No images? Click here Year-end Charitable Giving, Upcoming Webinars, Why Life Insurance Shouldn’t be Overlooked, and What’s Trending in Philanthropy Hello from Oregon Community Foundation! Thank you for the opportunity to work together as you serve your philanthropic clients. We are grateful for the many ways our team collaborates with attorneys, accountants, and financial advisors. Whether we are working together to structure a family’s donor-advised fund, a gift of real estate, endowed support for a favorite nonprofit, or a Qualified Charitable Distribution to a field-of-interest fund at OCF, our team enjoys and appreciates every minute. As always, we are here for you! —The team at OCF In this issue:
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 jumpstart 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 community foundations are ideal providers of donor-advised funds for clients who want to keep their philanthropy local and benefit from OCF’s focus, expertise, and mission-driven 501(c)(3) status. But donor-advised funds are not the only types of funds that OCF offers. Your clients can also establish field-of-interest funds, designated funds, unrestricted 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 scholarship, field-of-interest or designated fund. Understand OCF’s donor-advised fund advantages. As you work with clients for whom a donor-advised fund is appropriate, be sure you understand why OCF is such a great fit for so many philanthropic individuals and families. Indeed, OCF is the truly local option for donor-advised funds. Large, national providers associated with financial institutions also offer donor-advised funds, but those vehicles are typically not the best fit for clients who's priority is our local community and want to support the region’s nonprofits in a meaningful way. Know how a donor-advised fund works. It’s easy for a client to establish a donor-advised fund at OCF. After completing simple paperwork, your client will make a tax-deductible gift (of cash, stock or other highly-appreciated asset) to OCF to fund the donor-advised fund. The funds can then be granted out to eligible charities at the client’s recommendation over time. Many clients find that a donor-advised fund operates almost identically to a private foundation, but without the sometimes hefty administrative overhead costs and burdensome restrictions. A donor-advised fund 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 enable the client to give anonymously. Supercharge both tax benefits and giving. Giving through a donor-advised fund at OCF 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 OCF 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 OCF 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. Our team is here to help you ensure that your clients can meet their financial and charitable goals through year-end giving and beyond. Mark Your Calendar: New CE Webinars for 2024 Next year’s Philanthropy Forums are posted – and you can register now. These informative webinar-style sessions with nationally-recognized experts are offered at no cost, providing an opportunity to stay well-versed in the latest developments in charitable giving. Continuing education credits may be available pending application through the Oregon State Bar, Oregon Board of Accountancy and CFP Board. January 23, 2024: “Tax-Smart Charitable Giving” with Christopher Hoyt | Free Today, only 9.5% of taxpayers itemize deductions and get tax benefits from charitable gifts, compared to over 30% of taxpayers in 2017. Professor Hoyt will explain the challenges and solutions for getting income tax deductions from charitable gifts since the 2017 Tax Cuts and Jobs Act. April 24, 2024: “The Spheres of Influence and Impact in Philanthropy” with Dien Yuen | Free $84.4 trillion will be transferred between 2021 and 2045. 86% is expected to go to heirs, while the remainder will go to charity. In this presentation, we will look at the influencers of these wealth transfer plans, dive into the roles of advisors and gift planners, and apply what we learned by co-creating donor and client engagement strategies. September 11, 2024: “Adapt, Change or Disappear: New Approaches for a Changing Marketplace” with David York | Free This presentation will review these seismic shifts in wealth transfer planning and professional services, how these changes are affecting the financial services industry, and practical recommendations on how to connect with a new type of client and their heirs and thrive in the marketplace today. November 5, 2024: “Charitable Giving with Retirement Benefits” with Natalie Choate | Free This seminar explains the advantages and technical requirements of using retirement benefits to fulfill a client's charitable goals, both during life and as part of the estate plan at death, including what types of charitable and partly-charitable entities are suitable recipients of this type of gift. Includes recent planning options opened by “SECURE 2.0.” View all of our CE events for 2024 at oregoncf.org/forums. Life Insurance: A Key Charitable Planning Tool for Certain Clients As an advisor, you often talk with your clients about life insurance–how much is enough and which policies are best suited for a client’s particular situation. As you counsel your clients about risk management