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The perfect plate: Turkey, pumpkin pie and charitable giving

The perfect plate: Turkey, pumpkin pie and charitable giving

As you prepare to gather with family and friends over the Thanksgiving holiday, we invite you to reach out to the team at The Community Foundation for suggestions on how to incorporate charitable giving into the festivities.

For example:

  • Take this opportunity to brush up on the rich history of charitable giving in America.
  • Consider asking each family member to conduct quick research on a community need that they feel strongly about, such as homelessness, early childhood education, preserving the environment, medical research, and so on. Even just 15 minutes of online research on how the issue is playing out locally can be eye-opening!
  • When your family is together, each person can briefly share what they found in their research. If the group feels strongly about one or two issues, you might consider pooling donations–whether $5 per person or $50.
  • Contact The Community Foundation to find out which nonprofit organizations in the community are most closely aligned with addressing the issues you’ve selected. Make your family donation to those organizations.

Thanksgiving is also a good time to start planning for year-end charitable giving to meet your philanthropic goals. For instance:

  • Making gifts of cash or appreciated stock to your donor-advised fund at The Community Foundation can help you streamline your charitable giving recordkeeping and still allow you to support your favorite charities with year-end gifts. If you’ve not yet established a fund at The Community Foundation, we’d love to help you set that up. There is still plenty of time to put it in place to meet your year-end tax planning and charitable giving needs.
  • If you are over the age of 70 ½, consider making a Qualified Charitable Distribution (QCD) from your IRA to one or more qualifying charities, which include an unrestricted or field-of-interest fund at The Community Foundation. QCDs, available up to $100,000 annually per taxpayer, are an excellent way to bypass required minimum distributions and the corresponding income tax liability.
  • Many families update their estate plans around the holidays. If you’re planning to review your wills and trusts, it’s a great time to check in on any bequests and adjust those provisions, especially if you’ve recently established a donor-advised or other type of fund at The Community Foundation and intend for part of your estate to flow into those vehicles.

As always, please contact The Community Foundation for charitable giving inspiration and insights. We are here to help! Call us at 540-432-3863 or email Kristin Coleman at [email protected]

 

Give a little and feel a lot better

Give a little and feel a lot better

In the classic book The Go-Giver: A Little Story about a Powerful Business Idea, authors Bob Burg and John Mann share how Joe, a young professional, uses unselfishness to ultimately find business success.

Among the philosophies:

–Your true worth is determined by how much more you give in value than you take in payment.

–Your income is determined by how many people you serve and how well you serve them.

On a personal level, we’ve all heard the adage, and to paraphrase, “It’s better to give than to receive.” Two often-cited benefits of giving are (a) that it makes you happy, and (b) it makes you healthier and live longer.

These benefits can be experienced through small gestures, like opening a door for a stranger; surprising the next-in-line at the drive through with a free cup of coffee; or checking on a neighbor before or after a storm.

Volunteering is another source of happiness and health enhancement. According to the University of Maryland Health System, volunteering can bring physical and behavioral health benefits including a broader social network, lower blood pressure (which can reduce risk factors associated with heart disease and stroke), improved mental health and stress relief.

By doing good, we feel better ourselves.

In many ways, interestingly enough, your community foundation can be a facilitator of health benefits. By helping to establish, manage and distribute your gifts of generosity to the causes you care about, The Community Foundation can simplify the giving process to your favorite organizations that power medical innovation, support equipment acquisitions and fund construction at university health centers, hospitals, and blood banks, as well as the many important services delivered by community health providers.

Quite notably, many generous and significant gifts received by health centers in 2021 referenced family foundation involvement. Among those facilities are Cedars-Sinai Health System (Los Angeles, CA); Atrium Health (Charlotte, NC); Wolfson Children’s Hospital (Jacksonville, Fla.) and Saint Barnabas Medical Center (Livingston, N.J.).

By giving through The Community Foundation, whether to an unrestricted fund, field-of-interest fund, or a donor-advised fund, and whether to health-related charitable organizations or others, a donor’s gifts to charity can go above and beyond simply meeting individual or family tax and giving goals. By serving those in need and the greater good, gifts to charity help others feel happier and healthier—donors and recipients alike.

Call us at 540-432-3863 or email Kristin Coleman at [email protected] for any questions on charitable giving.

