April 2025 Professional Advisor News

As your philanthropic clients can likely attest, the going has been rough for many of the nonprofit organizations they support. Turbulent market conditions, concerns about inflation, and an overall feeling of economic instability are just a few of the factors that may be causing donors to be more financially conservative and perhaps begin to evaluate whether to keep their charitable giving at the levels of years past.

At the same time, many of your clients deeply understand the need to support the nonprofit sector and continue giving to the nonprofit organizations they love as they implement financial plans for 2025. Philanthropic support to these organizations is critical to maintaining and improving the quality of life in our community. This is especially true as the number of households giving to charity has faltered over the last few years.

As we head into the spring and summer months, it’s a good idea to touch base with your clients about their charitable giving budgets for 2025, including evaluating the types of assets that are best suited for a particular client to give to charitable causes. Especially important is the decision whether to give cash or stock.

When and why it makes sense to give stock
As economic conditions and potential inflation continue to increase clients’ concerns about their household finances, you and your clients may decide that preserving cash is a priority. This means that some of your clients who have typically given cash to their favorite charities or to their donor-advised funds at the Community Foundation may be reluctant to do so this year. That’s actually a good thing!

Giving appreciated, publicly-traded stock to charitable organizations is a highly-effective tax strategy in any economy. This is because capital gains tax is avoided when your client transfers long-term, marketable securities to a fund at the Community Foundation or other public charity. The client is typically eligible for an income tax deduction at the fair market value of the securities, and when the charity sells the securities, the charity does not pay capital gains tax. This is a win-win for your client and the nonprofit. And even in a rocky stock market, not all stocks are down. Many of your clients are no doubt holding long-term stock positions that have appreciated substantially since they bought them, even with the current stock market volatility.

When and why it makes sense to give cash
In those instances where clients’ portfolios are down significantly across the board, this may be a year to consider contributing cash to a donor-advised fund at the Community Foundation or other nonprofit organization instead of donating highly-appreciated stock. Gifts of cash could reduce the burden on a client’s personal stock positions that may have fallen in value dramatically, giving these positions more time to recover value and, at some point in the future, be contributed to the donor-advised fund at a higher value (thereby resulting in a higher tax deduction for the client).

Why a donor-advised fund is useful in dynamic market conditions
Overall, in turbulent times like this, donor-advised funds at the Community Foundation can come in especially handy. Now is the time to discuss charitable giving with those clients who regularly added to their donor-advised funds throughout the market’s long bull run. If these clients intend to ride out today’s market conditions in their personal portfolios, an up-and-down stock market doesn’t mean the clients’ 2025 charitable giving must take a hit. These clients can use their donor-advised funds to support their favorite organizations, sometimes even at levels consistent with prior years.

As always, please reach out to discuss options for your clients’ charitable giving. We are happy to help you help your clients achieve their goals, even in a year as bumpy as 2025 appears to be!

When you’re working on the charitable components of a client’s estate or financial plan, one of the first areas you’ll likely explore is the structure. Certainly, you are familiar with both private foundations and donor-advised funds as useful charitable giving tools. Before you jump into one or the other for a particular client, though, it’s important to review the similarities and differences between the two so that you can best achieve your client’s goals.

To help you evaluate a client’s options, here are three common myths about the differences between private foundations and donor-advised funds.

Myth #1: Donor-advised funds are all the same and only private foundations can be customized

Private foundations will always differ from donor-advised funds in important ways, not only because of their status as separate legal entities and the deductibility rules for gifts to these entities, but also because of the opportunities to customize governance. But it is a mistake to assume that a donor-advised fund is a cookie-cutter vehicle. Indeed, “donor-advised fund” is simply a term used to describe the structure of a fund and its relationship with a sponsoring organization such as a community foundation. The donor-advised fund vehicle itself is extremely flexible. Here’s why:

• Donor-advised funds are popular because they allow your client to make a tax-deductible transfer of cash or marketable securities that is immediately eligible for a charitable deduction. Then, your client can recommend gifts to favorite nonprofit organizations from the fund when they choose.

• A donor-advised fund at the Community Foundation is frequently a more effective choice than a donor-advised fund offered through a financial institution. That’s because at a Community Foundation, your client is part of a community of giving and has opportunities to collaborate with other donors who share similar interests. Plus, the Community Foundation is itself local and its staff is deeply knowledgeable about the needs of our community and the nonprofits meeting those needs.

• The Community Foundation can work with you and your client to build a charitable giving plan that extends for multiple future generations. That is because the professional staff at the Community Foundation supports your clients in strategic grant making, family philanthropy, legacy planning, and opportunities to learn about local issues and nonprofits making a difference.

