2023 was a busy year! We understand that charitable giving topics may not always be at the top of your reading list. That’s why we’re here! Our team at Arkansas Community Foundation is committed to keeping you up-to-date on what you need to know. Here’s a recap of five key developments last year that are most certainly worth keeping an eye on in 2024.

NIL Collectives

The IRS has had a lot to say lately about NIL collectives. In addition to offering insights for athlete recipients of NIL (name, image, and likeness) dollars, the IRS has also issued guidance pertaining to organizations that help develop NIL opportunities for athletes, suggesting that the activities of these entities, known as “collectives,” may not qualify as “charitable.” This development could be problematic for your clients who believe that their contributions to NIL collectives will qualify for a charitable tax deduction.  

Donations of Cryptocurrency 

It’s still a thing! At least a few of your clients are likely still invested in cryptocurrency, despite the whirlwind in that industry over the last year or so. You should know that in early 2023, the IRS published guidance confirming that a taxpayer cannot take a charitable deduction for a gift of cryptocurrency over $5,000 without submitting a qualified appraisal. Cryptocurrency, in the eyes of the IRS, is treated as property, not cash. And it is not a security, either. Note that the IRS also said that a price quotation from a cryptocurrency exchange (such as FTX!!) doesn’t count; a qualified appraisal is still required. 

Charitable Act

Senate Bill 566, which is still pending, was introduced in early 2023 to address what is sometimes called the “universal charitable deduction,” meaning that even taxpayers who do not itemize their deductions would be able to claim a charitable deduction, potentially in an amount up to one-third of the taxpayer’s standard deduction. Keep an eye on this; the bill enjoys broad support and, if it becomes law, could be a real perk for both your clients and the charities they care about.  

Exempt Purpose

It seems that at least once a year, the IRS issues guidance on what it means for an organization to be organized for an exempt purpose under Section 501(c)(3). In Private Letter Ruling 202349014, we are once again reminded that personal activities that have no direct public benefit simply will not be viewed by the IRS as exempt. While private letter rulings are of course not binding, they are nevertheless useful tools to provide to a client to show specific examples of what the IRS considers to be non-exempt. Estate planning attorneys and CPAs tell us that every few months, a client comes to them with an idea for starting a nonprofit, and it’s easier to tell a cautionary tale than it is to recite Internal Revenue Code sections!   

Proposed Regulations

Proposed regulations issued by the IRS are not binding, and often they are revised–or even shelved or canceled entirely–before they go into effect. Still, the team at the Community Foundation is always keeping an eye out for these and other forms of IRS rulemaking that could potentially affect your work with your charitable clients. A recent example of this type of IRS activity is a set of proposed regulations concerning donor advised funds, issued in November 2023. The public comment period ends in mid-January 2024, and then the IRS will take time to review the comments, so we won’t know anything definitive for quite some time. For those who are interested, we like the detail provided in this podcast series on the topic. You can take a long winter walk and learn everything you want to know about what’s being proposed! And of course, you’ll hear from us when (and if) the proposed regulations ever go into effect and what to do about it. 

Little Rock, Ark. (Jan. 3, 2024) – Linsley Kinkade of Little Rock recently joined Arkansas Community Foundation as its Chief Program Officer. She leads the community investment team and is responsible for the Foundation’s statewide impact across its 29-affiliate network. 

“Linsley has a strong history working with local organizations and developing programs to help support Arkansans,” said Heather Larkin, president and CEO of Arkansas Community Foundation. “Her experience with Winrock, combined with a strong network of statewide collaborations, will be a tremendous asset to our affiliates and our mission to build better communities. Her deep knowledge of the state’s needs makes her a great fit for the Foundation.”

Kinkade has dedicated her 22-year long career to supporting Arkansas communities, first serving as a staffer to an Arkansas U.S. representative and an Arkansas U.S. senator on Capitol Hill. For the past 16 years she has worked in Winrock International’s U.S. Programs, most recently leading the team as senior director. 

At Winrock, Kinkade led a talented team that supported asset-based community development in the rural mid-South through projects to improve quality of life and engender a sense of place. She worked on fostering entrepreneurship and small business development programming that supported proof-of-concept, Main Street and high-tech businesses to increase economic growth.

