Philanthropy keeps your clients sticky

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Philanthropy keeps your clients sticky

Regardless of your business or industry, retaining your clients or customers is a key to success. And as the saying goes, it’s easier and less costly to retain or get more work from a current client than it is to find a new client.

As an attorney, accountant, or financial advisor who helps clients with tax and estate planning matters, you’re well aware of the fragile transition phase after a client passes away. Not only are many tax planning techniques activated (and validated!) after a client’s death, but you’re also navigating the understandably stressful and emotional factors that impact your work with the heirs to administer the estate, transfer assets, and file tax returns.

It’s no wonder that the death of a client presents business retention challenges. You’d love to continue representing the client’s children, but that can be a difficult discussion immediately following their parents’ death. It’s no surprise that the rate of advisor disconnect and abandonment from one generation to the next is remarkably high. The numbers behind this churn are staggering. Historically, studies have found that 75% of parents report that their advisor had never met their children, and 10% or fewer of heirs retain their family’s advisor post-inheritance.

The solution is, of course, for the advisor to establish a connection with the next generation well in advance of a client’s death. Certainly there are many ways to cultivate a next-generation connection—starting young, sending birthday or holiday cards, encouraging clients to include children in meetings where appropriate, offering to counsel children on career choices, and making networking introductions or job referrals. Few touchpoints, however, are as substantive and meaningful as philanthropy. After all, in most clients’ view, inheritances are about more than money. They’re about values, humanity, multi-generational connections, understanding wealth’s origins, and more.

Children who get to know their parents’ advisors begin to appreciate the advisors’ roles in not only making family wealth last across generations, but also leaving a family legacy to the community. The Community Foundation can help advisors create opportunities to discuss philanthropy with clients and their children and grandchildren. Here are a few examples:

  • Suggest that your clients consider working with The Community Foundation to establish easy-to-understand charitable giving tools, such as a family donor-advised fund, field-of-interest fund, or designated fund.
  • Encourage your clients to take advantage of The Community Foundation’s services for families, which include researching family members’ favorite causes, arranging site visits at local charities, and educational sessions about the basics of charitable giving and what’s going on in the community.
  • Share with your clients and their children materials provided by The Community Foundation describing tax-savvy charitable giving, including the benefits of giving highly-appreciated stock instead of cash to a fund at The Community Foundation to avoid capital gains taxes.
  • Ask The Community Foundation to help facilitate family discussions so that all family members  see how they can support causes that have been important to their parents and grandparents over the years as well as causes that are contemporary, relatable, or meaningful to them.

While any conversation with a client’s child or grandchild can increase the likelihood of retaining the family as a client across generations, the topic of philanthropy is an especially effective tool to create a common bond that keeps the family from becoming your former client.

 

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

Three things every philanthropist must know about the gift and estate tax sunset

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Three things every philanthropist must know about the gift and estate tax sunset

The shorter days of fall and winter aren’t the only sunsets creeping up on people these days. If you’ve met with your estate planning attorney and tax advisors recently, you’re probably aware that the gift and estate tax exemption–the total amount you can leave to family and other beneficiaries during life and at death before the hefty federal gift and estate tax kicks in–is about to drop, rather precipitously.

Without legislation to prevent it, on January 1, 2026, the exemption will drop from $12,920,000 per person (that’s the 2023 exemption) to about half of that amount, depending on annual inflation increases. As the date gets closer, tax planning decisions get tougher. Make aggressive moves now to activate gifts to family members? Or hold out to see if legislation intervenes to prevent the sunset?

Understandably, some philanthropists are beginning to get concerned about what their legacy might look like when (and if) the exemption drops. Add to that uncertainty the fact that a person’s date of death is among life’s great unknowns, it’s no wonder that for the relatively few taxpayers who may be impacted by gift and estate taxes—at least for now—there’s both concern and confusion.