 

Counseling your clients about nonprofits: The good, the bad, and the big leaps

Counseling your clients about nonprofits: The good, the bad, and the big leaps

 

The nonprofit sector accounts for more than 12 million jobs in the United States, and job growth in the nonprofit sector in recent years has outpaced job growth in the private sector. As an advisor, you are more likely than ever to represent clients who hold executive positions at nonprofits, serve in key roles on nonprofit boards of directors, or do business with nonprofit organizations.

Please reach out to The Community Foundation as a resource when questions about nonprofit matters arise in your client discussions. Here are three examples of the types of issues that come up in the nonprofit arena:

 

–The good: The application process for exempt status has improved dramatically in recent years, thanks to IRS enhancements to its Form 1023. This is important for you to know when you are advising clients who are involved with a new charity. For those familiar with the application process, the new Form 1023 was a huge win and a major IRS accomplishment.

 

–The bad: Watch out for exempt status issues. At the heart of a nonprofit’s favored tax treatment is the concept of “exempt purpose”–meaning, essentially, operating for the public good, not to further private interests. For charitable entities organized under Internal Revenue Code Section 501(c)(3), exempt status is crucial for an organization to remain exempt from paying income tax. Exempt status under Section 501(c)(3) also allows contributions to the organization to be eligible for income tax deductions (as well as estate and gift tax deductions).

 

–The big leaps: The nonprofit sector, powered by private philanthropy, can be, and has been, transformational for our society. If you’ve not spent some time reading up on the major societal changes that have their roots in the nonprofit sector, you might consider doing so. As always, the team at The Community Foundation would welcome an opportunity to provide big picture background and inspiration to support the ongoing service you provide your clients who are involved in the nonprofit sector.

 

The team at The Community Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients.

 

Bright spots in the midst of economic challenges

Bright spots in the midst of economic challenges

Bear markets aren’t much fun for anyone. But that doesn’t mean your charitable giving commitments have to be put on hold. If you are like many donors, you are still looking for ways to support the organizations you care about that rely on your support to achieve their missions.

Remember, not every stock is down. It’s still incredibly tax-efficient to donate highly-appreciated stock to your fund at The Community Foundation. When you give appreciated stock held for more than one year (a long-term capital asset) to your donor-advised or other type of fund, instead of selling it outright, the capital gains tax is avoided. Plus, marketable securities are typically deductible at their fair market value, further helping your overall income tax situation.

Don’t forget about the Qualified Charitable Distribution (QCD), either. If you’ve reached the age of 70 ½, the QCD is an elegant and effective planning tool. You are still required to take Required Minimum Distributions (RMDs) from your IRA even in a down market, and the QCD can help offset this tax hit by allowing you to direct up to $100,000 to a qualified public charity, including a field-of-interest fund or unrestricted fund at The Community Foundation.

This is also a good time to make sure your estate plan is in good shape, including bequests you may wish to leave to a fund at The Community Foundation so that the causes you care about can continue to be supported for generations to come.

 

Please reach out to the team at The Community Foundation. We are here to help! Call us at 540-432-3863 or visit www.tcfhr.org.

 

Disaster philanthropy: Your clients and the important role of individual philanthropy

Disaster philanthropy: Your clients and the important role of individual philanthropy

Sadly, your philanthropic clients have likely grown accustomed to making charitable donations to support disaster relief. Individual donations provide critical resources to help communities recover from the many disasters–weather, fire, humanitarian, disease, war–that occur each year.

In the wake of Hurricane Ian, your clients may ask you about their options to support those affected by the storm. We encourage you to reach out to the team at The Community Foundation. We can connect your donors with a variety of options for giving that are trustworthy and effective. Indeed, disaster relief funding is frequently coordinated by community foundations, which are widely viewed as one of the very best vehicles to help donors provide financial support to relief efforts. Individual giving is critically important to any disaster relief effort, and The Community Foundation can help your clients make an immediate, powerful, and positive impact on the lives of those affected by Hurricane Ian or any disaster.

Especially heartwarming is that many donors are now exploring ways to help improve a community’s readiness for disaster response, including building reserve funds for future disaster relief and bolstering emergency preparedness infrastructure for medical care, food, clothing, and shelter delivered by a network of local, on-the-ground nonprofit organizations. We are happy to work with your clients to establish field-of-interest funds or unrestricted funds at The Community Foundation to ensure that the people in our region remain as safe and supported as possible when disaster strikes. Disaster-preparedness field-of-interest or unrestricted funds at The Community Foundation can be especially attractive because these funds are qualified recipients of QCDs (Qualified Charitable Distributions) from clients’ IRAs.

We look forward to helping your clients improve the lives of those affected by disasters both here in our community and across the nation and world.

