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What’s bubbling up: Need-to-know updates on the proposed donor-advised fund regulations

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What’s bubbling up: Need-to-know updates on the proposed donor-advised fund regulations

The Community Foundation is committed to providing timely updates on legal and policy developments to help you and other professionals who advise philanthropic clients stay on top of best practices in charitable planning. In that spirit, donor-advised funds and the rules governing these vehicles are topics that are popping up more frequently in financial and even mainstream media. Our team is closely watching these regulatory developments.

As background, in November 2023, the Internal Revenue Service issued proposed regulations that would change the way donor-advised funds are defined and how they operate. Especially leading up to the May 6, 2024 public hearings, the proposed regulations have created quite a buzz. If you’d not yet heard about the proposed regulations, the April 19, 2024 letter to Treasury Secretary Janet Yellen, signed by 33 members of Ways and Means, might have grabbed your attention. The letter lays out concerns that “these regulations could have the unintended consequence of impeding charitable giving in our communities, particularly at our local community foundations.” You’ll hear from us when (and if) the proposed regulations, or some version thereof, go into effect and what to do about it.

As you track the issue, however, it’s important to remember that a donor-advised fund is just one of many types of funds your clients can establish at The Community Foundation. Consider:

–Certainly the donor-advised fund is popular because it allows your client to make a tax-deductible transfer of cash or marketable securities that is immediately eligible for a charitable deduction. Then, the client can recommend gifts to favorite charities from the fund to meet community needs as they emerge.

–Other types of funds at The Community Foundation can be just as effective as a donor-advised fund depending on the client’s objectives. In some situations, these other fund types are even more effective than a donor-advised fund to achieve a client’s goals.

–Field-of-interest funds and designated funds, for example, allow your client to support a charitable cause or organization they love. Unrestricted funds help your clients support future needs in the community that can’t be predicted and can only be addressed through The Community Foundation’s perpetual structure and mission to serve the community as a whole.

–A major advantage of field-of-interest funds, designated funds, and unrestricted funds is that they are eligible recipients of the popular and tax-savvy planning tool called the Qualified Charitable Distribution, or “QCD,” available to your clients who have reached age 70 ½.

We look forward to helping you serve your charitable clients regardless of where the proposed regulations ultimately land. And we’ll keep you posted!

 

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

Getting creative: Three ways to support education

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Getting creative: Three ways to support education

It’s graduation season, and that means education may be on your mind! The Community Foundation can help you make a difference in the lives of young people by funding education. Certainly establishing a scholarship fund at The Community Foundation is one way to accomplish this goal. But that’s not the only way. Here are three ideas to consider as you explore ways to make an impact through education.

Establish a designated fund for educational institutions.

A designated fund provides support for specific organizations of your choice. So, for example, if you want to ensure that a particular college or university receives funding each year, you can set up a designated fund to accomplish this. For instance, if your family has supported the same local college for generations, you may want that support to continue. At the same time, you want to be sure that your funds are used effectively. This includes protecting your monetary support from the college’s creditors if the college finds itself in financial trouble. A designated fund at The Community Foundation could be the solution.

Establish a field-of-interest fund to support specific aspects of education.

Through a field-of-interest fund at The Community Foundation, you can establish parameters for grant making according to your wishes. If education is your priority, perhaps over the years you’ve supported a variety of local organizations that provide students with courses, tutoring, mentorship, and social services, ranging from grassroots charities to well-established trade schools and higher education institutions. Establishing a field-of-interest fund activates The Community Foundation’s expertise and research by delegating grant making decisions to The Community Foundation team. This helps donors like you ensure that their dollars will have the greatest impact.

Seek the advice of The Community Foundation for your donor-advised fund grant making.

If you have established a donor-advised fund at The Community Foundation, you’ve likely used it over the years to support your alma mater and perhaps other educational institutions. The Community Foundation team would welcome the opportunity to help you think broadly about education, beyond simply four-year institutions. Community colleges, trade schools, vocational programs, and out-of-the-box learning experiences may be a better fit for some students. The Community Foundation can also help you identify charities that support teachers, classrooms, and school districts, all of which need resources to deliver the best possible education to students.

We look forward to helping you support education as a major area of charitable interest! And if there’s a graduation in your family this year, congratulations!

 

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