As 2021 draws to a close, we know that you are navigating the general uncertainty of potential tax reform. With all that you are juggling, we understand that philanthropic planning is just one component of your work. We are here to support you.
4 Ways to Give
Legacy Giving Funds. With the possibility that more clients will be subject to federal estate tax in the future, charitable bequests are on the rise. As you assist your clients with estate planning, we would note that some clients can greatly benefit from establishing a legacy fund at the Omaha Community Foundation to receive and administer their charitable estate gifts. For example, if your client would like to support a certain nonprofit(s), a Designated Fund can be structured to make distributions to the nonprofit(s) in one lump sum, over a term of years, or, in perpetuity. Alternatively, if your client prefers to give the “gift of giving” to kids, grandkids, or friends, they could establish a Donor Advised Fund. Finally, if your client is committed to a certain cause, such as affordable housing, but does not know which nonprofits will be doing great work in that area in the future, they could establish a Field of Interest Fund. Fund agreements with the Foundation can be easily modified if your client’s interests change, without necessarily triggering the need to update the client’s estate planning documents. (We find these funds practical as a beneficiary of an IRA or other tax deferred fund).
IRA QCDs. Some of your clients may be required to take the Required Minimum Distribution (RMD) from their IRAs. If your client does not need the funds, a Charitable IRA Rollover (or Qualified Charitable Distribution) may be an attractive option. An individual who is 70½ years or older may gift up to $100,000 from his or her IRA, directly to a nonprofit like the Omaha Community Foundation or one of our funds, without having to recognize the IRA distribution as taxable income. This distribution counts toward the RMD.
Consider “Bunching” Again this Year. Charitable bunching is a giving strategy that allows individuals to contribute several years’ worth of charitable contributions into a giving fund at the Foundation in one calendar year. Bunching could allow your client to exceed the standard deduction threshold in the year the gift is made to a Foundation fund, and then they could recommend grants to nonprofit organizations now, or in the future, on their chosen timeline, giving them the flexibility to gift at the time and year that they choose, while maintaining a similar level of giving and timing as in previous years.
Give Stock. Compared with donating cash, or selling appreciated securities and donating the after-tax proceeds, your client may be able to automatically increase their gift and tax deduction by donating long-term appreciated securities to a Foundation fund. Your client may enjoy a double benefit of both an immediate income tax deduction and avoidance of capital gains tax on appreciated values. With positive market returns this year, and the possibility of increased capital gains tax rates currently being proposed, this giving technique continues to be a viable and useful philanthropic planning tool this year and beyond.