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HELPING YOU SERVE YOUR CLIENTS
CHARITABLE PLANNING TOOLS AND SOLUTIONS
FREQUENTLY ASKED QUESTIONS
CONSIDERING A PRIVATE FOUNDATION?
FOR FINANCIAL ADVISORS
RECOGNIZING OUR CHARITABLE PARTNERS
Value-added philanthropy
Value-added services
Community Giving Fund
Fast facts
Glossary
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We have a long history of collaborating with attorneys, financial planners, accountants, and other professional advisors. Here are answers to some of more common questions we’ve been asked over the years.
| My clients have finalized their wills with the exception of naming charitable beneficiaries. They haven’t been charitably involved and yet they want to include charitable planning to reduce the taxable portion of their estates. Where do we start? |
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As you well know, naming a charitable beneficiary of one’s estate is a common stumbling block. We often work with individuals who do not have a specific organization they want to support or even an area of charitable interest. Here are two solutions.
First, your clients can name the Community Foundation as beneficiary in their will or revocable living trust and wrap up their estate planning. We will then work with your clients to review needs in our community and help them identify an organization or area of interest to support. We will confirm these charitable wishes with a Letter of Intent. This Letter can be revised as often as your clients like and at no charge, if their intentions change over the course of their lifetimes.
If your clients want to support a broad range of needs in southwest Washington, have them designate the Community Giving Fund as the recipient of their bequest or other charitable estate gift to the Community Foundation. Grants from this fund are awarded to nonprofits via a formal process guided by the Community Foundation’s Board and by community members who are knowledgeable about local needs and organizations. People like the level of oversight we provide in granting their dollars. (back to top)
 Letter of Intent
Suggested Bequest Language
Community Giving Fund
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| My client wants to sell long-term appreciated stock but is concerned about capital gains. What should I advise? |
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Your client can completely avoid this taxable event by gifting their appreciated stock to the Community Foundation. Such stock can be used to create a charitable gift annuity or a charitable remainder or lead trust, and/or can fulfill a desire to support a favorite charity. This same scenario can be achieved with long-term appreciated real estate. (back to top)
Learn more about Publicly Traded Stock: A Case Study.
Partnership Policy |
| My client will be receiving additional taxable income this year, and he wants to give some to charity. He is preoccupied with the complexity of issues related to the asset and isn’t ready to decide on a charity to support. How can I reassure him? |
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Your client can quickly and efficiently create a Donor Advised Fund and lock in a tax deduction for the current year. When he’s ready, your client can recommend a grant from his fund to charities he wishes to support and on a timeline convenient to him. (back to top) |
| My client has a large retirement fund, but her children will only receive 30 or 40 cents on the dollar. Is there another way to look at this? |
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From a tax standpoint, assets in qualified retirement plans and IRAs are among the least advantageous to gift to children. Ask your client to consider gifting more tax-favored assets to her children and create a Donor Advised Fund with the IRA. This will establish a wonderful family legacy by providing a tool from which her heirs can make recommendations regarding charitable gifts. At the same time, she will eliminate income tax on the IRA distribution and reduce estate tax.
In addition, IRA “charitable rollover” legislation allows individuals 70 ½ years of age and older to make a gift directly from an IRA to charity while avoiding any tax consequences. Distributions can only be made in 2008 and 2009, with a maximum gift of $100,000 allowed in each of these years (couples with separate IRAs may each give up to $100,000 per year). This is a wonderful incentive to support escalating community needs. (back to top) |
| My retired clients have been very involved in the community and want to continue supporting their favorite nonprofit. However, they are concerned about running out of money during their lifetimes. What would you advise? |
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A charitable remainder trust is a perfect solution. During your clients’ lifetimes, they will receive an income stream. Upon their deaths, an endowed Designated Fund can be named as the trust’s remainder beneficiary. This fund will provide a permanent income stream to their favorite nonprofit far into the future. They can choose a name for the Designated Fund (e.g., The Smith Family Fund). Similar benefits are available with a charitable gift annuity. (back to top) |
| My clients have approached me about starting a private foundation. They are active, busy people, and I am concerned that they will find the administrative, legal, and reporting requirements burdensome. Is there a better option? |
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Estate planning attorneys tell us that they typically discourage creating a private foundation if the assets would be $5 million or less. Aside from the burdens you describe, they would be required to grant 5 percent from their foundation annually. The IRS’s schedule might not fit into your clients’ busy schedule. A Donor Advised Fund is a flexible tool that has no annual granting requirement. Through the Community Foundation, your clients’ grantmaking and administrative needs would be entirely supported. In addition, your clients could recommend grants anonymously (private foundation granting is a matter of public record). With these advantages, individuals with assets that greatly exceed the $5 million threshold quite often still choose the Donor Advised Fund option. (back to top)
Compare Four Approaches to Giving
Learn more about Donor Advised Funds |
| I am a financial advisor who has long-standing client relationships. I am encouraging my client to establish an endowed charitable fund with the Community Foundation, but she wants me to continue to manage her assets. How do I respond? |
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Through our Partnership Policy, you can manage your clients’ assets outside of the Community Foundation’s investment pool. The assets become that the property of the Community Foundation (thereby enabling your client to receive a tax deduction). Nevertheless, we retain your firm as the investment manager and you continue to invest the funds under the Foundation’s Investment Guidelines, with an annual review of performance. The minimum gift to enter into this arrangement is $200,000. (back to top)
Community Foundation Partnership Policy |
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