Today’s donors are looking to their professional advisors for financial planning advice and tax strategies. As you consider solutions that will provide the most benefit for your clients, remember charitable giving through the Hamilton Community Foundation can play an important part in your clients’ financial plans.
For nearly 70 years, the Hamilton Community Foundation's expert resources have teamed with professional advisors to help their clients achieve their goals and support the causes they care about. By partnering with us you can build relationships, increase your understanding of community needs, and strengthen and improve our community through philanthropy.
Local Professional Advisors also receive invitations to Hamilton Community Foundation events offering networking and education.
By August 2022, markets were down 12% for the year and inflation was up 8.3% year-over-year. Perhaps consequently, but then unknown, annual charitable giving was on its way to a rare (fourth time in 40 years) year-over year decline of some 4% according to Giving USA. Certainly this decline was due in part to donors not wanting to give stock at depressed values. You likely even discussed this with your clients!
Now months later (as of July 2023) markets were up 7.28% year to date and inflation was roughly half at 4.7% year–over-year. Even though the stock market still shows signs of volatility, hopefully, charitable giving will rebound.
No matter the times, and even in down markets, some stocks will still out-perform. These holdings are of course excellent candidates for your clients to give to charity and avoid taxes on the capital gains. This year is no different, with stocks like Microsoft, Apple, Nvidia, among others, enjoying banner years. Indeed, Microsoft, Apple, and Nvidia were up 38%, 36% and 228%, respectively through mid-August. For some of your clients, these gains have created concentrated stock positions where you, as an advisor, may believe that portfolio allocations have become imbalanced under the investment strategy you are pursuing. Your clients who support charities through their donor-advised funds at the community foundation can consider potentially alleviating this situation through charitable gifts of highly-appreciated stock.
Your clients who give appreciated stock to a Donor Advised Fund can:
–Enjoy the ease of the donor-advised fund as an account for current and future charitable giving
–Conveniently support the causes they and their families care most about
–Maintain a mix of assets in the donor-advised fund account that are consistent with the client’s investment philosophies
–Benefit from an up-front income tax deduction, avoid capital gains on the assets’ sale within the fund, and grow the proceeds for future grantmaking
–Leave a legacy for children and grandchildren to continue their philanthropic commitments
–Reduce the value of their taxable estate, potentially reducing estate taxes
–Comply with IRS charitable gifting guidelines
–Enjoy supporting charities in the client’s name, the fund’s name, or anonymously
–Receive a single year-end tax document that summarizes all gifts for tax purposes
By establishing a donor-advised fund at the Hamilton Community Foundation, your client is part of a community of giving and will have opportunities to collaborate with other donors who share their interests. In addition, your client is supported in strategic grant making, family philanthropy, and opportunities to gain deep knowledge about local issues and nonprofits making a difference.
So while it’s nice to see the market’s performance improve, a bonus opportunity lies in your clients’ transferring appreciated stock to donor-advised funds at the Community
Foundation. We are always here to help!
Call Jacob Stone-Welch, Director of Donor Services, at 513-341-6985 to discuss ways in which we can be your partner in philanthropy.
Founded in 1951, The Hamilton Community Foundation (HCF) has the largest collective impact on the quality of life in Hamilton, Ohio. By professionally managing more than 1,000 individual, family and corporate funds, as well as nonprofit agency endowments, the Foundation awards more than $5 million in grants and scholarships annually. HCF works to address new and emerging issues of community concern, while remaining focused on health and social issues, education and community revitalization. As the largest community foundation in Butler County, HCF is a public charity with $140 million in assets.
Generational Philanthropy Can be Easy, Impactful and Organized
Instilling the idea of charitable giving in children and grandchildren at first blush may appear to be easy, but where to begin, and how to make it ongoing? More and more, wealth advisors are being asked by their clients to weigh in on strategies for fostering a family’s financial values, which frequently include charitable giving traditions.
An important first step in creating any multi-generational philanthropy plan is to advise clients to consider organizing their charitable giving, such as through a family donor-advised fund at the community foundation.
The process of organizing charitable giving itself creates much-needed clarity around the family’s philanthropic purpose. This is because without an organized approach to family giving, it is easy for children and grandchildren to get confused about their parents’ and grandparents’ processes for making decisions about which nonprofits to support.
