Which type of charitable planning tool is best for a particular client? That is a question we regularly get asked by attorneys, CPAs and financial advisors.
At the Community Foundation, while we know that every client’s charitable goals are as unique as their fingerprint., below are three scenarios and solutions to help answer that question.
Streamline and tax-optimize charitable giving
Scenario:
Your client supports many different charitable organizations every year.
Solution:
A donor advised fund at the Community Foundation can be an excellent tool to help your client organize their giving to favorite organizations. Clients appreciate how easy it is to support multiple charities while the Community Foundation takes on the administrative part. Plus, clients can give stock and other appreciated assets to their donor advised funds, often avoiding capital gains tax and simplifying tax receipts to provide their accountants when tax time rolls around.
Support a specific charity while minimizing risk
Scenario:
Your client has supported a particular charitable organization for many years, intends for that support to continue, and also wants to be sure that the funds are used effectively.
Solution:
Through a designated fund at the Community Foundation, a client can make tax-deductible gifts—during life and through estate gifts—that are set aside to be used exclusively for a particular organization. The Community Foundation makes distributions from the fund according to the client’s wishes. Plus, a client who is 70 ½ or older can make Qualified Charitable Distributions up to $105,000 per year (increasing to $108,000 in 2025) from IRAs to a designated fund.
Leave a charitable bequest and reap significant tax benefits
Scenario:
Your client intends to provide for charitable organizations in their estate plan and owns an IRA or other qualified retirement plan.
Solution:
By naming a fund at the Community Foundation as the beneficiary of a qualified retirement plan, your client achieves extremely tax-efficient results. Not only is estate tax avoided on the retirement plan assets flowing to the charitable fund, but income tax is also avoided. As you know, the income tax hit on retirement proceeds left to heirs can be steep.
If you encounter any situation with a client where charitable giving could be involved, please reach out to Megan Sommerfeldt, Director, Gift Planning at the Community Foundation (megans@cfgb.org).
Most of the time, the Community Foundation can offer a solution that meets both the client’s tax and estate planning goals and the client’s objectives for supporting their favorite charitable organization.