Raised in rural southwest Arkansas, she developed a passion for Arkansas, its rural communities and its residents that is deeply ingrained. She has worked with more than 85 communities across the mid-South, where she has launched entrepreneurship, economic and workforce development programs that serve diverse stakeholders. She serves on the Community Development Institute’s Central Advisory Board and is a certified Professional Community and Economic Developer.

Kinkade, her husband David, proudly call Little Rock home. 

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Arkansas Community Foundation, a statewide nonprofit organization, provides resources, insight and inspiration to build stronger Arkansas communities – communities where our kids will want to raise their kids. The Community Foundation is the largest grantmaker in the state in the number of grants made each year. Since 1976, the Foundation has provided more than $450 million in grants to nonprofits. The Foundation staff works directly with donors, professional advisors and nonprofits to help strengthen Arkansas communities through strategic philanthropy and focusing on local needs. Its assets rank among the top 60 out of more than 900 community foundations in the United States. Serving statewide and local initiatives, the Community Foundation helps connect those who want to give to the causes they care about. Contributions to Arkansas Community Foundation, its funds and any of its 29 affiliates are fully tax deductible.

By Kim Dishongh

Lydia Davis’ husband died in 2013, and she struggled to make it through the days, weeks and months without him.

“There was no outreach out there that I could pull from and after being married for 50 years I was just totally devastated,” said Davis, who lives in Dumas. “I didn’t know what to do.”

She tried to keep busy, but evenings were a challenge. For three years, she came home from work and cut all the grass from her lawn each day instead of going inside to the quiet and loneliness.

“It came to me that I needed to start something for other people,” she said.

In November 2013, she started hosting dinners at a church, inviting people, mostly women, to just come and eat together and spend time consoling one another and enjoying companionship.

In 2017, she opened the doors to the nonprofit, Widows Empowering Widows and Reaching Others. It was formed as a support group for other widows who needed an outlet while helping others. One of their goals was to provide grief counseling through quilting projects and community service.

A year later, she bought a long-arm quilting machine and set out to use it to raise money for the organization. The money, she hopes, will allow for more service to the community.

Over the summer, between May and August, the organization offered keyboarding lessons for children.

“I’m interested in music, and we need music in our community, like anything else,” said Davis, who through the organization, bought several keyboards and headsets for the classes. “We need musicians in our churches, and we need children to learn music.”

Her son, she recalled, took piano lessons and easily used that skill to play the saxophone. There is also some strong research linking music skills and brain development and academic skills.

“I taught them the basics so they can start trying to put together the keys so they can make a melody,” she said.

The Widows Empowering Widows and Reaching Others quilting circle meets on Monday, Tuesday, and Wednesday each week, with four or five regulars gathering to keep each other company and to create quilts in a multitude of colors and patterns.

“We make them, and we sell them and we put the money back in the treasury,” she said. “This is the money we’re going to use to help the widows and unfortunate people.”

The widows in the quilting circle learn from one another, none of them were master quilters before joining this circle. Davis has brought in people to teach them, as well.

“They’re all beautiful when they’re done,” said Erma Evans, who has been part of the circle since its inception. “I come up here and be with these ladies. I enjoy piecing the quilts, and I enjoy the company.”

Shirley Thrash was later in joining, but she brings the skills she gained from sewing clothing for herself and her children as they grew.

“I was still working and didn’t come as often as I should have. I travel a lot. but I’m down here when I can, said Thrash. “I did a lot of stitching with my mom while she was here. I’m trying to relearn it now. There were a lot of things I forgot.”

The time they spend together, making comforting, warm quilts for others, brings warmth and comfort to them as well. “We just sit here, and we talk… it’s really a lot of fun,” Davis said. “It’s really enjoyable.”

Davis hopes to expand the organization into the building next door and create an area in the Widows Empowering Widows building where widows — or others — can teach children’s music lessons and offer some mentoring and homework help as well.

“We want to empower widows to reach out and do things for other folks,” said Davis. “That’s my whole goal, to help this community. We want to come together and draw ideas and feel good about what we’re doing in life. This is what I really want to see happen in this town.”

Through inspiring performances, educational initiatives, and collaborative efforts, Srividya Venkatasubramanya and her team at Ra-Ve Cultural Foundation have worked to create a vibrant, inclusive space in Bentonville where Indian arts and cultural traditions thrive and connections flourish.

