s annual giving campaign or endowment fund at the community foundation.

Please reach out anytime you’d like to brainstorm messaging to donors during the holidays. We are happy to be a sounding board.

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

How to build your endowment-specific fundraising stories

FEATURED PLAYBOOK

Building your endowment-specific fundraising stories

Fundraising asks can be cast in many forms, including direct mail, phone solicitations, and digital advertising to name a few. These asks are often of the quick-hit variety and yield gifts that help keep your organization's daily operations running. 

But to accomplish bigger goals and supplement your routine efforts, an endowment is absolutely critical. Formalizing your endowment, especially through establishing a fund at the community foundation, helps your organization attract donors’ investable gifts that can produce sustainable returns while the principal or endowed amount remains intact. 

Bigger gifts, of course, require bigger efforts, and that’s where the power of stories and storytelling come in.  

By mastering your organization's stories—and knowing the type of story your audience or prospect will be receptive to—you can connect with donors on an emotional level to achieve engagement and ultimately gain their more significant support, including major gifts and bequests to your endowment. This type of strategy is crucial to grow your endowment and ensure that your mission stays strong for generations to come. 

To get started, you will need to employ an effective blend of storytelling and insight to engage your audience.

Let’s first consider your audience. Surely, you’ll know their background and what might motivate them. It’s even better if you know their values and lifestyle. 

Once equipped, employ emotional intelligence through empathy, curiosity, asking open-ended questions, and doing more listening than talking. Here are a few tips: 

–If you suspect that someone is motivated by ideals and principles, and are the type to easily discern right from wrong (this person often speaks of what “should” be), then you can supplement the story with data.

–If they’re status or achievement oriented, you can incorporate their role in the ultimate outcome or how that will appear to others. 

–If they’re emotionally driven and someone who appears to make gut decisions, then emphasize the personal impacts their support will have on others. 

Next, start building the stories. Here are types of stories you can use in your fundraising efforts to build your endowment:

–The so-called “founder’s story” is the organizational “why” or purpose, telling the problem to be solved, based on an event. (For example: “After his 33-year-old brother passed away from brain tumor complications, Matt wanted to fund brain cancer research. So, he started a nonprofit 20 years ago and over the years has raised more than $20 million for research, mostly through 5K events held annually in nearly 30 markets.)

--The “purpose” story conveys the continuous impact of the organization (For example: “Every year we make grants to fund clinical trials and inspire hope in patients, families, and the brain tumor community.”)

--The “constituent” or “customer” story is often a testimonial. (For example: “Bob’s health is ‘holding steady’ due to a treatment that our organization’s grants helped sponsor.”)

--The “connective” story is often fictional and relates to the future. (For example: “With continued support and effort, we’ll continue to make progress and ease the burden on patients and families.”)

After you’ve honed a few stories, you’re ready for the preparation stage. Classic communications constructs, or structures, can help you kickstart, prepare or supplement the stories you’ll tell. Here are a few options: 

Under a model that’s sometimes called the “What?/So what?/Now what?” arrangement: 

--What? is the key idea or argument to be made.

--So what? is the relevance of the idea or argument to the audience.

--Now what? is the thoughts, feelings, and actions you wish your audience to hold or enact.

Another method is known as “And/But/Therefore,” which logically leads an audience through a setup >> problem >> resolution sequence. For example: “It’s been 20 years that we’ve been raising money for brain cancer research and we have much to celebrate. But far too many people—more than 18,000—died from brain tumors last year. Therefore, more funding is needed to keep brain tumor patients living longer and to reduce the impacts to families.”

