Disaster giving: Perspectives for your clients

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Disaster giving: Perspectives for your clients

Both the recent one-year anniversary of the start of the Ukraine conflict and the earthquake that has devastated Turkey and Syria are causing more and more people to explore ways they can help. In an era of abundant giving methods and (sadly) potential fraud, The Community Foundation is a source of reliability and expediency to help your clients act on their charitable instincts.

Disaster giving frequently takes the form of a wide-ranging response, given that disasters can occur suddenly or over time, domestically and internationally. The damage can be heart-wrenching, such as loss of life and property destruction, or health-related, like Covid that has swept the globe. The urge to help is often immediate.

There are many viable options for your clients to activate their generosity toward relief efforts, but there are also caveats. While global disaster giving is important, it is also important for clients to stay tuned to the most critical needs right here in our community. Although these critical needs do not always take the form of a time-bound disaster, the impact of ongoing crises such as low access to health care and poverty can be quite damaging over the long term.

 

What is disaster giving?

Although challenging to pinpoint holistically, what’s typically referred to as “disaster giving” is perhaps best thought of as a subset of what has been a robust philanthropic climate in recent years. In 2021, Americans’ charitable giving reported by Giving USA was up 4% over 2020 to nearly $485 billion. Certainly the strong percentage increases in the categories of Human Service, Public-Society Benefit (up 23%, the second-highest percentage gain) and Health all likely involved Covid-related concerns and sentiments.

An emerging area of challenge may be annual giving to international affairs, which declined approximately 5% from 2019 to 2021, finishing at $27.4 billion. Of course, these figures could change for 2022 when accounting for aid to Ukraine (and in future reports, to Turkey and Syria). As context, through February 2023, U.S. government aid to Ukraine has exceeded $75 billion, including 40% for humanitarian and financial purposes and the remainder for the military. Philanthropy also contributed to humanitarian needs; the 10 largest private donations, led by Microsoft, totaled more than $1.2 billion.

 

How The Community Foundation can help

The Community Foundation can help your clients fulfill their giving instincts by acting as a secure, knowledgeable, and trustworthy facilitator. Our team personally knows–and regularly vets–hundreds of charities every year, and we can help you and your clients navigate the options for both local and international giving.

Frequently, a donor-advised fund at The Community Foundation will be a suitable giving vehicle for your clients. Our team can help connect your clients to the causes they care about by identifying the most effective organizations addressing the critical needs both locally and globally in your clients’ areas of interest. Working with The Community Foundation also helps your clients secure robust tax planning benefits that can be missed when a client gives to charity on an impulse.

Finally, The Community Foundation can help your clients steer clear of scams perpetrated via familiar-looking but sham websites and QR codes, both of which proliferate during highly emotional or threatening times surrounding a disaster. While your clients may be tempted to make a gift online or by phone out of compassion in response to a verbal solicitation or a news story, remind them that The Community Foundation has much to offer—safely, securely and advantageously—when it’s time to make impactful humanitarian gifts both here and abroad.

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

In the news: Billionaire givers, QCDs, and celebrity inspiration

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In the news: Billionaire givers, QCDs, and celebrity inspiration

This month, we’re offering three suggestions for deeper reading on current topics in charitable giving.

Bring out your inner academic with this blog post published by the Lilly Family School of Philanthropy at Indiana University, especially if you’re interested in the latest chatter and variety of opinions on so-called “billionaire philanthropy.”

If you’re contemplating charitable giving in your retirement years, read this Kiplinger article to brush up on the Qualified Charitable Distribution (QCD), recently enhanced by late-2022 legislation. We totally understand that the first (and second, and third) time you read about QCDs, your eyes may glaze over, but the concept really is worth understanding. Contact the team at The Community Foundation. We are happy to break it down for you!

Finally, it can be reassuring to see high-profile individuals (Idris and Sabrina Dhowre Elba, for example) speaking up about their philanthropic values. In a world where so much needs to be done to improve lives and respect humanity, role models offer hope that philanthropy and community involvement can be important factors in progress.

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

In case you missed it: Three tax tips worth smiling about

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In case you missed it: Three tax tips worth smiling about

Energy incentive extends to nonprofit organizations

Nonprofits and other exempt entities are often left out of discussions when new tax incentives are proposed in Congress, primarily (and logically) because these organizations don’t pay tax. Fortunately, nonprofits are not left out of a recently enhanced tax provision known as the 179D deduction, which is intended to encourage incorporating energy efficiency measures into new or renovated buildings. While a nonprofit itself can’t use the deduction, of course, because it does not pay taxes, this incentive is still valuable because the nonprofit can transfer the deduction to the architect or engineer on the project who then uses the deduction.