Here’s a quick review of the facts:

  • For 2023, the estate tax exemption is $12.92 million per individual, $25.84 million per married couple, and for 2024, the exemption rises to $13.61 million and $27.22 million, respectively, adjusted for inflation, as recently announced by the IRS.
  • The IRS will issue inflation adjustments for 2025, too.
  • For 2026, the exemption is scheduled to fall back to 2017 levels, adjusted for inflation, which would roughly total $7 million per person.

Here are a few strategies you might consider evaluating with your tax advisors now to advance your estate plan and your philanthropy plan:

  • If you are a business owner, you could explore launching a gifting program to transfer shares of your business not only to heirs, taking advantage of the higher exemption, but also to your donor-advised or other fund at The Community Foundation. The objective here would be to begin intentionally reducing the value of your estate, assuming that the estate tax exemption will rise, while also executing a business transition plan that meets your overall intentions regardless of the tax laws. (As with any gift of a hard-to-value asset, securing a qualified appraisal is essential, as is timing; shares can’t be gifted to a charity if a sale is effectively already in process. The IRS watches both very closely.)
  • Annual exclusion gifts ($17,000 per gifting spouse per recipient in 2023, increasing to $18,000 in 2024) to family members and other individuals are an effective way to reduce the value of a taxable estate without eating into the lifetime gift and estate tax exemption. Indeed, many philanthropic individuals use the annual exclusion technique as inspiration for their charitable gifts. Gifts to charities are deductible for gift and estate tax purposes (as well as for income tax purposes) and therefore also serve to reduce the value of a taxable estate without eating into the exemption. Some philanthropists report that they like the idea of making annual exclusion gifts to each family member and then using their donor-advised fund at The Community Foundation to make annual exclusion-amount gifts to each of the charities they support.
  • Work with your tax advisors and the team at The Community Foundation to run various financial scenarios to determine whether the exemption sunset will affect you and if so, to what extent. If you find yourself looking at a potentially significant taxable estate in a couple of years, consider increasing your bequests to your donor-advised or other fund at The Community Foundation. Amounts passing to The Community Foundation or other qualified charity upon your death are not subject to estate tax. This means your charitable priorities will receive 100 cents on every dollar in the taxable portion of your estate, while your family and other beneficiaries could receive 60 cents on the dollar–or even less.

As always, the team at The Community Foundation is here to help you navigate the opportunities and pitfalls presented by changes in the tax law. It is our pleasure to work with you and your advisors to maximize your charitable goals.

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

Charitable giving tips for clients’ golden years

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Charitable giving tips for clients’ golden years

The rising popularity of the Qualified Charitable Deduction–”QCD”–appears to be inspiring an increasing number of retirees to re-evaluate their charitable giving plans. Before the clock winds down on 2023 giving opportunities, be sure you’re familiar with the various charitable giving techniques that are most appealing to retirees and the various ways The Community Foundation can help.

Here are four characteristics of retirees and their charitable giving situations that will help you serve your retired clients.

–Greater connection to community. Retirees often feel a greater connection to their community and favorite charities than your clients who are not retired. Whether it’s because a retiree’s income and corresponding giving capacity are more predictable, or because a retiree has more time, getting involved with favorite charities can help retirees stay active and even avoid loneliness. The team at The Community Foundation stays connected with the many nonprofit organizations in our region, and we are happy to serve as a sounding board for your retired clients who want to get involved.

–Less likely to itemize deductions. Many retirees apply the standard deduction on their income tax returns because they don’t have many expenses that qualify for itemization, such as business expenses and mortgage interest deductions. Help your retired clients evaluate whether itemizing deductions in certain years could be beneficial. Through a donor-advised fund at The Community Foundation, your clients may be able to concentrate charitable contributions into particular tax years and benefit from the deductions above and beyond the standard deduction. This is called “bunching,” and a donor-advised fund can help your client take advantage of itemizing tax deductions while still allowing them to provide steady support to nonprofits in years that follow the itemizing year.