Myth #2: Deciding whether to establish a donor-advised fund or a private foundation mostly depends on size

The size of a donor-advised fund, like the size of a private foundation, is unlimited. The United States’ largest private foundations are valued well into the billions of dollars. Information about private foundations, ironically, is not so private. The Internal Revenue Service provides public access to private foundations’ Form 990 tax returns. That is not the case for individual donor-advised funds.

Similarly, donor-advised funds are not subject to an upper limit. Although information on the asset size of individual donor-advised funds is not publicly available, anecdotal information indicates that some donor-advised funds’ assets may total in the billions of dollars.

Indeed, a donor-advised fund of any size can be an effective alternative to a private foundation, thanks to fewer expenses to establish and maintain, maximum tax benefits (higher deductibility limitations and fair market valuation for contributing hard-to-value assets), no excise taxes, and confidentiality (including the ability to grant anonymously to charities).

The net-net here is that the decision of whether to establish a donor-advised fund or a private foundation – or both – is much less a function of size than it is other factors that are tied more closely to the objectives a client is trying to achieve.

Myth #3: Donor-advised funds and private foundations are mutually exclusive

Make sure you’re aware of the benefits of using both a donor-advised fund and a private foundation to accomplish clients’ charitable goals. For example:

• Donor-advised funds can help meet the need for anonymity in certain grants, which is typically difficult using a private foundation on its own.

• A donor-advised fund can receive a client’s gifts of highly-appreciated, nonmarketable assets such as closely-held stock and real estate, and benefit from favorable tax deduction rules not available for gifts to a private foundation.

• An integrated donor-advised fund and private foundation approach can help a client balance and diversify investment and distribution strategies to ensure that giving to important causes remains steady even in market downturns.

Terminating a private foundation and consolidating giving through a donor-advised fund is sometimes the best alternative for a client when the day-to-day management and administration of the private foundation has become more time-consuming than expected and is taking time and focus away from nonprofits, the community, and making grants.

Along these lines, some families find that the tax rules related to investments, distributions, and “self-dealing” have become harder to navigate and are perhaps even preventing the family from maximizing tax benefits of charitable giving. Finally, the administrative load of managing a private foundation sometimes becomes overwhelming, especially if the family members who handled these functions initially have retired, passed away, or simply become busy with other projects.

The bottom line here is that we encourage you to reach out anytime you are evaluating how to structure a charitable giving plan to achieve both your client’s charitable goals and financial goals. Our professional staff is here to help. In many cases, the Community Foundation’s tools and services are a great fit for your client’s needs. If not, we will point you in the right direction.

Many attorneys, CPAs, and financial advisors share with us that one of the reasons their clients love working with GiveWell Community Foundation is because it is truly the community’s foundation. Whether your client has established a multi-million-dollar field-of-interest fund or a donor-advised fund to organize thousands of dollars of annual charitable gifts, your client gains full access to the Community Foundation’s charitable giving expertise and deep knowledge of the needs in our community.

The Community Foundation’s inclusive approach is one of the reasons our staff, our donors, and advisors, like you, find it so heartwarming to see stories about philanthropy hit the mainstream media. This is especially the case with recent reports about the rebound in charitable gifts from the 50 most generous philanthropists in the U.S. After a decline in donations in previous years, in 2024, these individuals collectively donated approximately $16 billion, marking a substantial increase. This resurgence highlights the continued commitment of affluent individuals to support various causes and charitable initiatives.

And it’s not just the ultra-wealthy donors who are making a difference. Families at all stages of prosperity are taking steps to organize their charitable giving activities. You may be observing a trend among your clients that donor-advised funds, for example, are becoming more popular at a wide range of wealth levels. Donor-advised funds at community foundations and national financial institutions have experienced substantial growth over the past decade, with total grants nearly doubling in the last five years.

The Community Foundation is honored to offer a local option for your clients who want to get started with a structured and intentional approach to their philanthropy by establishing a donor-advised fund. A donor-advised fund at GiveWell Community Foundation offers your clients several benefits:

Personalized service and local expertise
Our team provides personalized service, inviting your clients to interact with local experts who understand the community’s needs. We offer tailored guidance on grantmaking to support the interests and causes your clients care about. The Community Foundation’s local focus ensures that administrative fees support local initiatives rather than national or commercial entities.

Flexibility and customization
The Community Foundation is happy to offer a range of options for a client’s donor-advised fund as well as other types of funds, including endowed or non-endowed options, allowing clients to choose how they want to organize and manage their philanthropy. Plus, through a donor-advised fund, your client can support a full range of qualified public charities, both locally, nationally, and even internationally, providing flexibility in a strategic giving plan.

Tax benefits and administrative simplicity
Your client’s contributions to a donor-advised fund are eligible for immediate tax deductions, and assets can grow tax-free, maximizing the impact of donations. Our professional staff handles all administrative tasks, such as record-keeping and tax reporting, simplifying the process for you and your clients.

