May 2024 Professional Advisor News

The professional staff at GiveWell Community Foundation, works to stay attuned to legislation, legal developments, trends, news, and innovative strategies for all types of charitable giving so that we can keep donors, fundholders and their advisors up to date.

Currently, we’re carefully watching the IRS’s proposed regulations related to donor-advised funds. Issued in November 2023, the proposed rules have been the subject of conversation within financial and estate planning circles, especially following the April 19, 2024, letter signed by Ways and Means members and addressed to Treasury Secretary Janet Yellen urging the Treasury to take note of the proposed regulations’ potential chilling effect on philanthropy and especially on the work of community foundations.

We’ll keep you posted on new developments related to the proposed donor-advised fund regulations as they become available. In the meantime, we’d love to share some examples of when, and why, the Community Foundation should be your first call when you’re presented with a client’s charitable giving question or opportunity.

Planning in all seasons
A focus on tax savings isn’t just for tax season or year-end. Whether you’re meeting with a client in winter, spring, summer, or fall, our team can help you spot an opportunity to activate charitable giving techniques that both deliver tax benefits and achieve a client’s philanthropic goals. We’d be happy to join you in a meeting with a client to review their historical charitable gifts and dive deeper into their intentions to give during their lifetimes and even leave a legacy.

Portfolio awareness
As a financial advisor, you’ve made it a practice to advise your clients about asset allocation. But when you talk with clients about short-term cash needs, do you ask about their charitable giving plans? A client who is planning to make a major gift to a nonprofit organization of which you are unaware, could potentially disrupt a portfolio’s overall asset allocation. The Community Foundation can help you structure a client’s gift to a charitable cause so that the client does not need to prematurely divest from non-cash positions.

The net-net? Consider the Community Foundation as your “go to” resource for philanthropy. Pick up the phone! We’d love to be your first call whenever you encounter an issue that relates to charitable giving. We are here to help. Indeed, most of the time, we can provide an effective and efficient solution or at the very least, we can point you and your client in the right direction.

And of course, we will keep you posted about the proposed regulations!

April 15 may have come and gone, but that doesn’t mean tax issues aren’t still top of mind for you and your clients. It can take several weeks or even longer to decompress after a busy tax season. And, for many advisors and their clients, tax season isn’t over because there are so many taxpayers (19 million, according to the IRS!) who file extensions.

The IRS’s requirements for documenting and deducting gifts to charity are relevant year round and may be especially top of mind in the aftermath of April 15 (and leading up to October 15). Note the following:

• First and foremost, to be eligible for your client’s tax deduction, the recipient must be a qualified charitable organization under Section 501(c)(3) of the Internal Revenue Code. The taxpayer must also provide written documentation of the gift. Watch out for clients’ gifts to crowdfunding initiatives through GoFundMe and other similar providers; many of these contributions will not be eligible for a tax deduction.

• Remember that when your clients work with the Community Foundation to carry out their charitable giving, your client can rest assured that their contributions meet the requirements for a charitable recipient’s status. GiveWell Community Foundation itself is a 501(c)(3) public charity.

• Your clients who work with us know that our team handles the receipt documentation for tax returns. Whether your clients give cash, appreciated securities (usually a very good idea to maximize tax benefits), or other non-cash gifts, the Community Foundation will provide the appropriate documentation of receipt to help ensure that your client achieves the intended tax result.

• The Community Foundation will help you and your clients understand when a particular gift to a fund at the Community Foundation needs to be substantiated by a qualified appraisal (in the case of a real estate gift, for example).

For any of your clients’ charitable giving needs, please reach out! Our professional staff is here to help you with philanthropic planning all year long.

Charitable giving in an election year
While charitable giving historically has been resilient in the midst of elections, it’s worth bearing in mind that some sources predict that political donations will eat into your clients’ budgets for charitable gifts. As you talk with clients about their philanthropy plans for 2024, you might pass along these trends so your clients can factor into their target gift amounts the potentially greater demand for funding community organizations. This is also a good time to remind clients that political donations are not tax deductible. This may seem elementary, but it still trips up some people who don’t track the rules closely.

Rounding up at the register
Although the majority of your clients’ charitable giving is likely strategic, including giving through a donor-advised or other type of fund at the Community Foundation, there are definitely exceptions in any household. One of those exceptions for many of your clients may be a form of giving called “checkout charity.” The spare change really does add up – to the tune of $749 million nationwide in 2022 alone!

Legal pitfalls for nonprofits
As you counsel your clients who are on the boards of nonprofit organizations, or perhaps even lead them, be aware of a handful of that are surfacing as areas of concern, including the always-relevant topics of employees versus independent contractors and unrelated business activities, as well as emerging issues related to artificial intelligence.