As a professional advisor you will undoubtedly be faced with many questions from clients concerned with various aspects of charitable giving. Hopefully, the following suggestions will be helpful when facilitating these conversations and introducing to them the benefits of the Community Foundation of Northeast Iowa.
If your client wants to increase charitable giving but has some practical concerns, the Community Foundation of Northeast Iowa can help. If your client has limited time to make plans(i.e. during year-end tax planning) they may not be able to make the most knowledgeable decision on specific charities they would like to support. The Community Foundation of Northeast Iowa can help them establish a Donor Advised Fund in just one meeting. Your client can then work with our staff to learn more about non-profits in the area that may be of interest to them. Establishing a Donor Advised Fund allows your client to gain an immediate tax-deduction and still remain involved in the distribution of their gift.
Once your client has left provisions for family in their estate, they may soon realize they don't want their remaining assets to go to the federal government; instead they wish to use those assets to benefit charitable causes of their choosing. The Community Foundation of Northeast Iowa can assist you in establishing remainder gift through your client's will or trust. This will allow for them to provide for them to provide for local charities and reduce estate taxes.
If you have a client who is concerned with depleting a retirement account the Community Foundation of Northeast Iowa can help by creating an income plan option that would provide a fixed income for your client's lifetime. You can work with your client to determine the most appropriate assets to use for establishing an income plan. After your client's death, the charitable gift will be distributed by the Community Foundation of Northeast Iowa based on your client's wishes.
By encouraging your client to give through the Community Foundation of Northeast Iowa we can assist them in establishing an income plan that will address their goals. This allows your client to transfer assets to the Community Foundation of Northeast Iowa, take an immediate tax deduction and receive a fixed income for life, after which the balance of the annuity becomes a permanent asset of the Community Foundation of Northeast Iowa for grantmaking.
The Community Foundation of Northeast Iowa can suggest several ways to structure a charitable gift, including planned giving techniques that can help to reduce (or eliminate) capital gains tax. These options then allow for the highly appreciated stock to add volumes of good work to the community.
If your client has an interest in charitable giving but has few liquid assets, the Community Foundation of Northeast Iowa can help structure an arrangement where the client donates some company stock to the Foundation (after valuation), and the company repurchases the stock at fair market value. The Community Foundation of Northeast Iowa establishes a fund in your client's name and distributes grants according to their charitable wishes.
If your client is unsure of how to give, we would be happy to help you introduce the Community Foundation of Northeast Iowa to them. 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.
The Community Foundation of Northeast Iowa can help your client identify criteria for a scholarship (academic performance, financial need, etc) and focus on the most effective process for establishing the fund. The Community Foundation of Northeast Iowa currently administers over 70 scholarships annually.
Some clients may be under the impression that creating a private foundation is the only option available to them in preserving their family name through charitable giving. The Community Foundation of Northeast Iowa can assist your client in establishing a Donor Advised Fund (or even a Supporting Organization. These types of funds can provide advantages to clients while keeping them actively engaged in the distribution process. The chart below offers a comparison that may also be of assistance to you and your client when exploring the option of establishing a Donor Advised Fund.
|Items to Consider||Private Foundation||Community Foundation Donor Advised Fund|
|Setup||Must incorporate and apply for IRS tax-exempt approval||Simple agreement. Can be set up in as little as one day|
|Initial Costs||Set up fees||No set-up fees|
|Ongoing Costs||Liability insurance, direct administrative costs||Pooled administration, low costs|
|Tax Benefits for Cash Gifts||Up to 30% of adjusted gross income||Up to 50% of adjusted gross income|
|Excise Taxes||Usually 2% of investment income annually||None|
|Reporting Requirements||Annual 990-PF must be filed by private foundation or hired staff||None required by the donor. The Community Foundation handles all reporting|
|Grantmaking||Must research and identify agencies and programs to fund||Community Foundation staff educates donors regarding agencies and programs; provides information on qualified giving opportunities|
|Grant Management||Must ensure all recipients are qualified 501(c)(3) organizations||Community Foundation verifies an organization's status. Plus, donors can access the Community Foundation's strategic grantmaking services|
|Distribution Requirements||5% annual distribution required. Self-dealing restrictions||None - Donors make grant recommendations at their discretion|
|Privacy||Tax return is public record||Donor may choose to remain anonymous|