For many donors, the importance of a multi-generational family philanthropy plan is high on the radar, especially in the wake of 2020’s eye-opening events highlighting the importance of rallying around important social and community priorities.

How do you know when a client’s family is a strong candidate for more formal philanthropic planning, beyond simply budgeting for annual gifts to charity? Watch for these candidates among your client base:

  • Families who have started to ask you about multi-generational participation in their favorite causes.
  • Families who have publicly demonstrated a long-term charitable commitment to charitable organizations. Or,
  • Families who own a family business, creating the opportunity for corporate giving and values to serve as inspiration for the family’s charitable plans, even beyond the family’s ownership of the business. 

A comprehensive philanthropy plan often starts with establishing a structure, typically in the form of either a donor-advised fund or a private foundation. Although there are benefits and advantages of each, the donor-advised fund (DAF) option has become increasingly popular because of its favorable tax treatment, simplicity of administration, and flexibility. By contrast, private foundations typically appeal to families who want to engage directly in charitable activities, hire family members as employees to operate the foundation’s day-to-day business and receive salaries, run their own grant programs to support individuals, and grant directly to international efforts.  A common myth, however, is that families who wish to collaborate across generations on grant making and impact are better suited for a private foundation. The reality is that families can work together to determine and execute a philanthropic vision, mission, and grants from the family’s charitable structures, whether a DAF, private foundation, or both. For example, when a family establishes a DAF at Arkansas Community Foundation, our staff can support the family in areas of expertise well beyond simple adminstrative tasks. Identifying a family’s values and motivations, documenting charitable interest areas, and researching the programs and services of a particular nonprofit organization are all “donor services” offered by the Community Foundation.

Here are examples of comments you may hear from families who may be excellent candidates to work with the Community Foundation alongside you as their key advisor: 

  • “We are interested in engaging the next generation of our family in philanthropic conversations, but we are at a bit of a loss as to how to go about it.” 
  • “We are concerned that families today—including our family—are less community centered than they used to be. So we don’t want to ignore global issues, but we want to ensure that we make a difference locally. We thought about working with our children and grandchildren on community priorities and deploying philanthropy as a way to communicate our concerns and dreams for the region we all love, but we aren’t sure where to find tools and best practices.” 
  • “As a member of my family foundation’s so-called ‘next generation,’ I am worried that our older generation has been directly involved with just a handful of organizations, so they tend to support only those organizations. As younger donors, we aren’t necessarily going to want to be directly involved with these particular organizations, and at the same time we don’t want to shut off support. We want to respect and engage with our older family members while also charting our own course.” 
  • “As a thirty-something, I have a young family and it is really important to me to be able to engage my kids in the family’s philanthropy, working right alongside me, my parents, siblings, nieces and nephews, and grandparents.”

If you are hearing these and similar expressions of interest from your clients, please reach out. The team at Arkansas Community Foundation is your partner to serve your clients’ philanthropic endeavors.

Your client’s fund at Arkansas Community Foundation can be an ideal recipient of estate gifts through a will or trust, or through a beneficiary designation on a qualified retirement plan or life insurance policy. 

Bequests of qualified retirement plans can be extremely tax-efficient. Because charitable organizations such as Arkansas Community Foundation are tax-exempt, the funds flowing from a retirement plan after the client’s death will not be reduced by income tax. This also means the assets will not be subject to estate tax. 

Do not overlook life insurance, either. Not only is your client able to designate a fund at the Community Foundation as the beneficiary of a life insurance policy, but your client also may elect to transfer actual ownership of certain types of policies. For example, when your client makes an irrevocable assignment of a whole life policy to their fund at the Community Foundation, a tax-deductible gift of the cash value of the policy occurs at the time of the transfer. A gift like this can ease a client’s income tax burden, especially if the Community Foundation continues to own the policy and the client makes annual tax-deductible gifts to cover the premiums.  

Arkansas Community Foundation makes it easy for you to draft bequest terms in legal documents, including beneficiary designations of retirement plans and life insurance policies.

Keep in mind that even after a client has executed estate planning documents or beneficiary designations, in many cases the client can update the terms of the fund at the Community Foundation. Clients love the ease and flexibility and certainly will appreciate your bringing this technique to their attention. 

The housing market is showing no signs of slowing down in 2021. For certain clients, this presents a strong opportunity for charitable gifts of real estate, whether a primary residence, second home, rental property, or even niche commercial property that has benefited from a multi-faceted pandemic marketplace.