Consider this scenario:
"Before we got everything organized through the community foundation, our family seemed to take a shotgun approach to charitable giving," commented the daughter of an entrepreneur who formed a family donor-advised fund upon the sale of a business.
Her mother, the entrepreneur, had underestimated the confusion: "Nearly every check I’d ever written to a charity was aligned with my commitment to supporting a healthy workforce in our community. Without a healthy workforce, my business would never have been successful. Now, though, I see that because I was not involving the rest of my family in my giving and explaining why I was supporting certain causes, it might have looked chaotic to them."
Establishing a Fund at the Hamilton Community Foundation can be a very effective solution for many of your clients who are launching a multi-generational giving strategy. Here’s why:
–Community Foundation vehicles are extremely flexible and can be used to engage an extended family in the process of charitable giving. Donor-advised funds, for example, are popular because they allow your client to name children and grandchildren as successor advisors.
–When your client organizes charitable giving through a Community Foundation fund, the client can make a large transfer of cash or marketable securities that is immediately eligible for a charitable deduction. Your client then can recommend gifts to favorite charities from the fund when the time is right. This is especially useful in the case of clients who sell a business or for another reason experience a large influx of taxable income in a single tax year.
–Establishing a Donor Advised Fund at the Hamilton Community Foundation can be a much better choice for your family-oriented clients than a donor-advised fund offered through a brokerage firm (such as Fidelity or Schwab). That’s because, at a community foundation, your clients, as well as their children and grandchildren, are part of a community of giving and have opportunities to collaborate with other donors who share similar interests.
–The Hamilton Community Foundation can work with a client and the client’s family on a charitable giving plan that extends for multiple future generations. That is because the experienced team at the community foundation supports strategic grant making, family philanthropy, and opportunities to gain deep knowledge about local issues and nonprofits making a difference.
–Finally, the Community Foundation’s tools and resources make it much easier for families to communicate across generations about the family’s charitable giving purpose and goals for long-term impact.
We welcome the opportunity to work with you and any of your philanthropic clients to establish an enduring and rewarding family philanthropy program that is customized to meet each client’s unique purpose.
Call Jacob Stone-Welch, Director of Donor Services, at 513-341-6985 to discuss ways in which we can be your partner in philanthropy.
Founded in 1951, The Hamilton Community Foundation (HCF) has the largest collective impact on the quality of life in Hamilton, Ohio. By professionally managing more than 1,000 individual, family and corporate funds, as well as nonprofit agency endowments, the Foundation awards more than $5 million in grants and scholarships annually. HCF works to address new and emerging issues of community concern, while remaining focused on health and social issues, education and community revitalization. As the largest community foundation in Butler County, HCF is a public charity with $140 million in assets.
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Why Give to the Hamilton Community Foundation?
As an advisor, I meet my clients where they are. Some families are genetically philanthropic – walking into my office with definable goals and plans. Some families struggle to identify their passion, employ philanthropy in a scatter-shot sort of way, and react rather than plan. And, of course, there is every kind of family in between. A gift to the Hamilton Community Foundation is a perfect solution for all types of givers.
Let’s take gifts to a donor–advised fund for starters. Quick primer – a donor-advised fund created by a donor can be a target for charitable dollars annually or at the occurrence of an “event” (sale of a business or an inheritance, for example) without requiring a firm position on the ultimate recipient at the creation of the fund. This allows an indecisive donor to punt the decision of what cause to benefit into the future. On the other hand, these funds allow a more decisive donor to reap the tax benefits of a large gift to the Foundation now while funding donations to the charity of their choice later. All types of donors can use these funds to address needs as they arise in the community in the future – not just in the year of the gift.
Gifts to established funds, whether field of interest or unrestricted, can help fund more generalized charitable intentions. Economic development, scholarships, human needs – these are all categories, and more, in which the Hamilton Community Foundation’s fine staff have high levels of local expertise. When a family desires to benefit the community, but wants to leave it to the experts to determine best uses, these gifts are ideal. Many of these funds are also endowed, which means they exist in perpetuity and will ensure benefit to the community forever.