–More interested in involving children and grandchildren in their philanthropy. The Community Foundation is happy to help your retired clients fulfill their desire to stay connected with their children and grandchildren, including formalizing roles for these family members as advisors and successor advisors of the retiree’s donor-advised fund at The Community Foundation. This is often an excellent and easy way to structure philanthropic priorities for generational wealth as well as create positive, authentic communication channels across an extended family.

–Excellent candidates for Qualified Charitable Distributions. Your clients who are at least age 70½ can direct a tax-free distribution (up to $100,000 per spouse in 2023) from an IRA to a qualified charity such as a field-of-interest or designated fund at The Community Foundation. For your clients who must take Required Minimum Distributions (RMDs), the Qualified Charitable Distribution (QCD) is especially beneficial. This is because the distribution to charity counts toward the RMDs and therefore never lands in the client’s taxable income.

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

Structured philanthropy: A process relieves the pressure

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Structured philanthropy: A process relieves the pressure

Helping families create a meaningful structure for their philanthropy has long been a hallmark service of The Community Foundation. That structure and the resulting discipline are increasingly important as both wealth and charitable giving more frequently span multiple generations. Indeed, spontaneous and unstructured conversations around wealth and philanthropy can be a source of family discord.

By being part of the discussion–whether formally or informally, at the table or behind the scenes–the team at The Community Foundation can help families resolve issues and smooth out the edges around common intra-family challenges, including communication, decision-making, and charitable giving.

Here are a few of the ways the team at The Community Foundation can help:

–Serving as a coach to foster thoughtful, intentional, and inclusive family conversations, even if The Community Foundation team member is serving simply in an “ice-breaker” role.

–Offering guidance from the position of a facilitator to assure that all voices are heard, particularly as views across generations can differ.

–Helping a family structure a series of discussions that employ a phased-in or “dimmer-switch” approach, beginning with values-centered discussions to identify common ground and progressing to systematic funding and allocation conversations and decisions.

 

The Community Foundation can work with a family under a variety of circumstances. For example:

–Some families enjoy organizing their charitable giving through both a private foundation and a donor-advised fund at The Community Foundation. The team at The Community Foundation can serve as a sounding board for grant making from both vehicles and also work with a family’s tax advisors to help optimize the role and use of each vehicle.

–Many families have found that a donor-advised fund at The Community Foundation meets all of their charitable giving needs, and they appreciate The Community Foundation taking on the administrative burden associated with tax filings and administration. In some cases, a family decides to close their private foundation altogether and transfer the assets to a donor-advised fund at The Community Foundation.

–Some families leverage The Community Foundation for the full suite of its charitable giving services, often using a donor-advised fund in much the same way they’d use a private family foundation, only with increased privacy and no need to create a separate legal entity, thanks to The Community Foundation’s umbrella 501(c)(3) status.

 

By consulting with the team at The Community Foundation, and leaning into the structure that’s right for them, families can help their favorite community causes—and keep the peace across generations.

 

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

By the numbers: What’s around the corner in 2024

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By the numbers: What’s around the corner in 2024

As 2023 makes way for 2024, you’re no doubt inundated with information about the various IRS thresholds that are subject to adjustment. But have you thought about how each of these thresholds might be connected with your clients’ charitable giving? Here are a few pointers to keep handy as you inform your clients about changes for 2024 and also help them tee up their charitable giving plans for the coming year.

 

Social Security COLA increases

The Social Security Administration announced a cost-of-living adjustment (COLA) increase of 3.2% that will take effect in January. This increase is less than half of 2023’s COLA increase (which was the highest since 1981) and reflects inflation’s decline in recent months.

Connection to charitable giving: Remember that retirees are a unique group when it comes to tools and techniques related to charitable giving. Remember also that 72% of Baby Boomers (and 88% of the Silent Generation!) give to charity every year, so if your clients include retirees, you’re almost certainly dealing with philanthropic individuals. When you talk about the Social Security increase, it’s a logical time to also bring up charitable giving plans for 2024.