We encourage you to reach out anytime to learn more about how we can support your philanthropic clients, whether they’re just getting started with modest investments, or whether they’re deploying significant wealth toward philanthropic causes. Our staff is honored to serve your clients by combining boots on the ground local expertise with flexible and cost-effective charitable giving solutions.

As attorneys, CPAs, and financial advisors, you know very well that trust is at the foundation of your relationships with clients. Your clients are seeking a similar level of trust with the people and organizations that are helping carry out their philanthropic wishes.

Fortunately, trust in nonprofit organizations has shown an increase after a dip in recent years. According to the 2024 Edelman Trust Barometer and the Independent Sector’s “Trust in Nonprofits and Philanthropy” report, trust in nonprofits rebounded by 5 points to 57% in 2024, following a four-year decline.  This increase positions nonprofits as the most trusted sector compared to government, business, and media. Still, nonprofits face challenges and concerns about maintaining this trust, including general skepticism about institutions, as well as increasing expectations that nonprofit organizations demonstrate transparency and accountability.

As you work with your charitable clients, keep in mind that GiveWell Community Foundation can help bolster clients’ trust in their favorite charitable organizations. Here’s how:

Trustworthy information about particular nonprofit organizations
The Community Foundation is a valuable source for objective, timely information about specific nonprofits and the impact of particular programs and initiatives. By working with our Philanthropic Services staff, your clients can leverage a transparent and trustworthy avenue for learning about how best to make a difference for their favorite charitable causes.

Wide-ranging expertise about community needs
At its core, the Community Foundation is committed to achieving impact. This means that our staff keeps a finger on the pulse of local needs, whether related to social services, health care, education, the environment, the arts, community development, or any other community priority. With a deep understanding about community needs, our professional staff can be an excellent sounding board for your clients who want to learn which charitable organizations are addressing each need and how those nonprofits are measuring results.

Broad set of tools for structuring charitable gifts
The Community Foundation can help establish a tax-efficient structure to achieve each client’s goals for community impact. Available vehicles include not only donor-advised funds, but also other types of funds such as designated funds to support specific nonprofits and field-of-interest funds to address particular causes, as well as multi-generational funds to involve clients’ children and grandchildren. The Community Foundation offers your clients a flexible and effective way to manage charitable giving by simplifying their giving processes and maximizing potential tax benefits and impact in areas that mean the most to your client.

As always, we seek to be top of mind and your first call! Please reach out anytime the topic of charitable giving comes up during a client conversation. We are here to help!

If you encounter any situation with a client where charitable giving could be involved, please reach out to the Community Foundation! Our professional staff stands ready to serve as a sounding board for any matter related to philanthropy. To give you a sense for the specific client needs we can help address, here are three scenarios that are frequently the subject of our conversations with professional advisors.

Scenario #1
Client profile
A couple in their mid-50s supports many different nonprofit organizations throughout the year.

Goals
The couple wants to ease the transactional burden of charitable giving and maximize tax benefits.

Possible solution
A donor-advised fund at the Community Foundation can be an excellent tool to help these clients organize their giving to favorite charitable causes, such as local organizations, places of worship, along with an out-of-state alma mater or other charitable cause. Clients appreciate how easy it is to support multiple nonprofits while the Community Foundation’s systems keep track of everything. Plus, clients can give stock and other appreciated assets to their donor-advised funds, often avoiding capital gains tax and simplifying the tax receipts they provide to CPAs and other advisors when tax time rolls around.

Scenario #2
Client profile
A retired widower’s primary charitable interest is supporting a local college.

Goals
The client wants to provide long-term support for the college but with safeguards in case the college gets into financial trouble.

Possible solution
Through a designated fund at the Community Foundation, this 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. An advantage of a designated fund is that the assets are out of creditors’ reach if the charitable organization were to run into financial difficulties. Plus, a client who is 70 ½ or older can make Qualified Charitable Distributions up to $108,000 per year (that’s the 2025 limit) from IRAs to a designated fund. 

Scenario #3
Client profile
A couple in their mid-60s have realized that they’ve more than achieved their retirement savings goals.

Goals
The clients want to leave a meaningful legacy to favorite charitable causes while still providing for heirs.

Possible solution
By naming a fund at the Community Foundation as the beneficiary of one or more qualified retirement plans and IRAs, these clients could achieve extremely tax-efficient results. Not only is estate tax avoided on the retirement assets flowing to the charitable fund, but income tax is also avoided. Indeed, the income tax hit on retirement proceeds left to heirs can be steep.

As you encounter these and other scenarios, please reach out! Most of the time, we 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 organizations. At the very least, we can point you in the right direction.