The Hamilton Community Foundation can also be the recipient of a wide range of gifts, during life and at death. Cash is the most common gift, of course, but provision can be made for gifts of stock, life insurance policies, retirement assets, and more. This flexibility may provide tax benefits beyond the normal income tax deduction, can help manage future estate tax liabilities and can provide a family with support in simplifying their portfolios.
Gifts to the Hamilton Community Foundation can serve other purposes beyond philanthropy and tax. The professionals at the Foundation provide a high level of service when they help a family design their gift, which is something a gift to a large, remote charity may not afford. Gifts to the Foundation also assist in creating a connection to the community across generations, reinforcing charitable giving as a core family value, teaching younger family members how to collaborate with their neighbors and other local partners, and leaving a legacy – both for charitable purposes and to honor the family itself.
As an advisor in this community, it is impossible to overstate the value and service the Hamilton Community Foundation provides to its donors and the Hamilton area. The variety of funds and gifting options available make it the number one tool in the planning toolbox when working with families. We are truly fortunate to have such a valuable resource at our disposal.
May 2023
A major portion of the $80 billion scheduled to be invested in Internal Revenue Service upgrades is earmarked to “increase tax compliance among wealthy taxpayers and businesses,” according to the IRS’s plan. Indeed, the IRS is investing upwards of $47 billion toward enforcement efforts, an amount that towers over the next-largest item on its spending plan, which is just over $12 billion slated for technology enhancements.
Little doubt remains that your high income-earning clients can expect more oversight and less room for error. This reality is of concern to attorneys, accountants, and financial advisors who are responsible for helping their clients adhere to the tax laws with integrity.
If you’d like to dig into the details about the IRS’s newly-secured tens of billions of dollars, you can peruse the agency’s Inflation Reduction Act Strategic Operating Plan submitted April 5, 2023 by IRS Commissioner Daniel I. Werfel. The 150-page plan covering 2023 - 2031 speaks primarily to five areas of priority spending:
• $47.4 billion to increase tax compliance among wealthy taxpayers and businesses.
• $12.4 billion for technology enhancements.
• $8.2 billion to recruit and retain a highly skilled, diverse workforce.
• $7.5 billion targeting taxpayer service improvements.
• $3.9 billion for cybersecurity.
Significant operational efficiencies are anticipated, and the heightened compliance efforts will generally apply to taxpayers making more than $400,000 annually. What’s raising eyebrows is that high-income earners and thus, donors to charity—and the financial professionals who serve them—should likely expect more in terms of attention, oversight, and audits.
According to the plan, “segments of taxpayers with complex issues and complex returns where audit rates are minimal today, such as those related to large partnerships, large corporations, and high-income and high-wealth individuals,” will be areas of focus.
The new-hire ramp up and technology implementation will take some time, per experts, with some believing that 2022 tax returns will be less subject to scrutiny than those in future years. But, the agency also has a three-year window to initiate an audit, giving it time to look back.
Of specific importance to the charitable community is Objective 3, Initiative 4 (PDF page 66 of the plan), which states: “The IRS will increase enforcement activities to help ensure tax compliance of high-income and high-wealth individuals.”
Increasing right along with the enhanced scrutiny is the need for solid charitable planning advice to assist your high net-worth clients. The community foundation is an ideal partner, offering secure and efficient vehicles for charitable giving—including the precise tax documentation and compliance that the IRS expects.
Indeed, a silver lining for advisors and their clients who work with the community foundation may be that the added potential IRS oversight plays to the foundation’s strengths. By offering donors fully-vetted grantee organizations, plus gift execution, documentation and compliance services, your charitable clients who’ve established donor-advised, field-of-interest, designated, or other funds at the community foundation can rest more easily knowing that their philanthropy is being handled as intended and able to withstand questioning, whether your clients are funding their contributions with Qualified Charitable Distributions, highly-appreciated stock, or complex assets such as closely-held businesses and real estate.
We look forward to working with you and your clients as we navigate a new era of IRS scrutiny.
8 March 2023
No one has to tell you about the sense of dread that can arise when asking some clients to pull together their receipts and documents. It’s never too early to start thinking about how to avoid that dread next year.