 

Standard deduction increases

The standard deduction will increase in 2024 by approximately 5.5 percent to $14,600 for single tax filers and $29,200 for married couples filing jointly.

Connection to charitable giving: The standard deduction is an important factor in charitable giving. Your clients whose gifts to charity, plus other deductions, total more than the standard deduction are eligible to itemize deductions. You know this, of course, but it is worth talking with your clients about their 2024 charitable giving plans (and their last-minute plans for 2023!) to evaluate whether a “bunching” strategy, working with The Community Foundation, could be helpful to maximize a client’s intended support of favorite charities over the next few years.

 

Tax brackets

Though tax rates in each tax bracket, ranging from 10% to 37%, aren’t changing, the income levels that define each bracket are increasing. Generally speaking, your clients can earn up to about 5% more in 2024 and remain in their 2023 tax bracket.

Connection to charitable giving: Reviewing tax brackets with your clients is a good time to bring up pending legislation known as the Charitable Act, which would create a “universal deduction” even for taxpayers who do not itemize. A similar, pandemic-era law that has since expired helped boost giving following the drop in giving that occurred after the standard deduction increased in 2018.

 

Qualified Charitable Distributions

Each taxpayer aged 70½ and older may direct up to $105,000 in distributions from an IRA to a qualified charity in 2024, up from $100,000 in 2023. Note that your client can make a once-in-a-lifetime QCD to a charitable remainder trust or charitable gift annuity in the amount of $53,000 in 2024 (adjusted for inflation from $50,000 in 2023).

Connection to charitable giving: With the ability to give more in 2024 than 2023, your clients can further escape income tax via QCDs and satisfy a greater portion of  their Required Minimum Distributions (RMDs). Field-of-interest and designated funds at The Community Foundation are very effective recipients of QCDs.

 

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

Local Nonprofits Receive 2023 Funding from The Community Foundation

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Local Nonprofits Receive Funding from The Community Foundation

Harrisonburg, VA – Giving season is upon us and The Community Foundation of Harrisonburg and Rockingham County is celebrating. The Community Foundation reports a total of $159,518 will be granted to twelve organizations in their Fall 2023 grants cycle. Programs and projects like ‘Meals on Wheels’ by Valley Program for Aging Services and ‘Operation Free Pet Healthcare’ by Anicira are among the funded grantees. Over 60 organizations submitted applications. “Our grant funding process is difficult, especially because we receive so many wonderful applications each year. All are deserving of funding. We encourage nonprofits to apply for our grants next year as our grant awards will increase substantially.” – Ann Siciliano, Director of Program Services, TCFHR. Fall 2023 grant awards will be distributed to Harrisonburg-Rockingham nonprofit agencies by year end.

2023 TCFHR Competitive Grant Awards:

Fund Grantee Purpose/Project
Community Endowment Valley Program for Aging Services Meals on Wheels
Valley Arts & Culture Fund Oasis Fine Art & Craft Beyond Restaurant Mural
Valley Arts & Culture Fund Rockingham Ballet Theatre Costume Storage Improvement
Janet Sohn Endowed Fund The Salvation Army The Salvation Army Emergency Shelter
Mary Spitzer Etter Endowed Fund Arts Council of the Valley Development of New Arts Council of the Valley Website
Alvin J. Baird, Jr. Program Endowed Fund Blue Ridge Free Clinic, Inc. A Free Clinic Bridge to Health
Alvin J. Baird, Jr. Program Endowed Fund Cross Keys Equine Therapy Parent/Grandparent Caregiver Trauma Group
Earlynn J. Miller Fund for the Arts Arts Council of the Valley ACT ONE
Earlynn J. Miller Fund for the Arts OASIS Fine Art & Craft `Wild and Wonderful – Animals “Captured” in Paint!
Earlynn J. Miller Fund for the Arts Virginia Quilt Museum Creating a multi-purpose space for hands-on learning and programs
Earlynn J. Miller Fund for the Arts Harrisonburg Dance Cooperative Sprung Subfloor
Hildred Neff Memorial Fund Wildlife Center of Virginia Treatment of Sick, Injured, and Orphaned Wildlife from Harrisonburg and Rockingham County
Hildred Neff Memorial Fund Cat’s Cradle Pet Retention for Low-Income and Other Vulnerable Populations
Hildred Neff Memorial Fund Anicira Operation Free Pet Healthcare