As is the case with gifts of other long-term capital gains assets, gifts of real estate to a charity can be extremely tax-efficient. Whether your client is giving a second home, rental property, or commercial property to a fund at Arkansas Community Foundation, the client may be eligible for a charitable tax deduction of the fair market value of the property. Because the Community Foundation is a public charity, when the property is sold, the full amount of the proceeds less fees will remain in the fund—not subject to income tax. 

Gifts of real estate to charity should not be undertaken lightly. If your client is considering a gift of real estate to charity, consider working closely with Arkansas Community Foundation to ensure that the transaction is properly structured. 

Our team at Arkansas Community Foundation can help you navigate the rules for gifts of real estate such as:

  • how to determine valuation,
  • dealing with debt on the property,
  • how to substantiate value and properly report the transaction on Form 8283,
  • when and to what extent minority interest discounts may apply,
  • how to avoid a “step transaction” due to a prearranged sale, and
  • determining whether unrelated business taxable income (UBTI) will be a problem.

Our team would be pleased to work with you and your client in utilizing their gift of real estate to benefit their favorite charities through either a Designated Fund or a Donor Advised Fund. Contact us!

Unlocking the power of clients’ real estate: Why the bargain sale is a must-have in your charitable planning toolkit

The bargain sale, frequently heralded as the earliest charitable giving vehicle, results in the real estate owner serving in both the role of a seller for the cash portion of the sale to a charity, and also in the role of a donor for the donated portion of the property. A benefit of using Arkansas Community Foundation is that we are well versed in bargain sales and can create a charitable fund that will benefit many charities that your client cares about on their timeline.

As is the case with many types of charitable gifts, establishing fair market value of the subject real estate is critical and requires a qualified appraisal that complies with IRS regulations. Establishing the fair market value in turn determines the charitable donation portion, which is the difference between the fair market value and the lower cash amount paid by the charity to the donor/seller.

A post-pandemic world may create new opportunities for your clients to consider bargain sales of property to charities. Indeed, nearly $430 billion in commercial and multifamily real estate debt is set to mature this year, opening up conversations about what property is really worth and how owners can most efficiently unlock its value. And of course, bargain sales are not limited to commercial property. The U.S. housing market is estimated to have gained more than $2.5 trillion in value in 2020 alone, bringing the total value of housing in the U.S. to over $36 trillion. Call us at Arkansas Community Foundation and we can talk you through effective strategies.

If you do a google search for the Yvonne Richardson Community Center, the results show “Temporarily Closed,” but that is definitely not the case. There is plenty going on at one of Fayetteville’s favorite places for play.

Led by Tenisha Gist for eight years, the center is still serving as a critical hub for families. Gist, a Tennessee native, knows her way around a gym. She played basketball at Ole Miss from 2000-2004 and has always felt drawn to serve. For kids in south Fayetteville, YRCC makes serving families possible. 

When COVID-19 hit, the center was forced to close, but programming didn’t stop. Instead, it adapted. With a supportive board and the tenacity to keep serving the community, Gist mobilized donations and local partnerships to make sure the center could continue to provide quality activities for kids at home.

“We have a history of fun, effective programs that attracts all types. The majority of kids who use our programs come from low-income families, but we have a healthy mix of kids from different demographics,” Gist said. “Now that we’ve moved to virtual programming, we developed take-home activities that are fun and educational.”

A grantee of the Arkansas Community Foundation COVID-19 Relief Fund, the center left no stone unturned before implementing new ways of working. “Before trying to start all new programming, we did a survey of our clientele asking questions like, ‘What do you need? What devices do you have at home? Do you have reliable internet access?’ This helped us meet families where they were,” said Gist.

Local collaboration has been key. “We wanted to make sure we weren’t duplicating effort between other organizations in town and that we could all still serve our clients through this weird time.”

Hundreds of books have been donated to YRCC by the Fayetteville Public Library. Weekly produce bags were provided by Apple Seeds Inc. and the Coop provided snacks after school. Backpacks, donated by the local St. James Baptist Church, line the center’s entrance loaded with school supplies. Various departments at the University of Arkansas help provide educational activities, instruction, volunteers and supplies for afterschool programming. There are even small crock pots. All participating youth (ages K-6th grade) are provided with cookware, food and recipes to try safely at home with virtual instruction.

When asked about the future of the center, Gist is quick to confirm, “We aren’t going anywhere. We will have programs and play time at local parks where we can socially distance and still have fun. And when the doors open again, we’ll be ready for that too.”