To raise endowment-level funding, use authenticity-infused storytelling that boosts your organization’s everyday tactics and semi-annual campaigns. Then, when you’re ready, start to layer in the various options for complex giving and planned giving, since many endowment gifts will come in the form of estate gifts and bequests. Be sure to always remind your audience of potential endowment donors that your organization–through its endowment fund held at the community foundation–can accept gifts in many forms, including:

–Gifts of life insurance

–Retirement plan beneficiary designations

–Qualified Charitable Distributions from an IRA

–Gifts of closely-held stock

–Gifts of real estate

–Charitable remainder trusts

–Charitable gift annuities

–Highly-appreciated stock

Finally, make sure you are constantly reinforcing basic tax principles that will further encourage your donors to make large gifts to your endowment, such as:

–IRA and retirement plan beneficiary designations to an endowment fund at the community foundation allow the donor’s heirs to avoid both income and estate tax on these assets

–Gifts of highly-appreciated stock or real estate to a charity during lifetime can avoid capital gains tax and also result in an income tax deduction

–Assets flowing to charity through a bequest in a will or trust will not be subject to estate taxes thanks to the charitable deduction

Please reach out to the community foundation anytime. We are here to help you successfully build your endowment fund to ensure that your organization can continue to improve the quality of life in our community for years to come. It is our honor to be your partner. 

Permanent “universal charitable deduction”?

You’re likely watching what’s going on with the Charitable Act, which would make permanent the “universal charitable deduction,” which expanded the ability to deduct charitable contributions to taxpayers who do not itemize deductions. This temporary $300 charitable deduction was passed by Congress in March 2020, and it was expanded in December 2020 to $600 for joint married filers and extended through 2021. If the “universal charitable deduction” were to become permanent, research estimates that more than $17 billion in additional annual giving would be mobilized. Many nonprofits are reaching out to legislators in support of the Charitable Act and even encouraging their donors to reach out, too.

In case you missed it: Legal developments affecting nonprofits

2023 has been a busy year! If you’ve found yourself buried in the day-to-day work of fulfilling your organization’s mission and engaging donors, you might have had a hard time keeping up with legal and policy developments affecting your donors and your organization. Not to worry; this outstanding, concise summary is an excellent way to catch up. We were glad to run across it and happy to pass it along to you!  

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

Key messages to encourage charitable giving

Key messages to encourage charitable giving

The news about charitable giving’s decline in 2022 is everywhere. Your donors are no doubt seeing it, too! Many of you have reached out to the community foundation for recommended strategies to increase giving–and even to avoid further declines. 

To help you navigate these challenging times, we are offering a few suggestions for key messages you can deploy in your communications this fall. You’ll note that these messages are designed to encourage charitable giving in general, and then you can follow up with your own messages about your programs and the worthiness of your mission. Indeed, if people are not interested in giving in the first place, it won’t matter what you say about the opportunities to support your organization. 

Consider the following message points:

–Philanthropy means “love of humanity”—and, according to at least one dictionary, “philanthropy” refers to “acts that benefit both the giver and the receiver.” This is surprising to some people who have been taught “it’s better to give than to receive.” 

–Somehow we have popularized the idea that giving should “hurt.” But that is not what the research says. Consider just a few examples:  

–Research on the connection between volunteering and hypertension revealed that four hours of volunteering a week reduced the risk of high blood pressure–by 40%--in adults over 50. 

–Another study indicates that giving reduces cortisol levels. 

–Yet another study found a link between unselfishness and a lower risk of early death because “helping others” reduces stress-related mortality. 

–Research has linked doing something good for someone else to an increase in endorphins. 

–An altruistic attitude in the workplace makes you more productive and less likely to quit. 

–Doing good and being grateful helps you sleep better at night. 

–People who do just one good thing a week for someone else actually become happier over time. 

–And this actually does matter. The gifts Americans give to charity every year provide critical support for more than a million organizations that are helping sustain the quality of life in our communities. Philanthropy equates to 2% of GDP–that’s about the same as the home improvement industry. 

–Still, only about half of Americans give to charity in a given year. And charitable giving was down in 2022 for only the fourth time in 40 years. 

–Trends like these are concerning given that the United States has historically been at or near the top of the most charitable countries. Additionally, many community needs are increasing, whether due to inflation that makes food less affordable or a hot summer that has strained the health of so many. 