The takeaway here? If you represent nonprofit executives or board members at organizations that have undertaken capital projects (universities, for example), you’ll want to be aware of this potential benefit, in addition to keeping up in general on sometimes tricky tax rules related to exempt entities.

This again? More crypto crack down

The ups and downs (and downs) of cryptocurrency continue! If your clients are involved in the cryptocurrency market, and especially if they are contemplating giving these assets to support charitable endeavors, be aware that the IRS continues to formalize its guidance and requirements for a qualified appraisal. Recently, the IRS confirmed that an appraisal is required to claim a deduction of $5,000 or above for a gift of cryptocurrency.

A must-know: Reviewing the QCD

You’ll recall the buzz at the end of 2022 when Congress passed sweeping omnibus legislation that included a version of the long-awaited Legacy IRA provisions that expand a tool called the Qualified Charitable Distribution, or QCD. A QCD is a financially-savvy way for your clients to support the charities they care about.

As a reminder, if your client has reached the age of 70 ½, the client may be eligible to make annual distributions of up to $100,000 from IRAs directly to an unrestricted or field-of-interest fund at the community foundation or other qualifying public charity. QCD transfers count toward satisfying clients’ Required Minimum Distributions and therefore avoid the income tax on those funds. Plus, distributed assets are no longer part of a client’s estate at death, which avoids estate taxes, too. The new law expands the QCD rules to allow for a one-time, $50,000 QCD to a split-interest vehicle, such as a charitable gift annuity or charitable remainder trust, as well as indexing the QCD cap for inflation in future years.

Punchlist: What the IRS may be up to in 2023

Advisors of philanthropic clients are keeping an eye on the IRS’s list of priorities for the fiscal year, which includes a focus on several sections of the Internal Revenue Code that impact charitable giving. The team at The Community Foundation is also watching closely, and, as always, we’ll keep you posted as issues bubble up that may lead to potential charitable giving-related legislation.

 

The team at The Community Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients. This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.  

It’s not too early for spring cleaning: Make this the year to help clients get organized

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It’s not too early for spring cleaning: Make this the year to help clients get organized

If you’re already dreading asking your clients to pull together their receipts and other documents for 2022 tax filings, this may be a good time to take proactive steps to avoid being in this same spot next year.

When it comes to charitable giving, your clients may find that organizing their giving through one or more funds at The Community Foundation will make their lives easier. Establishing a fund at The Community Foundation is an easy way to organize and track charitable giving. A client can take advantage of this feature by making a single, tax-deductible contribution each year to The Community Foundation, to be added to their donor-advised, field of interest, or other type of fund.

An especially tax-savvy technique is for the client to make this contribution using highly-appreciated stock. After the stock has been transferred to The Community Foundation, the proceeds from The Foundation’s sale of the stock–free from capital gains tax–are then used for distributions to support your client’s favorite charities. No matter how many different charities receive support from the fund, the client still has just one receipt to keep track of charitable donations for income tax deduction purposes.

The subject of gathering up tax receipts for charitable donations is often a prompt for clients to get organized with the rest of their financial lives, too. At the very least, the subject of charitable giving can pave the way for a discussion about the basics of estate planning. Many clients are simply not aware of the meaning and importance of critical elements, such as:

–The difference between a will and a living trust and how charitable wishes fit in to these documents

–Why it’s critical to be intentional about how each and every asset is titled so that the assets actually pass as intended (which requires making a comprehensive list of assets in the first place)

–The dangers of hurriedly filling out life insurance and retirement plan beneficiary designations and why these documents are absolutely critical components of a financial, estate, and charitable plan

–Reasons for having both a “living will” and a durable power of attorney, both of which (or the lack thereof) have a major impact in the event of incapacity

–A reminder to make sure someone in the family knows where to find a list of logins and passwords

Charitable planning is one of many steps in your work with clients, but it can be an excellent catalyst for helping clients understand why they need that comprehensive estate and financial plan you’ve been encouraging them to complete. The team at The Community Foundation is happy to help with the charitable components of your service to clients. We look forward to making it easier for you to address all of your clients’ needs.

The team at The Community Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients.

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

Community foundations: Unparalleled resources

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Community foundations: Unparalleled resources for local giving with major impact 

As economic times get tough, more and more people are asking how they can make the biggest difference right in their own backyard. Indeed, local giving is a topic that has even made its way into the opinions of the mainstream media, causing many charitably-inclined people to pay more attention to the impact their dollars are having on the causes they love.

