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Summer reading that’s worth a forward

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Summer reading that’s worth a forward

Every week, the team at The Community Foundation works with a wide range of charitably-minded individuals and families who are either already working with The Community Foundation or are considering establishing a donor-advised or other type of fund to organize their giving. We also talk with attorneys, accountants, and financial advisors as they work alongside charitably-minded clients. Indeed, many advisors are telling us that they’re taking advantage of summer’s slower pace to get a jump on 2024 tax planning and estate plan updates.

As you work with your advisors over the next few months, be sure to let them know that The Community Foundation can serve as the hub of your family’s philanthropy by administering a wide range of charitable giving vehicles, including:

–Donor-advised funds, which may be a better fit for families than a private foundation

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

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

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

 

Along these lines, some of you have requested that we provide a reading list to pass along to your advisors to help them stay up-to-date on legal and tax issues impacting charitable giving. Here are a few suggestions you could forward to your advisors (or simply forward this email):

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

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

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

 

As always, please let us know if you’d like our team to be part of a conversation with your advisors. We welcome the opportunity to serve as the go-to charitable giving resource as you build a comprehensive financial and estate plan that includes philanthropy.

Thank you for the opportunity to work together! Give us a call at 540-432-3863.

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

Philanthropy: It’s not one size fits all

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Philanthropy: It’s not one size fits all

Charitable giving traditions are a big part of many peoples’ lives. The ways philanthropic values translate into action and behavior, however, vary widely from person to person. And that’s a good thing! When you align your charitable giving activities with your own personality and the ways you like to do good, you’ll enjoy it a lot more and as a result, you’ll be more likely to get even more involved with your favorite causes.

Indeed, your choice of the causes you support may be based on personal experiences or even how you view your character. You may also find that philanthropy fosters personal growth and self-discovery. Some people find that getting involved in the community creates opportunities for networking and building relationships based on shared values and goals.

That’s why it’s important to acknowledge that not everyone likes to “do good” in exactly the same way. To figure out what mix of charitable activities might best suit your personality, consider reflecting on whether you tend toward an ”investor,” “connector” or “activator” profile.

 

Here’s what it might look like to be an “investor” type of philanthropist:

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

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

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

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

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

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

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

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

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

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

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

Whatever your personality type, The Community Foundation can help! Whether it’s setting up a donor-advised fund to organize your giving, working with you and your advisors to establish a legacy bequest, or getting your family and friends involved in site visits to favorite charities, we’re here for you!

 

Thank you for the opportunity to work together! Give us a call at 540-432-3863.

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

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

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

It’s an election year, which means you may have more questions than answers as you work with your advisors to build out your financial and estate plans. In particular, the looming sunset of key provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 has created a tremendous amount of ambiguity.

For many taxpayers, the potential sunset of the TCJA’s higher estate tax exemption is top of mind. Unless Congress intervenes, the exemption is set to fall after December 31, 2025 from roughly $27 million per couple to approximately $14 million per couple (depending on inflation adjustments).

No one has a crystal ball, and it is impossible at this point to know whether or when you should implement planning strategies to address potential changes in the law. Nevertheless, if you are among those who would be affected by the estate tax exemption’s precipitous drop, it’s important to know that charitable strategies can fit nicely into a gifting plan that would help offset the sunset’s impact.

If you’re a business owner, for example, you could explore launching a gifting program now to transfer shares of the business not only to your heirs to take advantage of the higher exemption, but also to a donor-advised or other fund at The Community Foundation. With these gifts, you could reduce the value of your taxable estate while also executing a business transition and philanthropy plan that aligns with your overall intentions regardless of the tax laws.

Along those lines, some families may decide to lean into annual exclusion gifts ($18,000 per gifting spouse per recipient in 2024) to family members and other individuals to reduce taxable estates without eating into the lifetime gift and estate tax exemptions.

If you’re considering ramping up your annual exclusion gifts, you might consider adopting a parallel strategy for charitable gifts. Gifts to charities are deductible for gift and estate tax purposes (as well as for income tax purposes) and therefore will also reduce the value of your taxable estate without using your exemption. Some philanthropists report that they like the idea of making annual exclusion gifts to family members, and, while they’re at it, making stock gifts of an equal amount into a donor-advised fund at The Community Foundation.

Given the uncertainty about what might happen with the estate tax exemption, some people might consider updating their estate plans to increase a bequest to a donor-advised or other fund at community foundations. This would help blunt the impact of estate taxes, and the bequest can be adjusted during lifetime as planning goals and estate tax laws evolve.

The Community Foundation is here for you! Our team is happy to help you navigate the opportunities and pitfalls presented by potential changes in the tax law. It is our pleasure to work with you and your family to maximize your charitable goals.

 

Thank you for the opportunity to work together! Give us a call at 540-432-3863.

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

Planning for a sunset: Lock in a higher exemption, unlock a legacy

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Planning for a sunset: Lock in a higher exemption, unlock a legacy

Without legislation to prevent it, the sunsetting of current estate tax laws at the end of 2025 will dramatically reduce the federal estate tax exemption from $13.61 million per person in 2024 to approximately $7 million in 2026 (this includes adjustments for inflation). This change would affect many high net-worth individuals and families, likely exposing many more estates to federal estate taxes.

It is impossible to predict whether or not legislation will prevent the sunset. Even so, it is important for advisors to prepare for client discussions and start considering estate planning strategies now, especially techniques that incorporate multi-generational gifts and charitable planning.

Indeed, for a client who is charitably-inclined, making larger lifetime gifts to charity and arranging for charitable bequests will help reduce the client’s taxable estate because of the charitable estate and gift tax deduction. Donor-advised, field-of-interest, designated, unrestricted, and endowment funds at The Community Foundation are flexible and effective charitable recipients of both lifetime and estate gifts.