When it comes to charitable giving, your clients may find that organizing their giving through one or more funds at the Hamilton Community Foundation will make their lives easier. A client can take advantage of this feature by making a single, tax-deductible contribution each year to HCF, to be added to their donor advised, field of interest or other type of fund.
An especially tax-savvy technique is for the client to make this contribution using highly-appreciated stock. After the stock has been transferred to the Community Foundation, the proceeds from the foundation’s sale of the stock
The subject of gathering up tax receipts for charitable donations is often a prompt for clients to get organized with the rest of their financial lives, too. At the very least, the subject of charitable giving can pave the way for a discussion about the basics of estate planning. Many clients are simply not aware of the meaning and importance of critical elements, such as:
1. The difference between a will and a living trust and how charitable wishes fit into these documents.
2. Why it’s critical to be intentional about how each and every asset is titled so that the assets actually pass as intended.
3. The dangers of hurriedly filling out life insurance and retirement plan beneficiary designations and why these documents are absolutely critical components of a financial, estate and charitable plan.
4. Reasons for having both a “living will” and durable power of attorney, both of which have a major impact in the event of incapacity.
5. A reminder to make sure someone in the family knows where to find a list of logins and passwords.
Charitable planning is one of many steps in your work with clients, but it can be a catalyst for helping clients understand why they need that comprehensive estate and financial plan you’ve been encouraging them to complete. The Hamilton Community Foundation team is at the ready to help with the charitable components of your service to clients.
Call Katie Braswell at 5163.805.0220 to discuss ways in which HCF can be your partner in establishing your clients’ charitable portfolio.
Founded in 1951, The Hamilton Community Foundation (HCF) has the largest collective impact on the quality of life in Hamilton, Ohio. By professionally managing more than 1,000 individual, family and corporate funds, as well as nonprofit agency endowments, the Foundation awards more than $5 million in grants and scholarships annually. HCF works to address new and emerging issues of community concern, while remaining focused on health and social issues, education and community revitalization. As the largest community foundation in Butler County, HCF is a public charity with $140 million in assets.
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1 March 2023
Most attorneys, accounts and financial advisors are well aware of donor advised funds and the reasons behind their popularity. Especially when a donor advised fund is established at the Hamilton Community Foundation, this vehicle is an excellent way for your clients to organize their charitable giving and get even more connected to the causes about which they care.
Enter the QCD
Your clients can give nearly every type of asset to a donor advised fund at the Community Foundation. A notable exception, though, is the Qualified Charitable Distribution (QCD). The QCD allows a taxpayer 70 ½ or older to make a direct transfer of up to $100,000 annually from an IRA to a qualifying charity. A donor advised fund is not considered to be a qualifying charity.
Although donor advised funds cannot accept QCDs, the Community Foundation offers other types of funds that can accept QCDs. For example, designated funds and field of interest funds held at HCF are ideal recipients of QCD transfers. These fund types are often overlooked but many times provide the exact right opportunity for a donor to give where their heart is.
What is a field of interest fund?
A field of interest fund is defined as a fund held by a community foundation that is used for a specific charitable purpose, such as education or health research. Perhaps your client is passionate about rare disease solutions, feeding the food insecure or preserving works of art, for example. Your client selects the name of the fund and then HCF distributes the grants from the field of interest fund in a way that is aligned with your client’s values and charitable wishes outlined in the fund agreement.
What is a designated fund?
Designated funds are restricted funds in which the fund beneficiaries are specified by the grantors. These are a good choice for a client who knows they want to support a particular charity or charities for multiple years. The client names the fund and HCF fulfills the distributions. Made over time, these funds can help the charity’s or charities’ cash flow planning. Again, distributions are aligned with the client’s wishes set forth in the original fund agreement.
Call Katie Braswell at 5163.805.0220 to discuss ways in which HCF can be your partner in establishing your clients’ charitable portfolio.
Founded in 1951, The Hamilton Community Foundation (HCF) has the largest collective impact on the quality of life in Hamilton, Ohio. By professionally managing more than 1,000 individual, family and corporate funds, as well as nonprofit agency endowments, the Foundation awards more than $5 million in grants and scholarships annually. HCF works to address new and emerging issues of community concern, while remaining focused on health and social issues, education and community revitalization. As the largest community foundation in Butler County, HCF is a public charity with $140 million in assets.
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