 

Call us any time from 9am to 5pm Monday through Friday at 540-432-3863 for questions. www.tcfhr.org

 

What seems charitable may not always be deductible in the eyes of the IRS

What seems charitable may not always be deductible in the eyes of the IRS

With such a wide range of options available for you and your family to support your favorite causes and your community, ranging from crowdfunding to online solicitations, how do you know whether (and why) your donations are eligible for funding out of your account at The Community Foundation?

In short, contributions to organizations and causes that would fall into the non-tax-deductible category, although worthy investments to help the community, generally are not eligible recipients of grants from your funds at The Community Foundation. Remember, you received a tax deduction when you transferred assets to your fund at The Community Foundation, which means the money needs to be distributed to charitable organizations and causes qualified to receive tax-deductible contributions.

If you’re interested in the legal background, keep reading!

Section 501(c) of the Internal Revenue Code lays out the requirements for organizations to be considered tax-exempt, meaning they don’t pay taxes. This is a status for which an organization must seek IRS approval.

Even under Section 501(c), there are different types of nonprofits that are recognized by the IRS as tax-exempt. To qualify specifically under the Internal Revenue Code Section 170 charitable deduction for gifts to Section 501(c)(3) organizations, the recipient organization must be organized and operated exclusively for “charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the prevention of cruelty to children or animals.” In other words, “charitable,” according to the IRS, has a very specific definition. Your funds at The Community Foundation help you support the 501(c)(3) charitable organizations you and your family care about.

Separate from your charitable donations, perhaps you and your family also support social welfare groups (organized under Section 501(c)(4) of the Internal Revenue Code). Examples of social welfare groups include neighborhood associations, veterans organizations, volunteer fire departments, and other civic groups whose net earnings are used to promote the common good. Donations to social welfare groups are tax deductible in only certain cases (e.g., gifts to volunteer fire departments and veterans organizations). Your fund at The Community Foundation can’t be used to support non-tax-deductible civic causes, but certainly you can continue supporting these causes out of your personal assets.

Similarly, chambers of commerce and other business leagues fall under Internal Revenue Code Section 501(c)(6); donations to these entities are not tax deductible, either.

In addition to your civic activities, perhaps you’ve also helped set up a dedicated account at a bank to provide scholarships to the children of an accident victim, or even participated in a GoFundMe fundraiser to help a specific family. These vehicles, along with other crowdfunding platforms, typically do not meet the qualifications for a charitable organization under Section 501(c)(3), usually because the funds are earmarked for a particular person or persons.

We know the rules are complex and can be overwhelming! If you have any questions about the tax deductibility of your contributions to various organizations, and whether your community foundation funds can be deployed to make the contributions, please reach out to the team at The Community Foundation. We are immersed in the world of Section 501(c) every single day and are happy to help you navigate the rules.

The team at The Community Foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. We also encourage you to consult your tax or legal advisor to learn how this information might apply to your own situation. 

Call us any time from 9am to 5pm Monday through Friday at 540-432-3863 for questions. www.tcfhr.org

 

Is the cost of event tickets tax deductible?

Is the cost of event tickets tax deductible?

As charitable organizations emerge from pandemic restrictions, in-person fundraising events are beginning to rebound, especially athletic events that are held outside. This is a good time for a quick refresher course on the charitable deduction rules related to events, which can be tricky.

As a general rule, if you purchase a ticket to a fundraising event and attend the event, the IRS only allows a tax deduction for the portion of the ticket price for which you received nothing of tangible value in return. So, when the charity sends a receipt for the gift, you will see that the charity has subtracted the fair market value of the perks–food, beverage, entertainment, T-shirts, and other goodies–from the full amount of the contribution. The rules for raffles, auctions, and games of chance are also complex, exacerbated by the increase in virtual events and online fundraisers.

What’s the reason for all of this complexity? Simply put, tax-deductible dollars cannot be used for private benefit. The point of the charitable tax deduction is to incentivize taxpayers to use their own money to help others. Even when a portion of a donation can be tied to funding the charity’s programs, the intermingling of event-related benefits back to the donor (even if it’s just a T-shirt or a dinner) becomes too much of a tangled web, in the IRS’s view, to discern the true amount of the charitable deduction, and without that clarity, none of it is deductible.

The good news here is that the team at The Community Foundation is on top of it. We are here to answer your questions about tax deductibility and how to help the charities you care about.

Call us any time from 9am to 5pm Monday through Friday at 540-432-3863 for questions. www.tcfhr.org