For some clients, you may wish to begin exploring a comprehensive, multi-generational wealth transfer plan, potentially using key tax-planning vehicles:

Charitable lead trust
Charitable lead trusts (CLTs) may be particularly effective in the current environment. These trusts can provide income to your client’s fund at The Community Foundation for a set period of time, with the remaining assets passing to family members. Right now, the higher exemption allows for potentially significant initial funding of such trusts. This is because the value of the remainder interest counts toward the client’s estate and gift tax exemption.

Generation-skipping trust
A generation-skipping trust is an irrevocable trust that can benefit a client’s grandchildren and later generations. This trust utilizes a client’s generation-skipping transfer (GST) tax exemption (which parallels the estate and gift tax exemption). This type of trust could allow a client to take advantage of the higher exemption before it potentially decreases in 2026. It is possible under some states’ laws for these trusts to go on for many generations in a “dynasty” format, such that each generation benefits from the trust’s income (and potentially principal for health and education) without the trust’s assets being included in the beneficiaries’ estates for estate tax purposes.

Multi-generational fund at The Community Foundation
Alongside a charitable lead trust or generation-skipping trust, or as a standalone, a client can establish a donor-advised fund at The Community Foundation that can function much like a family foundation, with successive generations serving as advisors, or The Community Foundation stepping in after the first or second generation, to recommend grants from the fund to carry on a tradition of supporting the causes that have been most important to the client during the client’s lifetime.

The team at The Community Foundation looks forward to working with you to achieve your clients’ long-term charitable goals, even in the midst of uncertainty concerning the estate tax laws.

Thank you for the opportunity to work together! Give us a call at 540-432-3863.

 

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

Mixing business and charity: Keep it ethical, legal, and transparent

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Mixing business and charity: Keep it ethical, legal, and transparent

Your clients who are corporate executives have likely wondered at some point about the benefits of aligning their companies with philanthropy, whether specific causes or particular organizations.

In general, a community engagement strategy can be good for business, if well-executed. For example, almost half of consumers view a brand favorably when the brand supports a charitable cause. Community engagement programs can help with employee retention, too.

But what are the risks involved in mixing business with charity?

In the spirit of aligning doing good with doing well, some companies would love to set up their own nonprofit organizations as “charitable arms” of their enterprises. Corporate leadership may like the idea of efficiency, control, and tight alignment between the company’s offerings and the charity’s mission. For example, a company that makes swimming pools might think it’s a great idea to set up a charity to build swimming pools at community centers to give more kids access to water sports. The company would like to donate tax-deductible dollars to the charity and ask its suppliers and customers to do the same. The company’s executives would serve on the board of the charity, and the charity would purchase swimming pools from the company to carry out its mission.

Is this a good idea?

No. This strategy plays fast and loose with the rules. Beyond setting up an obvious conflict of interest, this practice would mean that a company effectively would be using charitable funds to benefit itself. This is not a “charitable purpose” in the eyes of the IRS and could result in the loss of the charity’s tax exemption. Plus, if the news got out about this structure, the company could suffer reputational damage.

The company, its executives, and the community are all better off if the company pursues more transparent and ethical charitable strategies such as establishing a corporate fund at The Community Foundation, setting up a volunteer program for employees, establishing a matching gifts program, or aligning with wholly-independent charities on cause-related marketing partnerships.

Reach out to The Community Foundation to learn more about effective corporate philanthropy strategies. We are here to help as you work with your clients to achieve their charitable goals both at home and in the workplace.

Thank you for the opportunity to work together! Give us a call at 540-432-3863.

 

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

Charitable Giving on a Budget

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Although it’s still late summer, some people are ready to start planning for the season of giving. Gifts will be carefully chosen for family and friends, scrumptious desserts will be baked and ready to eat, and holiday decorations hung up around the house. What about giving back to the community though? Unfortunately most of us aren’t made of money so when it comes to charitable giving, planning a budget is a necessity. Here are a few tips to start planning for the upcoming holiday season!

 

Donate your clutter

Go through your house and clear out any unwanted items or things you don’t need that others could use more. Here are a few organizations to start with that accept donations:

http://www.valleyopendoors.com/

http://ourcommunityplace.org/

http://virginiasalvationarmy.org/harrisonburgva/

http://www.goodwillvalleys.com/

http://www.themercyhouse.org/

http://giftandthrift.org/

 

Pool your money

Create a small giving circle within your friends and family to pool all your money together and make one large donation to the organization of your choosing.

 

Set aside part of your income

Try to set aside at least 3% of your income on a regular basis to ensure you’ll have a little something to give and still have a separate pool of money for family gifts.

 

Employer match donations

Most corporate employers have matching funds or grants that match its employees’ charitable contributions. Some matching gifts are dollar-for-dollar but others can be double or triple the donation.

 

Blood/plasma donations

When donating money isn’t an option, don’t forget you can donate blood or plasma and some places even compensate you for your donation with cash (which can then be donated if you wish).

 

Donate your time

Finally, don’t forget you can always donate your time. A lot of organizations are always looking for extra hands to help out in the busy season of giving. Even if it’s only an hour of your time, anything helps!

Aren’t sure where help is needed? Check out these organizations below!

https://www.brafb.org/

http://www.themercyhouse.org/

http://ourcommunityplace.org/

www.bbshr.org/

http://virginiasalvationarmy.org/harrisonburgva/

http://www.uwhr.org/

https://www.sites.google.com/site/wrtcpublicrhetoric/home

 

Click on link below for a full list of local non-profit organizations.

http://www.tcfuwhr.org/index.php/site/a-z