–Some people are simply not aware of philanthropy’s role as a catalyst for improving quality of life. They are not aware that anyone with a willingness to give can be a philanthropist. Whether you’re giving $25, $2500, or $25,000, you’re making a difference, teaching your children charitable values, and improving your own well-being, too. Celebrate the good you are doing. However much, however little. It all counts. Your gifts count. 

–In so many ways, philanthropy creates the margin of excellence that helps communities, families, and individuals thrive. 

–Peter Drucker wrote, “Virtually every important improvement in the quality of American life has roots in the nonprofit sector, from abolition of slavery, child labor and racial discrimination to advances in medicine, education and technology.”

The community foundation is here to help. We want your organization to thrive! Please reach out as you field questions from donors about making gifts of complex assets such as real estate or large blocks of stock, setting up charitable trusts, or establishing planned giving vehicles to support your mission for the long term. The community foundation can serve as your back office to help you secure large or complicated gifts to your endowment or reserve fund at the community foundation.

How planned giving helps you plan for your organization’s future 

You and your team are well aware that bequests to your organization can make a huge difference to your bottom line. With the average size of a bequest reported to total more than $78,000, it’s easy to see how the numbers can add up quickly.

Still, focusing on planned giving is hard. You and your team are busy with annual campaigns, fundraising events, and major gifts. Fitting in a conversation about planned gifts sometimes seems impossible! 

The key is to break it down and make it easy. Here are three tips to help streamline your planned giving efforts.

–First, start by taking a look at all of your marketing materials to be sure you have at least mentioned the opportunity for planned giving somewhere on each marketing asset. Make sure your website mentions your endowment fund at the community foundation. The same goes for printed materials and one-pagers. Similarly, every email newsletter to your donor base should include at least a very small section at the bottom to remind donors that they can leave a meaningful legacy to your organization through an endowment gift in their will or trust. Another key marketing piece is the annual appeal letter. Even though you are asking for a current gift, don’t forget to mention that you’re always open to a discussion about endowment gifts through a bequest or charitable remainder trust. 

–Second, talk with your major gift donors about the importance of your endowment operating reserves to the organization’s ability to weather the ups and downs of the market and community needs. Sometimes donors don’t think about the “business” side of nonprofits. 

–Third, share stories with donors about other people (with their permission, of course) who have given endowment gifts and how those gifts have made a significant difference in your organization’s ability to serve its constituents. Keep an eye out for eye-catching mainstream news articles about charitable giving that you can post on your social media channels or mention to donors in a meeting. 

We look forward to working with you to help you grow your endowment! The community foundation is committed to your success and to philanthropy’s ability to improve the quality of life in our region through the outstanding nonprofit organizations delivering services to people who need it most. Thank you for all you do. 

Understanding the personality types of your donors

As you talk with your donors about the possibility of making a gift to your endowment fund at the community foundation, it’s helpful to take a step back and consider your approach. Each donor’s reasons for giving to your endowment fund will be a little different, but in general, it is helpful to categorize donor “personalities” into major groups.

There are many tools and techniques on the market today to help you segment your donors according to motivation and behavior. The net-net is that there does seem to be commonality among most segmentation methods that boils down to three types of charitable givers. Consider these major categories as you plan for your one-on-one meetings with potential major gift or planned giving donors:

–“Investors” prefer to engage in charitable activities that are independent and don’t necessarily require scheduling dedicated time or working directly with others. Investors sometimes feel they have more money than time and would prefer to write a check or purchase a product that supports a cause.

–“Connectors” love to engage in charitable activities that involve the opportunity to get together with other people. These are people who enjoy going to community events or even promoting their favorite causes on social media and getting their friends and family to join them in putting dollars behind a cause. 

–“Activators” are passionate about participating in the one or two causes they care most about, and tend to focus on “changing the world” and solving a very specific issue. Activators like to be able to see the difference they are making, and many will roll up their sleeves to get involved alongside their financial contributions.

Whatever your donors’ charitable giving personality types, the community foundation is here to help. Reach out to strategize with our team about that next big gift to your endowment fund. We’d love to talk about how you can land it!

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