Grant distributions come from funds held at TCFHR and are determined by Grants committees. Nonprofit organizations awarded all participated in a competitive application process. Per TCFHR policy, grants are made without regard to factors of gender, race, religion, national origin, or sexual orientation. For more information, visit TCFHR’s website, www.tcfhr.org.

Contact: Ann Siciliano, 540-432-3863 or [email protected]

Website: www.tcfhr.org

About The Community Foundation of Harrisonburg & Rockingham County (TCFHR) 

TCFHR makes charitable giving easy, acting in the best interest of our donors and partners to facilitate bold philanthropic initiatives for a stronger, healthier community.

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Your donor-advised fund: Think “hub,” not “autopilot”

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Your donor-advised fund: Think “hub,” not “autopilot”

Perhaps you established a donor-advised fund at The Community Foundation years ago, or you set up a donor-advised fund more recently. Or maybe you are considering establishing a donor-advised fund at The Community Foundation this year to help you keep your giving more organized and involve your children and grandchildren in your philanthropic priorities.

Whatever the case may be in your situation, it’s a great idea to consider a few best practices for ensuring that your donor-advised fund is making the biggest difference possible for the causes you care about. Life gets busy, the months fly by, and it’s tempting to put your donor-advised fund on autopilot. But that would be a missed opportunity.

By now, you likely know that a donor-advised fund at The Community Foundation offers the convenience of a one-stop-shop: You make tax-deductible contributions of cash (or, ideally, appreciated stock) to the fund, and then recommend grants to your favorite charities. Make sure you’re leveraging your donor-advised fund to execute the full range of your charitable giving each year. You’ll find it so much easier to keep track over time of where you’re giving, and how much.

As the hub of your charitable giving, The Community Foundation certainly makes it easy for you to use your donor-advised fund for your annual giving to charities. But that’s not all. As you work closely with The Community Foundation, you’re likely to discover even more ways our team can support your philanthropic activities:

  • We can help you establish a designated or field-of-interest fund to complement your donor-advised fund. A designated fund allows you to support a specific charity over the long term, while a field-of-interest fund focuses your support on a particular area of community need by leveraging The Community Foundation’s expertise. If you are over the age of 70½ and you own one or more IRAs, your designated fund or field-of-interest fund can receive Qualified Charitable Distributions up to $100,000 per year per spouse, bypassing your taxable income.
  • We can work with you and your attorney to help you establish a bequest in your estate plan to support your favorite causes beyond your lifetime. Many fund holders at The Community Foundation name their donor-advised funds, field-of-interest funds, designated funds, or even The Community Foundation itself, as beneficiaries in their wills and trusts, and especially as beneficiaries of IRAs and other qualified plans because doing so delivers significant tax benefits.
  • We can help you and your family learn more about your favorite nonprofit organizations and the issues they are addressing so that you can become more informed and effective philanthropists in our community. The Community Foundation team’s unparalleled, deep knowledge of local issues and organizations is a real advantage for you and your family. When you better understand the needs of the community and how your favorite nonprofits are addressing those needs, you’ll be better equipped to structure your giving so that it makes a difference in measurable ways. You’ll enjoy your charitable giving a lot more, too.

We hope you’ll consider your donor-advised fund–and your connection with The Community Foundation–as the hub of your philanthropy. The team at The Community Foundation is here to help you make the most of your donor-advised fund and related strategies so that you’re not only putting your money to work to improve the quality of life in our community, but you’re also achieving financial and philanthropic goals for your overall charitable giving.