Sometimes the greatest needs really are right here at home. As donors explore charitable giving opportunities and receive requests for funding from charities near and far, it can be helpful to read first-hand accounts of why other philanthropists have been so inspired by uncovering local needs that they simply were not aware of.

Over the years, researchers have consistently validated the important emotional elements of giving to familiar and nearby organizations to foster the rewarding sense of connection that is such an important driver of repeat philanthropic behaviors. Today’s donors want to be able to actually see the results of charitable investments.

Here are three suggestions for anyone who wants to get started on a “give local” journey.

First, scan the local news. Many people are very accustomed to scrolling the news feeds on phones and catching the national and international headlines. Local news can be hard to find, but those outlets do still exist! In particular, many television stations’ websites include a local news tab. Spend five minutes scrolling through the local news for three days in a row, and you might be surprised at how much you learn about your own community. Make a mental note of issues that raise your eyebrows or make you ask yourself “I hope someone is doing something about that.”

Second, with this research in hand, run a few quick Google searches with the key words you’ve identified, along with the terms “nonprofit,” “charity,” and the name of your town or city. Sometimes these searches will illuminate organizations you might have heard of or even be involved with already. At the very least, you will begin to frame your own description of the local causes you care about.

Third, reach out to the team at The Community Foundation. The Community Foundation’s mission is to improve the quality of life in our region, and that is possible through the work of nonprofit organizations and people like you who support them. The Community Foundation team will know which nonprofits are addressing the issues you’d like to learn more about and can provide advice about how your charitable dollar can make the greatest possible difference.

The Community Foundation is unparalleled in its ability to be flexible and responsive, providing outstanding, personal service designed around your needs while at the same time working closely with legal, tax, and wealth advisors to ensure that you are maximizing the financial elements of your charitable giving plan.

We look forward to working with you to make as big a difference as possible in the causes you love and make our community an even better place for everyone.

Ring in the new year with new charitable giving tax laws

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Ring in the new year with new charitable giving tax laws

If you’ve been tracking federal legislation, you’re likely aware that on December 29, 2022, President Biden signed a $1.65 trillion-dollar omnibus spending bill known as the Consolidated Appropriations Act of 2023 (“CAA”).

A component of this legislation, known as “SECURE 2.0,” includes many provisions that make it easier for people to build retirement savings, ranging from required enrollment in employer-sponsored 401(k) plans to larger “catch up” contributions to enable workers nearing retirement to add more to their retirement accounts each year.

Three of the new law’s provisions are particularly interesting to people who give to charities, especially related to a planning tool called the Qualified Charitable Distribution (QCD). Many charitable individuals who are 70½ or older have already been taking advantage of the QCD. This technique allows a taxpayer to make an annual transfer of up to $100,000 from an IRA to a qualifying public charity such as a field-of-interest fund, scholarship fund, or unrestricted fund at The Community Foundation. The taxpayer does not need to pay income tax on the distribution and, for taxpayers who must take RMDs from their retirement plans, the QCD counts toward that year’s RMD.

Here’s what’s new, thanks to SECURE 2.0:

More time to accumulate retirement assets

Under the new law, the required minimum distribution (RMD) age (previously 72) increased to 73 on January 1, 2023. RMDs are the IRS-mandated distributions from qualified retirement plans. The RMD age will further increase to 75 beginning on January 1, 2033. This provision is a boost to retirees’ financial plans and may mean more dollars available for charitable giving, especially in the form of a tax-savvy beneficiary designation of retirement plans to charity.

Note that the age for QCD eligibility is still 70½, and, still, donor-advised funds are not eligible recipients of a QCD.

“Legacy IRA” opportunity

SECURE 2.0 makes QCDs even more attractive because taxpayers may now make a one-time $50,000 QCD transfer to a charitable remainder trust (CRT) or other split-interest gift such as a charitable gift annuity (CGA). These components of the new law are called the “Legacy IRA” provisions.

Bigger QCDs

The annual per-taxpayer $100,000 QCD cap is now slated to be indexed for inflation, which will allow taxpayers to give even more from their IRAs directly to charity.

The team at TCFHR would be happy to talk with you about how the new laws can enhance your charitable giving plans. Reach out anytime!

Call us at 540-432-3863 or email Kristin Coleman at [email protected].

 

Invest in impact built on trust

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Invest in impact built on trust

If you’ve supported a particular charitable organization for many years, and perhaps even served on its board of directors, you are likely familiar with some basic concepts of “trust-based philanthropy,” even if you didn’t know that’s what it is called.