Venkatasubramanya is the founding president and executive director of Ra-Ve Cultural Foundation, a nonprofit she established to promote and celebrate Indian performing arts in Northwest Arkansas. Upon moving to Bentonville with her family 15 years ago, she found it difficult to feel a sense of belonging in her new home, even among people who shared her cultural heritage.

“There was a very big gap in being accepted for who I was,” she said.

Although popular culture — specifically Hindi cinema commonly referred to as Bollywood — is a way for many Indian Americans to connect with one another, she believed an overemphasis on these movies eclipsed the traditional dance and music that defined her upbringing. In 2009, she and a friend established an annual event called Sargam to promote and celebrate traditional Indian performing arts.

“A lot of Indian families in the area were investing in traditional dance and music classes, but when it was time for a public performance, they would do Bollywood-inspired acts,” she said. “I wanted to give status to traditional Indian performing arts and show that those performances did not only have to be relegated to private viewing.”

What started as a mission to connect Indians to their cultural heritage evolved into a need to connect immigrants with the broader community. Personal and business challenges in 2016 led Venkatasubramanya to pivot Sargam from an annual event to a cultural organization that would help remove barriers between Indian and non-Indian residents.

“There is something out there that’s not allowing us to connect,” she said. “So the idea of Ra-Ve was to overcome these barriers. It was not just about music and dance, but music and dance makes it a little easier to connect, perhaps.”

The name Ra-Ve is a portmanteau of her parents’ names, who died unexpectedly within months of each other in 2016.

“I named it for my parents because ultimately, sustaining a culture and keeping a culture alive is very much a parenting thing,” she said. “You have to be relentless.”

Many of Ra’Ve’s team members have a personal story about how the nonprofit gave them an avenue to celebrate their cultural heritage.

Through inspiring performances, community showcases, classes, food, and clothing, Ra-Ve Cultural Foundation brings a piece of India to Northwest Arkansas. The nonprofit is housed in the Kalaloka Institute of Fine Arts, or KIFA, which serves as the hub for Indian dance, music and theater in the area. Located at 1380 Southwest Westpark Drive in Bentonville, KIFA offers classes, performances, workshops, informal gatherings and jam sessions.

Many of Ra-Ve’s team members can share a personal story about how the nonprofit connected them and their families with others in the community and gave them an avenue to celebrate their cultural heritage.

Harini Jayachandran is Ra-Ve’s community outreach coordinator. She attended dance and music performances with her grandmother while growing up in India and was able to provide her children with the same opportunity through Sargam. She enrolled her daughter into the dance school and eventually began volunteering and later working for Ra-Ve.

Karthika Mohan Sheela serves as Ra-Ve’s logistics and programming coordinator and supports the organization’s human resources and marketing functions. Before acquiring her work visa, Sheela decided to fill her time pursuing her passion for Indian performing arts. She was naturally drawn to Ra-Ve and its mission to bring the classical arts of India to the area and eventually became an instructor at KIFA. An opportunity arose for Sheela to apply her human resource expertise to the nonprofit.

Vinitha Vijayam Ramakrishnan is a volunteer coordinator for Ra-Ve Cultural Foundation. She participated in Ra-Ve’s events as a classical Indian dancer, and her son also was involved with the organization. After serving as a volunteer, she began working for the organization to support fundraising and development.

As Ra-Ve continues to grow, Venkatasubramanya is hopeful that the organization will garner support from individuals and corporations outside the Indian community.

“In five years, we have been able to uplift the Indian community in Northwest Arkansas, whether it’s in terms of recruiting Indian immigrants to work in the nonprofit sector, collaborating with other local organizations, and promoting Indian arts and culture,” she said. “Our hope is that we can build our support among individuals and corporations in the region — not just the Indian community — so that we can continue to contribute to Northwest Arkansas’s vibrant arts and cultural scene.”

Driving past the old Brandon House furniture building in Little Rock on her way to graduate school classes, Dr. Patrice Bax dreamed about the opportunities that could be offered inside.

Bax knew that various modes of art to express feelings and share experiences could be life-altering for kids, especially those at-risk.

