As a professional advisor you receive many questions from clients about various aspects of charitable giving. Here’s a sample of some of the questions that we hear often and illustrations of how working with Our Community’s Foundation can benefit your client.
- My client received a sizable bonus near year end - how can we quickly address charitable giving for tax purposes but leave my client flexibility in choosing recipients?
- How can we plan for the eventual use of a charitable bequest in advance?
- How can I help reduce (or eliminate) capital gains tax on highly appreciated stock for a client with charitable intent?
- My client has a highly concentrated portfolio – what can we do to mitigate that risk?
- How can my client make a lasting difference, in the most effective way, to benefit his or her community?
- What are the advantages of establishing a Donor Advised Fund at the Community Foundation instead of creating a private foundation?
- How does working with the Community Foundation differ from working with other types of financial institutions like banks?
- How does working with the Community Foundation differ from working with one of the private national charitable gift funds?
How can we quickly address charitable giving for tax purposes, yet retain flexibility?
When a client has very limited time to make plans (i.e. at year-end), he or she may find it difficult to quickly determine what specific charities to support. Our Community’s Foundation can help by establishing a Donor Advised Fund usually in just one meeting. Establishing a Donor Advised Fund allows your client to gain an immediate tax-deduction and still remain involved in the distribution of the gift, as the distribution is not connected to the deduction timing. Your client can then later work with our staff to learn more about non-profits in the area that may be of interest and to make grants at his or her convenience.
How can we plan in advance for the later use of a bequest?
Once clients have provided for their family in their estates, they may soon realize they don't want their remaining assets to go to the government; instead they want to benefit charitable causes of their choosing. Our Community’s Foundation can assist your client by structuring an advance agreement (a “shell agreement”) that outlines the terms of use for a charitable fund that will be funded at some point in the future using a remainder gift through a will or trust.
How can I help my client reduce (or eliminate) capital gains tax on highly appreciated stock?
We can suggest several ways to structure a charitable gift, including planned giving techniques that can mitigate or eliminate capital gains tax. These options then allow for the highly appreciated stock to do volumes of good work for our community. Your client receives market value (average of the high / low values on the date of the gift) for his or her charitable gift while the gains get put to work for charitable purposes.
How can we mitigate the risk inherent with a highly concentrated portfolio?
It’s never a good idea to have “all your eggs in one basket,” and it’s especially risky during a volatile economic climate. If your client has charitable intent, a charitable remainder trust is a great way to diversify the holdings in a client’s portfolio and to create an income stream for your client, while at the same time doing good for our community. Donating stock to a donor advised fund, again, if one has charitable intent, will result in a diversification of the assets with the gain able to be used for charitable gift making purposes.
How can my client make a lasting difference, in the most effective way, to benefit his or her community?
Introducing your client to the Community Foundation can help your client to make a lasting difference for good. By identifying the most advantageous tax strategy, the most appropriate vehicle, and the best way to extend the charitable benefit (type of fund, etc) your client will be confident that their charitable gift will be put to good use. We can help you to help your client identify if his or her interest is in community grant making, student scholarships, support of specific nonprofit organizations, etc., and how he/she wants to help.