As a devoted supporter of the nonprofit organizations you love, you know that an organization’s chances of success are greatest when the organization’s leadership and talented staff are able to deploy the organization’s resources in the ways they believe will best fulfill the mission. This, in turn, sometimes translates into the organization placing a high value on what are called “unrestricted” donations, meaning that the organization can use the dollars in whatever way it sees fit. An example of this, grossly oversimplified to illustrate the point, is when a donor writes a check to a food pantry and instructs that the money be used to purchase canned goods, but the food pantry’s leadership knows that what they really need at the moment is to fix the roof or hire a staff member to help with sorting food before the pantry will be in a position to accept more canned goods.

Unrestricted gifts are only one component of the overall trust-based philanthropy concept. The broader model is designed to increase the impact of philanthropy by encouraging collaboration, communication, and information-sharing among all stakeholders, including not only donors and the nonprofits they support, but also the community as a whole.

Trust-based philanthropy has become somewhat of an academic phenomenon, and it is not without some controversy. Still, the fundamentals make sense, such as listening to community stakeholders and lifting some of the administrative burdens on nonprofit organizations who receive funding.

Trust-based philanthropy is nothing new to TCFHR. In many ways, TCFHR’s mission already embodies these principles: Deeply understanding the needs of the community, building strong relationships across all stakeholders, helping donors maximize the value and impact of their charitable giving, establishing permanent support for the community to address whatever needs may arise, connecting donors more deeply to the causes they care about through personal service and education, and leading on critical community issues.

We look forward to working with you as you get even more involved with the causes you care about.

Call us at 540-432-3863 or email Kristin Coleman at [email protected].

 

Intentional philanthropy is critical in a downturn

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Intentional philanthropy is critical in a downturn

Your family may be among those who are taking their charitable giving budgets more seriously this year, given the stock market’s challenges, rising interest rates, economic concerns, and anticipated cash crunches.

At the same time, not surprisingly, community needs tend to rise during uncertain economic times. As 2023 gets into full swing, inflation, housing challenges, and economic uncertainty are pressuring people who are already vulnerable due to financial insecurity, illness, or disability. Nonprofit organizations serving these populations need additional resources—and even more support from charitable giving—to meet the escalating demands.

 

A budget has benefits

Here are a few steps to consider in building a 2023 budget for charitable donations that can help you continue to support your favorite causes and remain fiscally cautious.

–Review all your charitable donations from the last three years and compile totals for each organization. This can be an easy exercise for people who use a donor-advised fund at The Community Foundation because the data can typically be pulled directly from TCFHR’s donor portal or requested from TCFHR’s team.

–Carefully review the list of organizations you’ve supported over the last three years. Regardless of your donation levels, which are the most important to you? Are you serving on the board of directors of any of these organizations? Do you regularly volunteer at any of them? Is there a personal connection?

–Are there any organizations on your list that you supported primarily because the organization was raising money for a capital campaign, or because you were helping out a friend who is involved with that organization? These may be organizations to possibly put on hold and then revisit supporting in future years when the economy picks back up.

–Add up your total giving over the last three years and then divide it by three to get your average. Is that number doable this year? If not, reduce it to a level that fits within your financial situation to arrive at your tentative 2023 giving budget. Remember to consider the value of publicly-traded stock gifts you could make this year if preserving cash is a priority.

–Consider whether to keep certain organizations at historic levels of giving, such as those you’re personally involved with. Or on the flip side, you may decide to temporarily reduce your level of giving to organizations for which you are providing other types of support, including volunteering or board service.

–Review the list to see if there are any organizations you’ve supported that you’d like to learn more about. The team at TCFHR is extremely knowledgeable about nonprofits in our region and would be happy to provide information on how a particular organization spends its money and how it measures impact.

–Finally, do the best you can to set targets for the amount of support you’d like to provide to each organization—and perhaps even set targets for the timing of your gifts. You can change these targets at any time, of course. The point here is that the planning and budgeting process is a great way to create more intentionality around your giving. Intentional giving is not only more rewarding for you but is also likely to increase your level of engagement with the recipient charities and enhance your understanding of how dollars are being deployed to meet the mission. This, in turn, helps your favorite organizations get better at carrying out their programs and serving those who rely on their work.

 

Consider taking a year-long view of your giving 

As compelling as year-end giving may be, perhaps even more compelling are the reasons for planning and launching a charitable giving strategy early in the year, starting with January. Benefits of a year-long giving strategy include:

–Helping nonprofit organizations meet their budgets all year long, which can save them from worrying as much about whether constituents’ ongoing needs can be addressed.