and the role of life insurance in their estate plans, don’t forget that life insurance can be an effective charitable giving tool in some situations. Many advisors overlook the ease of naming a charity as the beneficiary of a life insurance policy. Certainly, qualified plans and IRAs are a more tax-effective vehicle to leave to a charity via a beneficiary designation, but some clients might want to do even more than that. For instance, “second-to-die” life insurance policies are a common hedge or shield against anticipated estate taxes. These policies may become more popular as the estate tax exemption drops back down at the end of 2025. Some clients may not be fully aware of how important beneficiary designations really are. Of course, many policyholders will first want to provide for family members in either specified dollar amounts or percentages. What some clients may not realize is that they can also designate insurance proceeds to support the causes they care about, whether by naming a charity directly or naming a fund at OCF to carry out their charitable wishes. Increasing the coverage under an existing policy may present an additional charitable giving opportunity for some clients. Because policy premiums generally do not rise proportionately to benefit amounts, expanding the benefits can be cost efficient. For example, if a client would like each of four family-member beneficiaries to receive $250,000 from a million-dollar life insurance policy, adding $250,000 of benefit will typically not increase the premium by 25%. In fact, the benefit-to-premium ratio may improve. In a case like this, the client can name the four family-member beneficiaries and the charity to each receive ⅕ of the policy benefits. Depending on the client’s overall financial and estate planning picture, a technique like this might truly deliver bang for the buck. And although deploying life insurance as a charitable planning technique may not be a fit for every client, it’s certainly worth considering in edge cases. Indeed, the global market for term insurance is growing—from $850 billion in 2021 to an expected $1.3 trillion by 2028. Many people buy term insurance with its relatively low fixed-rate premiums for 20 - 30 years as a hedge for potentially lost income during high-expense times in life, such as children’s college years, or to pay off a mortgage. But if those years pass uneventfully (fingers crossed!), and amid an improved personal financial position, it’s an opportune time to reassess and even continue the policy. Past term insurance policy premiums can then be viewed as sunk or unrecoverable costs, and future premiums can be seen as a relatively moderate “investment” relative to the benefit. Of course, all of your clients want to outlive their policies. But as long as a policy is in effect, the policy offers many potential opportunities, including for charitable giving. Reach out to OCF to explore this further. We’d love to talk! Philanthropy Tips and Trends Many eyes are on the Charitable Act, which, if passed, would allow for deductible charitable contributions that exceed the standard deduction. The Charitable Act proposes to restore the pandemic-era “universal charitable deduction” and raise the cap from $300 for individuals ($600 for joint filers) to approximately $4,600 for individuals ($9,200 for joint filers). Some advisors have been watching the regulations surrounding Type I and Type III supporting organizations. If you are dealing with these vehicles in your practice, be sure to stay up to date on the latest IRS regulations. The IRS is issuing warnings about crisis giving and potential fraud. All too often, a tragic event occurs and is quickly publicized through news accounts or social media. Then, the dollars start rolling into a crowdfunding site like GoFundMe, Kickstarter, or Fundly. Well-intended zeal and urgency to give may not be truly aligned with the greatest needs. Unfortunately, not all “dollar destinations” are legitimate, either in their authenticity or their declarations that a specified gift percentage will be delivered as intended. Your clients can count on OCF as a trusted source to authenticate grantee organizations. Our team not only knows the charitable landscape, but also we can fully vet recipient organizations for qualification and tax deductibility. OCF is here to help your clients navigate all of the considerations that factor into making a tax-deductible gift to a legitimate organization that can truly help offer the relief they intend. Indeed, mobile devices have made it easy to act on our honest instincts. However, in an increasingly impatient, noisy, and short-attention-span world that can carry a “get ‘er done” urgency, haste often makes waste. Please give us a call to talk through your clients’ options for crisis giving and how to make sure their dollars get to the people and places that need it most. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. The team at OCF is grateful to be able to serve as a resource for you as you work with your clients on their charitable planning. We are happy to run illustrations that show deduction amounts and anticipated taxation of annuity payments. Please reach out to discuss further or request an illustration for your clients. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. |