Brandon House Cultural Center may not be in the location where Bax originally imagined, but it provides spaces for children and adults alike to learn and create things they may not have even realized possible, just like she had hoped.

Bax and her parents, Dr. Pamela and Paul Bax, and her brother, Dion Bax, founded Brandon House Cultural and Performing Arts Center in 2010.

One of their pilot programs was DreamStarters, which began in 2016 at a charter school. Through DreamStarters, students ages 6 to 11, get to learn about visual arts and music through lessons infused with reading comprehension, math and science.

“The Dream Starters program really takes time to expose kids to all types of art, so they can explore where their talent is. It gives them a taste of what it is to be in the realm of being an artist and creating art,” said Bax.

DreamStarters meets after school in a small house on 12th Street, but soon that program will be relocated to Brandon House’s suite of facilities further west, on Colonel Glenn, where the organization expanded a couple of years ago. The relocation will allow them to raise the enrollment capacity for DreamStarters, just as the new digs have allowed the organization to grow its offerings beyond the original creative program that focused on youth.

“The expansion has allowed us to branch out. We can do more programming and meet the needs of our artists and creative professional community as well,” said Bax. “It allowed us to have our own production suite. We have a photography lab, video editing suite, podcasting station, music studio, vocal booth, a media lab, and then also an event space. We also have a theater, a dance hall, another production studio for choir and band rehearsals, a café area, art gallery and an art lab and a gift shop.”

The pandemic, of course, put a hold on face-to-face instruction for a while, and the pause gave Brandon House’s staff an opportunity to “think through some new things,” according to Bax. This “re-thinking” led to the plans for career and workforce training along with creative services for small businesses.

“We started with just creative programs, but it birthed a whole other area of service and support that we offer to the community,” said Bax. “We want to serve the community in general, but we had to pace ourselves in how we did it.”

Brandon House leaders are also considering new ways to generate revenue for the organization.

Their newly-opened event space, for example, is available for public use, and they offer services to artists, musicians and other creative professionals, including marketing, branding and promotions.

“Half of our team is split between my contracted staff who have those experiences and programming staff, those who work with youth,” said Bax.

The production suite, where vibrant murals painted by local artist Jose Hernandez, color the walls of hallways and pods. It contains spaces for a gaming system and a media editing suite, a podcast space and a photography pod. Across the hall is a vocal booth, where students can learn the ins and outs of audio production.

“What I’ve seen is the opportunity to kind of [allow students] to just be themselves,” Bax said of the kids who come to Brandon House. “It’s a fun space, and they get a chance to learn. We never pressure anyone to stick to one thing, which is why we have different activities every day.”

Kids arrive for afternoon activities at 4:30 p.m.

“I like creating music, and I like taking pictures of things,” said Destiny Jeffries, 12, during a recent session. “I like cityscapes, especially.”

Her friend, Rayleigh Ashford, 11, has not yet decided what activity she likes most.

“I like to check out everything,” she said.

That kind of exploration is encouraged, Bax said. The students who come after school and during the summer get a chance to dabble in various types of arts to see what sparks their interest. The lessons learned through Brandon House are intended to give them a way to process how they see their surroundings and, eventually, to find a voice or outlet to share their thoughts and opinions with the world.

“We cooked and made videos, and we made a podcast,” said Rayleigh.

Making podcasts involves making decisions about what topics to cover, what to call the show, and who to interview.

“For one podcast we interviewed each other — and we would just talk on the show about music and other stuff,” said Destiny.

“The thing I want to focus on is acting,” said Jordin Walden, 12. “I really like acting, and I have drama in school.”

Jordin has participated in Brandon House’s drama program, “Act Out,” as well as “Youth Voices Impact Change.” The latter pairs teens with adults who can guide them in creative expressions about social concerns, using multi-digital media and mixed art.

“I think all in all, kids come out with a better perception of themselves,” Bax said. “And they find a place where they feel accepted for who they are.”

Tony Anderson, Brandon House’s producer, is a chef, and manages the organization’s new artistic café. He leads Monday afternoon’s “Let’s Eat” classes, which include conversations about nutritional facts and tips for safe preparation.

“Sometimes I’m learning new things, and I’ll teach the kids the new things,” said Anderson. “We give them the freedom to be creative. Like yesterday we did charcuterie boards. I gave them a variety of ingredients and gave them a template and told them to go from there.”