–Leveraging employer matching gifts programs early in the year when dollars are available and there is plenty of time to process the paperwork.

–Increasing predictability of cash flow and therefore being proactive, not reactive, in supporting the causes you love. You might even consider setting up automatic contributions to a donor-advised or other type of fund at TCFHR by working with your financial advisor to formalize this component as part of your ongoing plan.

–Taking advantage of plenty of time to learn more about the charities you plan to support so that you can be an even more informed and impactful donor, including fully utilizing TCFHR’s expertise and resources.

–Giving yourself time to include children and grandchildren in the charitable giving conversation as a learning experience for the whole family.

–If you are over 70 ½, being able to avoid the year-end scramble to process a Qualified Charitable Distribution (QCD) from your IRA directly to an eligible charity by executing a QCD in the first quarter.

–Leaving enough time to explore options for more complex giving tools that might provide tax benefits as well as meet your charitable goals, rather than waiting until the last minute when it may be hard to get on the calendars of your attorney, financial advisor, and accountant to map out the best strategy for your situation.

As always, TCFHR is here to help. Please reach out to our team to learn more about how you can make the biggest difference with your charitable dollars, including how you can use an existing or new donor-advised fund, or other type of fund, to carry out your 2023 charitable wishes. You’ll be glad you planned ahead to help your favorite organizations fulfill their missions throughout the entire year, as well as maximizing your own tax benefits and avoiding December’s crunch time.

Call us at 540-432-3863 or email Kristin Coleman at [email protected].

 

The gift of giving, community foundation style

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The gift of giving, community foundation style

The Community Foundation can work with you to create and package a gift of a community foundation fund, pre-established and pre-funded, personalized in the name of your gift recipient. Your gift recipient can be a partner, child, grandchild, colleague, or friend. Frequently taking the form of a donor-advised fund, a gift of a fund empowers the recipient to experience the benefits of working with The Community Foundation to support their favorite causes.

Whether you are a current fundholder at The Community Foundation or just considering it, the team at The Community Foundation can help you create a gift fund from soup to nuts, including granting the recipient online access to recommend grants from their new fund. You can literally put a bow on the carefully rolled up fund document, sign a card listing the login URL and credentials to view the fund online, and present the package to the child, grandchild, friend or colleague as a gift. Both giver and receiver will love the experience.

When the recipient is a child or grandchild, educational opportunities are a natural follow up. For example, you can work with The Community Foundation to find resources on The Community Foundation’s website and structure a family giving session over Zoom where participants learn the basics of charitable giving and are introduced to key issues facing communities in our region and across the country. This type of experience helps the family’s values stay intact across generations.

We look forward to hearing from you soon about creating a gift of giving for someone you love! 

Call us at 540-432-3863 or email Kristin Coleman at [email protected].

 

So long, 2022: Important charitable tax planning reminders as the year winds down

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So long, 2022: Important charitable tax planning reminders as the year winds down

Now is the time to share important reminders with your clients about year-end gifts. Time is indeed of the essence!

Gifts of appreciated stock still shine

Giving in a roller coaster market may continue to be a real concern for many of your philanthropic clients, but remember, not all stocks are down. Gifts of appreciated stock to a donor-advised fund or other type of fund at The Community Foundation is still one of the most tax-savvy ways to support favorite charitable causes because capital gains tax can be avoided. And of course, a stock market rally can present timely opportunities.

Donor-advised funds help both the donor and the donor’s favorite nonprofits

Grantmaking from donor-advised funds (DAFs) continues to rise, especially as donors and their advisors pay increasing attention to the ways a donor-advised fund can help with tax planning and, importantly, keep a donor’s giving levels consistent even in lower income years. Reach out to The Community Foundation to learn more about how “bunching” at year end can maximize clients’ tax benefits, and at the same time ensure that nonprofits are supported as demands on their missions continue to grow in choppy economic waters.

Year-end giving deadlines are firm

Watch the calendar closely! Year-end can sneak up on all of us, and it’s important not to miss key deadlines for accomplishing your clients’ charitable goals. Please reach out to our team to find out when certain transactions must occur to be completed during this tax year, including checks to a fund at The Community Foundation. Gifts of marketable securities also need to be fully transferred by December 31, so please urge clients to contact us in plenty of time for our team to process and receive the transfer.

The team at The Community Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients.

Questions? Call us at 540-432-3863 or email Kristin Coleman at [email protected].