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

Crisis giving: Avoiding pitfalls

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Crisis giving: Avoiding pitfalls

Whether you’re motivated to respond to needs created by a conflict, accident, or natural disaster, it’s human nature to want to help—especially through financial support. All too often, a tragic event occurs and is quickly publicized through news accounts or social media. Then, the dollars start rolling into a crowdfunding site like GoFundMe, Kickstarter, or Fundly.

 

And therein lies a problem. Or a potential one, at least.

Well-intended zeal and urgency to give may not be truly aligned with the needs. Unfortunately, not all “dollar destinations” are legitimate, either in their authenticity or their declarations that a specified gift percentage will be delivered as intended. Among fraudsters’ tools are TV ads that can pop up overnight; illicit websites or URLs bearing seemingly familiar names (known as phishing); or digital money transfer recipient addresses or account names that are difficult if not impossible to verify. In some cases, donors are mistaken or confused about the deductibility of their contributions. Even the IRS is issuing warnings about crisis giving and potential fraud.

Count on The Community Foundation as your trusted source to authenticate grantee organizations. Our team not only knows the charitable landscape, but also we can fully vet recipient organizations for qualification and tax deductibility. The Community Foundation’s role is especially important and relevant in light of a recent study that revealed a growing decline in trust in nonprofits–despite nonprofit organizations still being among the most trusted organizations (along with small businesses).

The Community Foundation is here to help you navigate all of the considerations that factor into making a tax-deductible gift to a legitimate organization that can truly help offer the relief you intend. Indeed, mobile devices have made it easy to act on our honest instincts. However, in an increasingly impatient, noisy, and short-attention-span world that can carry a “get ‘er done” urgency, haste often makes waste.

Please give us a call to talk through your options for crisis giving and how to make sure your dollars get to the people and places that need it most. 540-432-3863

 

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

Gifts of “complex” assets deliver multiple benefits

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Gifts of “complex” assets deliver multiple benefits

When you think about supporting your favorite charities or making contributions to your donor-advised or other type of fund at The Community Foundation, cash may be the first thing that comes to mind. It seems so easy to just write a check or donate online. (You probably don’t immediately think of artwork or other types of assets!)

Most of the time, gifts of highly-appreciated marketable securities are the most logical non-cash gift. Gifts of publicly-traded stock, for example, are easy to transfer to your donor-advised or other type of fund at The Community Foundation. The Community Foundation team can provide you or your advisor with transfer instructions to make the process simple. As is the case with a cash gift, The Community Foundation will provide a receipt for tax purposes, and your gift of stock will be valued at the shares’ fair market value on the date of transfer. When The Community Foundation sells the shares, the proceeds flow into your fund without any reduction for capital gains taxes. This is because The Community Foundation is a 501(c)(3) charitable organization and therefore does not pay income tax. That would not have been the case, however, if you had sold the stock first and then transferred the proceeds to your fund at The Community Foundation; you’d owe capital gains tax on the sale. Especially in cases where you’ve held the stock a long time and it’s gone up significantly in value since you bought it, the capital gains hit can be significant.

Cash and publicly-traded stock are not your only options for adding to your fund at The Community Foundation. You can also give assets such as real estate, closely-held business interests, and even artwork or other collectibles. When you give assets like this to a fund at The Community Foundation or other public charity, the tax treatment of these “alternative” assets is the same as gifts of marketable securities in that no capital gains tax will be levied when the charity sells the assets, and, assuming the assets are “long term” capital gains property under IRS rules, you’ll be eligible for a charitable deduction at the fair market value of the assets on the date of transfer. Gifts of assets other than cash or marketable securities are sometimes called gifts of “complex assets,” but that does not mean the process needs to be intimidating. The team at The Community Foundation can work with you and your advisors every step of the way.

You can also use “complex” giving techniques to achieve your estate planning and tax goals. For example, if you are over 70 ½, The Community Foundation can work with you and your advisors to execute a Qualified Charitable Distribution from your IRA to a designated or field-of-interest fund. Or, we can work with you and your advisors to establish a charitable remainder trust if you’d like to retain an income stream and also get the benefit of an up-front charitable deduction.