He sometimes assigns a theme and lets kids prepare meals that dovetail with those themes. For example, a game night theme might mean serving pizza or sliders.

There is a “Fall In” event at Brandon House every other weekend, giving students who are not a part of the after-school activities an opportunity to “fall in” to activities outside the school week.

“Our large events space is one of our best assets,” Bax said. “It gives us a chance to open our space to the community and also to showcase the work that we’ve done with students and local artists.”

In the future, our café area will be a place for single-stage events or open-mic events.

“We have a saxophonist and when he wants to do a jazz show or something he can do that in here,” Bax said.

There is a majorette dance team at Brandon House, and a choreographer will coordinate fee-based dance classes.

Allan Boston might be one of Brandon House’s strongest supporters. Boston found his way to Brandon House while he was in high school, through what was then a pilot program called “I Have Unique Skills to Learn and Earn” (iHustle).

“After growing up where I did and where I went to school, I was like, ‘I am not going to get tied up with any of this.’ I started doing things at Brandon House and I never wanted to leave. I still don’t want to leave,” said Boston. “We introduce kids to graphic design, multimedia artistry, podcasting, videography, cinematography, photography, personal branding…among other things. We all had an opportunity to try. I went because I had a dream of being a photographer.”

As a student, Boston was surprised when Bax handed him a camera and ushered him off with instructions to take video and photographs of an event, and he rose to the occasion.

Boston helped recruit other teens to iHustle, and together they made a video to promote the organization’s Arts Over Tobacco initiative, encouraging kids to turn their focus from nicotine to creativity. That video led to other videos for other purposes, which spawned further opportunities. Boston built his confidence and his skills through Brandon House, and now he shares his knowledge with the students who are coming up behind him.

Almost seven years after he first arrived at Brandon House, Boston is on staff as videographer and event center auxiliary support.

Through Brandon House’s programs, he said, he learned about accountability, punctuality and how to work with a team as well as some of the skills that brought him there in the first place.

“I hope I’ve made a notable mark here at Brandon House,” he said. “They granted me opportunity after opportunity. I’m trying to give them a decade and then a decade more.”

Helping families create a meaningful structure for their philanthropy has long been a hallmark service of the Community Foundation. That structure and the resulting discipline are increasingly important as both wealth and charitable giving more frequently span multiple generations. Indeed, spontaneous and unstructured conversations around wealth and philanthropy can be a source of family discord. 

By being part of the discussion–whether formally or informally, at the table or behind the scenes–the team at the Community Foundation can help families resolve issues and smooth out the edges around common intra-family challenges, including communication, decision-making, and charitable giving. 

Here are a few of the ways the team at the Community Foundation can help:

–Serving as a coach to foster thoughtful, intentional, and inclusive family conversations, even if the Community Foundation team member is serving simply in an “ice-breaker” role. 

–Offering guidance from the position of a facilitator to assure that all voices are heard, particularly as views across generations can differ. 

–Helping a family structure a series of discussions that employ a phased-in or “dimmer-switch” approach, beginning with values-centered discussions to identify common ground and progressing to systematic funding and allocation conversations and decisions. 

The Community Foundation can work with a family under a variety of circumstances. For example:

–Some families enjoy organizing their charitable giving through both a private foundation and a donor advised fund at the Community Foundation. The team at the Community Foundation can serve as a sounding board for grant making from both vehicles and also work with a family’s tax advisors to help optimize the role and use of each vehicle. 

–Many families have found that a donor advised fund at the Community Foundation meets all of their charitable giving needs, and they appreciate the Community Foundation taking on the administrative burden associated with tax filings and administration. In some cases, a family decides to close their private foundation altogether and transfer the assets to a donor advised fund at the Community Foundation. 

–Some families leverage the Community Foundation for the full suite of its charitable giving services, often using a donor advised fund in much the same way they’d use a private family foundation, only with increased privacy and no need to create a separate legal entity, thanks to the Community Foundation’s umbrella 501(c)(3) status.  

By consulting with the team at the Community Foundation, and leaning into the structure that’s right for them, families can help their favorite community causes—and keep the peace across generations. 