Michele Sears, Certified Financial Planner™ with Taurus Financial Advisors, LLC, in Fayetteville, first learned about Arkansas Community Foundation five years ago while serving on the board of Single Parent Scholarship Fund.

“That’s where my passion is. I care about Single Parent Scholarship Fund because I was a single parent, and I see the good they do in our community,” Michele explained. “I want to help my clients find and support the causes closest to their hearts.”

Arkansas Community Foundation has been a trusted resource for Michele helping clients make charitable giving decisions. Jody Dilday, the Foundation’s development director, has helped Michele’s clients connect with the local charitable causes they care most about.

“The Foundation offers an easy way for clients to make charitable donations to local causes while providing smart solutions with low basis, concentrated stock positions in their portfolios,” said Michele. “They offer sophisticated, creative solutions that allow clients’ charitable giving to have the most possible positive impact for them and their community.”

Michele graduated from the University of Arkansas with a landscape design and horticulture degree. Surprised to find a career in finance, she loves what she does and has never been bored in 32 years on the job. Michele has raised two sons and given countless hours to community causes in Northwest Arkansas because this is her home.

In addition to her work with clients, Michele is a member of the Community Foundation-sponsored Philanthropy Club, a group of philanthropists started by Jane Hunt. “It’s a great way to introduce like-minded individuals to challenges that need to be met in our community,” she said. “I’ve had my eyes opened to the importance of making sure my gift is a smart gift that satisfies those needs.”

Michele would “absolutely” recommend the Foundation to other financial advisors. “I see the Foundation as a connector for the wants and needs in the community,” she said. “They connect donors with vetted and appropriate nonprofits. They connect students with potential scholarships opportunities. They connect those seeking grants with those making the grants. To me, this is a classic win-win situation.”

Dear friends,

As we reflect on the past fiscal year, I am filled with gratitude for making fiscal year 2020 one of the most impactful years the Foundation has seen in its 44-year history. The pandemic has tested most facets of our operations, but as the theme and information in this report will show, we were ready.

  • We were ready to activate the emergency response COVID-19 Relief Fund with dollars set aside from the Foundation’s unrestricted funds.
  • We were ready to answer the challenge when Governor Hutchinson issued a Proclamation that individuals and companies should donate to the Foundation for pandemic relief.
  • We were ready with the infrastructure to receive millions in donations over just a few weeks; and we were ready to mobilize a multi-phased grantmaking approach that provided quick and appropriate dollars to Arkansas nonprofits.
  • We were ready to guide current fundholders with smart giving tools and help them navigate new legislation to best maximize their charitable options.
  • We were ready to mobilize our staff to work remotely. And, thanks to our committed Board and affiliate network, we were ready to review over a thousand grant proposals virtually and get funding out the door within days.
  • We were ready to respond to questions from the media with transparency and confidence about our work.
  • We were ready for the economic fallout of 2020 with our focused long-term investment strategies to minimize the impact on the Foundation’s endowments.
  • We were ready to adapt every hour, day, week and month to meet the ever-changing needs of our stakeholders to best serve the state.

And what prepared us to be ready? You. If it weren’t for you, the committed partners, fundholders, local and state board members, friends and especially the amazing nonprofits statewide, none of this would have been possible.

Our values and mission have held strong through a volatile time, and our mission to serve this state by engaging people, connecting resources and inspiring solutions to build community is unwavering.

The next year holds even more promise. The Community Foundation opened another affiliate office, is hiring new staff and is embarking on a strategic planning process that will help shape the future of the organization.

I am forever grateful for you and the trust and commitment you’ve shown to build the state’s Community Foundation over the years. On behalf of the entire Foundation family, I’m honored to share this report with you. It is because of you that we can confidently say “We were ready.” I am honored to share this report with you.

In gratitude,

Heather Larkin
President & CEO

Since establishing Conger Wealth Management in 2005, Cindy Conger has empowered her clients to make financial choices with confidence. She is known nationwide for fee-based financial management customized to client needs. Cindy gives sound financial advice and uses proven planning tools to achieve her clients’ goals.

Her clients stick with her because she gets to know them personally—their families, the nuances of their businesses and their reasons for giving back. Cindy is a Community Foundation superstar. Not only does she refer her clients to the Foundation for their charitable giving, but she is a fundholder giving back to local causes (and has started involving her family, too) year after year.