As the end of the year approaches, it’s a good time to evaluate your portfolio with your advisors to determine whether a gift of complex assets might help you support a critical need in the community while providing key tax benefits for you and your family.

If you have questions about an asset you’re interested in contributing, please reach out to us. The Community Foundation is happy to help you establish a charitable giving plan and take the complexity out of giving complex assets.

 

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

Get ahead of the year-end rush

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Get ahead of the year-end rush

Holidays and tax planning (although very different in the ways they are celebrated!) are both year-end traditions. No doubt (?) you’ve got the holidays covered, and perhaps your advisors are already helping you make sure your tax planning is in place. It’s a good idea to familiarize yourself with several important year-end charitable giving techniques and deadlines so you can be prepared for conversations with your attorney, accountant, and financial advisor, as well as the team at The Community Foundation. We stand ready to assist!

Standard deduction reminders. Remember that the 2023 standard deduction for single taxpayers ($13,850) and married filing jointly ($27,700) is up nearly 7% over 2022. While this increase allows for more relief from income tax for most filers, it also sets a higher bar to exceed for those who itemize deductions. Keep your household’s standard deduction amount in mind when you tally your deductible expenditures, including your gifts to charity. Reach out to The Community Foundation for help.

Itemization and bunching. If your total deductions are at or under the standard deduction amount for 2023, but you and your advisors determine that your particularly high income this year means you could benefit from increased deductions, a “bunching” strategy may be a good fit for you. “Bunching” means you are “front-loading” charitable donations into the current year, knowing that you plan to make these donations in future years. By structuring a large year-end gift to your donor-advised fund at The Community Foundation, you could surpass the standard deduction threshold to further reduce your taxes in 2023. Then, your favorite organizations can receive support from your donor-advised fund not only this year, but also in subsequent years. This allows you to provide predictable, steady support for the causes you love. Our team can help you build a strategy!

Stock, not cash! As you prepare for year-end giving, don’t automatically reach for the checkbook! Gifts of long-term appreciated stock to your donor-advised or other type of fund at The Community Foundation is always one of the most tax-savvy ways to support your favorite charitable causes because capital gains tax can be avoided. Similarly, if you are a business owner, you can work with your advisors and The Community Foundation team to explore how you might give shares in the business to your fund at The Community Foundation as a part of your overall estate plan. Not only will transfers be eligible for a charitable deduction during the year of transfer (and at fair market value if you held the shares for more than one year), but also these gifts could potentially reduce income tax burdens triggered upon a future sale of the business.

QCDs from IRAs. As always, keep in mind that the Qualified Charitable Distribution (“QCD”) is a very smart way to support charitable causes. If you are over the age of 70 ½, you can direct up to $100,000 from your IRA to certain charities, including a field-of-interest, designated, unrestricted, or scholarship fund at The Community Foundation. If you’re subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. That means you avoid income tax on the funds distributed to charity. Our team can work with you and your advisors to go over the rules for QCDs and evaluate whether the QCD is a good fit for you.

Fingers crossed on deduction legislation. Keep an eye on the Charitable Act, which, if passed, would permit a deduction for charitable gifts that exceed the standard deduction. The Charitable Act proposes to restore the pandemic-era “universal charitable deduction” and raise the cap from $300 for individuals ($600 for joint filers) to approximately $4,600 for individuals ($9,200 for joint filers). This could be a game-changing incentive for your favorite charities–and for you!

Don’t miss year-end deadlines. Please reach out to The Community Foundation team to find out when certain transactions must occur to be legally completed during this tax year, including checks to your fund at The Community Foundation which must be postmarked or hand-delivered no later than December 30. Gifts of marketable securities also need to be fully transferred by December 30, so please work with your advisors to contact us in plenty of time for our team to process and receive the transfer.

  • PLEASE SEE OUR HOME PAGE FOR 2023 HOLIDAY GIVING SCHEDULE!

 

 

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