Perhaps you established a donor advised fund at the Community Foundation years ago, or you set up a donor advised fund more recently. Or maybe you are considering establishing a donor advised fund at the Community Foundation this year to help you keep your giving more organized and involve your children and grandchildren in your philanthropic priorities.

Whatever the case in your particular situation, it’s a great idea to consider a few best practices for ensuring that your donor advised fund is making the biggest difference possible for the causes you care about. Life gets busy, the months fly by, and it’s tempting to put your donor advised fund on autopilot. But that would be a missed opportunity.

By now, you likely know that a donor advised fund at the Community Foundation offers the convenience of a one-stop-shop: You make tax-deductible contributions of cash (or, ideally, appreciated stock) to the fund, and then recommend grants to your favorite charities. Make sure you’re leveraging your donor advised fund to execute the full range of your charitable giving each year. You’ll find it so much easier to keep track over time of where you’re giving, and how much.

As the hub of your charitable giving, the Community Foundation certainly makes it easy for you to use your donor advised fund for your annual giving to charities. But that’s not all. As you work closely with the Community Foundation, you’re likely to discover even more ways our team can support your philanthropic activities:

–We can help you establish a designated or field-of-interest fund to complement your donor advised fund. A designated fund allows you to support a specific charity over the long term, while a field-of-interest fund focuses your support on a particular area of community need by leveraging the Community Foundation’s expertise. If you are over the age of 70½ and you own one or more IRAs, your designated fund or field-of-interest fund can receive Qualified Charitable Distributions up to $100,000 per year per spouse, bypassing your taxable income.

–We can work with you and your attorney to help you establish a bequest in your estate plan to support your favorite causes beyond your lifetime. Many fundholders at the Community Foundation name their donor advised funds, field-of-interest funds, designated funds, or even the Community Foundation itself, as beneficiaries in their wills and trusts, and especially as beneficiaries of IRAs and other qualified plans because doing so delivers significant tax benefits. What’s more, the Community Foundation offers opportunities for our legacy donors to get together and learn from each other as a group. If you’re not involved as a legacy donor already, please reach out and we’ll fill you in!

–We can help you and your family learn more about your favorite nonprofit organizations and the issues they are addressing so that you can become more informed and effective philanthropists in our community. The Community Foundation team’s unparalleled, deep knowledge of local issues and organizations is a real advantage for you and your family. When you better understand the needs of the community and how your favorite nonprofits are addressing those needs, you’ll be better equipped to structure your giving so that it makes a difference in measurable ways. You’ll enjoy your charitable giving a lot more, too.

We hope you’ll consider your donor advised fund–and your connection with the Community Foundation–as the hub of your philanthropy. The team at the Community Foundation is here to help you make the most of your donor advised fund and related strategies so that you’re not only putting your money to work to improve the quality of life in our community, but you’re also achieving financial and philanthropic goals for your overall charitable giving.

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. 

Finally, for your situational awareness as you advise clients who are pet owners, no amount of pet cuteness on Instagram will resolve the nationwide overcrowding at animal shelters. Dog and cat populations are up sharply from the pandemic due to owner-adopters returning to in-office work, inflationary costs for food and veterinary care, and owners seeking new forms of companionship. For a client who is passionate about this issue–or any issue–be sure to encourage your client to learn more about establishing a designated fund or field-of-interest fund at the Community Foundation to support highly targeted areas of relief, and, for those clients who are over 70½, serve as recipients of Qualified Charitable Distributions from IRAs.  

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 the Community Foundation 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 the Community Foundation to explore this further. We’d love to talk! 

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 the foundation’s focus, expertise, and mission-driven 501(c)(3) status. But donor-advised funds are not the only types of funds that the Community Foundation 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 field-of-interest or designated fund.  

Understand the Community Foundation’s donor-advised fund advantages. As you work with clients for whom a donor-advised fund is appropriate, be sure you understand why the Community Foundation is such a great fit for so many philanthropic individuals and families. Indeed, the Community Foundation 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 a fit for clients who care about our 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 the Community Foundation. After completing simple paperwork, your client will make a tax-deductible gift (of cash or, ideally, stock or other highly-appreciated asset) to the Community Foundation 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 the Community Foundation 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 the Community Foundation 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 the Community Foundation 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.