For Professional Advisors
Community foundations are a resource for advisors. Attorneys, CPAs, financial planners, brokers, insurance agents, and other professional advisors are turning to community foundations to help enrich the charitable giving strategies of their clients. Here’s why:
- Community Foundations are neutral experts with technical information on a range of planned giving options — from executing gifts of real estate, stock, or personal property to establishing Donor Advised Funds or income-producing charitable annuities. Community foundations help advisors provide their clients with the best charitable giving strategies based on each client’s unique financial situation, tax status, and giving goals.
- Community Foundations have in-depth information on local needs and nonprofit organizations. When clients ask, “How can I make sure my charitable gifts will make a difference?” many advisors turn to community foundations for information on the programs and agencies that are working effectively in the specific arenas interesting each client. Community foundations are in touch with local organizations and activities addressing the broad spectrum of community needs — ranging from the environment, arts, education, and economic development to special programs for youth, family, and seniors.
- Community Foundations serve as the vehicle for giving many advisors seek for their clients. For example, community foundations can establish Donor Advised Funds — the very popular mechanism through which a client can make a charitable gift and stay personally involved in suggesting uses for that gift over time. Community foundations are frequently named in bequests as stewards for estate assets that a client wishes to direct to address specific areas of community need in perpetuity. Giving through a community foundation also provides a client time and resources for evaluating potential grant recipients, as well as the ability to give to multiple charities with a single gift.
Philanthropy is a very personal decision. A financial advisor can help clients realize their charitable objectives by listening for charitable giving opportunities, explaining options, and suggesting solutions. Significant giving opportunities often arise when clients are making major business, personal, and financial decisions. Our staff can work with you and your client to recommend the best charitable solution. Following are some
Year-end tax planning. Your client just earned a large bonus and wants to give a portion back to the community, but has no time to decide on the most deserving charities. Recommend establishing a Donor Advised Fund through his or her community foundation for an immediate tax deduction, and the ability to stay involved in recommending uses for the gift for years to come.
Preserving an estate. Estate planning identifies significant taxes going to the IRS, but your client wants to direct dollars for local benefit.The community foundation can work with you and your client to reduce his/her taxable estate through a charitable bequest or other planned gift.Your client’s gift will create a legacy of caring in the community that stays true to his/her charitable intent forever.
Retiring in comfort. Your client is concerned about running out of money during his/her lifetime, but has always been charitable. Recommend establishing a life income gift (such as a charitable remainder trust) at the community foundation that pays income potentially for life. Upon your client’s death, the gift can be distributed by the community foundation in accordance with his/her charitable interests.
Establishing a private foundation. Your client is thinking about establishing a private foundation, but is looking for a simpler, more cost-efficient alternative. The community foundation can help you and your client analyze the pros and cons of creating a Donor Advised Fund, a supporting organization, or a private foundation.
Closely held stock. Your client’s personal net worth is primarily tied up in a closely held company, but it’s important for him/her to give back to the community. Recommend establishing a Donor Advised Fund or planned gift; your client is eligible for a tax deduction measured by the fair market value of appreciated stock (less any planned gift value).
Sale or disposition of highly appreciated stock. Your client has appreciated stock and wants to use a portion of the gains for charitable giving, but the identified charities are too small to accept direct stock gifts. Suggest establishing a fund at a community foundation with a gift of appreciated stock. Your client receives a tax deduction on the full market value, while avoiding the capital gains tax that would otherwise arise from sale of the stock. Your client can even be involved in recommending uses for the gift, including the organizations and programs he/she cares about most.
Sale of a business. Your client owns highly appreciated stock in a company that is about to be acquired. The community foundation can work with you to suggest several ways to structure a charitable gift (including the use of planned giving techniques) to help your client reduce capital gains tax and maximize impact to the community.
Strategic giving. Your client is passionate about helping meet a specific community need and wants to make a meaningful gift. You and your client can work with our grantmaking experts to understand community needs and programs and then direct gift dollars to make the greatest impact.
Substantial IRA/401(k) assets. Your client wants to leave his/her estate to community and family, and has substantial assets in retirement accounts. The community foundation can help you and your client evaluate the most beneficial asset distribution to minimize taxes, giving more to his/her heirs and preserving charitable intent.
For more information contact our staff.