I found this wonderful article in the Idaho Community Foundation’s Professional Advisor Newsletter, November 2023. (Printed with permission.) If you want more information, please contact Kris Kamann at the Idaho Community Foundation, 208-342-3535, or go to the Idaho Community Foundation website. – Susan M. Graham
Tips for clients’ year-end giving
Year-end giving makes up a significant portion of total revenue for most charitable organizations. Research even shows that a whopping 25% of online giving occurs in December!
What this means is that there’s a pretty good chance your clients are already considering end-of-year gifts to support causes they care about, are being asked by at least one nonprofit for an end-of-year gift, or both.
That’s why it’s important for you to talk with clients well in advance of the year-end giving rush.
Here are six tips to help jump start your client conversations over the next few weeks. Please give us a call if you’d like to dive deeper! We are here for you.
Check in on goals. By discussing your clients’ overall charitable goals, you can ascertain which causes your clients are passionate about and why they care, how much they’d like to contribute in the short term and over time, the impact they’d like to see, and whether they intend to provide for their favorite charities in their estate plan. Against this backdrop, year-end giving strategies become easier to develop.
Explore a wide variety of fund types. Donor Advised Funds are very popular vehicles, and the Idaho Community Foundation is an ideal provider of Donor Advised Funds for clients who want to keep their philanthropy local and benefit from the community foundation’s focus, expertise, and mission-driven 501(c)(3) status.
But DAFs are not the only types of funds that the community foundation offers. Your clients can also establish Field-of-Interest funds. Designated Funds, Forever Idaho funds, or Scholarship Funds. Our team will help you evaluate what type of fund (or funds) is best suited for a particular client. For example, a client considering a Qualified Charitable Distribution from an IRA is a great candidate to establish a Field-of-Interest or Designated fund.
Understand the Idaho Community Foundation’s DAF advantages. As you work with clients for whom a Donor Advised Fund is appropriate, be sure you understand why the community foundation is such a great fit for so many philanthropic individuals and families. Indeed, the community foundation is the truly local option for DAFs. Large, national providers associated with financial institutions also offer DAFs, but those vehicles are typically not a fit for clients who care about our community and want to support the region’s non-profits in a meaningful way.
Know how a DAF works. It’s easy for a client to establish a Donor Advised Fund at the Idaho Community Foundation. After completing simple paperwork, your client will make a tax-deductible gift (ideally, stock or other highly-appreciated asset) to the community foundation to fund the DAF. The funds can then be granted to eligible charities at the client’s recommendation over time.
Many clients find that a DAF operates almost identically to a private foundation, but without the sometimes hefty administrative overhead costs and burdensome restrictions. A DAF can be named after the client (e.g. Smith Family Fund) or named to reflect the purpose of the client’s giving (e.g., Fund for the Future of Anytown), or even structured to allow the client to give anonymously.
Supercharge both tax benefits and giving. Giving through a DAF at the community foundation may allow a client to tap a helpful technique called “bunching,” which maximizes the client’s itemized deductions for the tax year, while still ensuring that the client can give strategically over the next few years to achieve charitable goals and support favorite organizations when they need it the most.
Don’t default to cash. Many clients naturally think of cash as the source for their year-end giving. That’s a missed opportunity! Most of the time, highly-appreciated marketable securities (or other highly-appreciated, long-term assets) are a better gift to a client’s fund at the community foundation or other public charity because the client is eligible for a tax deduction at the assets’ fair market value, and the proceeds from the sale of the assets will flow into the client’s fund at the community foundation free from capital gains tax. That means more funds are available to support the client’s favorite causes.
Philanthropy is an important topic of conversation with your clients, not just at the end of the year, but always. The team at the Idaho Community Foundation is there to help you ensure that your clients can meet their financial and charitable goals through year-end giving and beyond.
Do you have a written estate plan that protects your future and your loved ones? Call to schedule a meeting with Susan Graham to give you peace of mind that your affairs are in order (phone 208-344-0375 or Contact Us on our website).
Undoubtedly you have thought of someone who could use our services. If so, please have them call us at 208-344-0375. Introductions and referrals are the lifeblood of our practice. Thank you.