“There are several reasons I refer my clients to the Community Foundation. One obvious reason is for tax purposes. My experience with Donor Advised Funds is that it is one of the best ways for clients to reduce their tax liability. Donor Advised Funds are great because you don’t have to decide what you want to do with the funds now, but you get the tax benefits for that year. It’s a great way to invest. I’ve never seen that go wrong!” said Cindy.

Cindy Conger, CPA/PFS, CFP

She knows. She has more than 35 years of experience helping her clients manage their money. Her advice right now? “Open a Donor Advised Fund. It will become exceedingly important over the next few years for people to understand how to leverage the benefits of charitable giving,” said Cindy. “Not to mention the personal satisfaction that you get when you are making a difference with your money.”

Cindy helps clients statewide with what she calls niche giving. “Through the Foundation, my clients have access to the full portfolio of charitable causes that the Foundation works with. So, you don’t have to open a fund or make a commitment right away; their affiliate network and broad range of charitable options gives people choices and time. For example, I have clients in Wynne who wanted to help rebuild the downtown area there. This wouldn’t have been possible without the guidance and support of the Foundation’s experienced staff and their knowledge of local causes.”

As a successful woman in a male-dominated field, Cindy is often asked to speak nationally to peer groups and conferences for professional advisors. When the topic of charitable giving comes up, she always boasts about the benefits of utilizing a community foundation to help clients achieve their charitable goals.

“You don’t get the same level of connection and service when you use a Schwab or Fidelity. The local connection that Arkansas Community Foundation has statewide is key. They know the local needs and help people dig deep in their hearts and financial portfolios to make a real difference,” said Cindy.

Personally, she is passionate about investing in education for women. At 28-years-old, Cindy went back to school and earned a degree in accounting. “My education changed the trajectory of my life. I want more women to have the opportunities that I did,” she said.

“Because of that, one of my favorite organizations to support is the Women’s Foundation of Arkansas. They were my first big donation. They have programs that help bring education to women. For me, education was key to my success. I was able to build and sell my business and I want more women to know what that feels like, and to know the joy of making a transformational gift. Because of tools that the Community Foundation provides, I can give to them now, and will give to them long after my death. That brings me great satisfaction and pride.”

Pocahontas, Ark. (Feb. 4, 2021) – Melody Rainwater has been named Executive Director for North Delta Community Foundation, serving Clay, Randolph and Lawrence Counties.  Founded in 2019 as the 29th affiliate of Arkansas Community Foundation, the goal of North Delta Community Foundation is to continuously evaluate and meet the complex needs of the local community through equitable grantmaking and education.  

“Melody has a strong desire to work with others to make a positive impact,” said Heather Larkin, Community Foundation president and CEO. “Her experience as a speaker, team leader and event coordinator with Arkansas State will help our newest affiliate become a moving force for the North Delta community.” 

A native of Jonesboro, Rainwater was previously the training and development coordinator at Arkansas State University Human Resources in Jonesboro. She also served as applicant tracking coordinator and HR assistant at the University. She received a Bachelor of Science degree in Journalism from Arkansas State in 2015. 

“I am delighted to welcome Melody Rainwater into the role of Executive Director. I know her experience will make her a valuable asset to not only the North Delta Community Foundation, but to the entire region,” said Graycen Bigger, North Delta Community Foundation chair. “I look forward to working with her to support community development and charitable giving in the North Delta area.”  

In December of 2020, the affiliate announced $6,100 in Giving Tree Grants for nonprofits benefiting Randolph, Lawrence and Clay Counties. The North Delta Community Foundation currently makes grants through the Giving Tree program annually. The next grant cycle will begin in July 2021. More information about Community Foundation grants and the North Delta Community Foundation is available at www.arcf.org/northdelta.  

### 

Arkansas Community Foundation offers tools to help Arkansans protect, grow and direct their charitable dollars as they learn more about community needs. By making grants and sharing knowledge, the Community Foundation supports charitable programs that work for Arkansas and partners to create new initiatives that address the gaps.  Since 1976, the Community Foundation has provided more than $310 million in grants and partnered with thousands of Arkansans to help them improve our neighborhoods, our towns and our entire state. Contributions to the Community Foundation, its funds and any of its 29 affiliates are fully tax deductible. 

Little Rock, Ark. (Feb. 9, 2021) – Scholarships are now available for eligible Arkansas students through Arkansas Community Foundation.

Each scholarship has its own eligibility criteria; in general, the Community Foundation’s scholarships are for Arkansas students pursuing education at two- or four-year colleges or universities, vocational schools or technical training programs. Some scholarships are designated for graduates of a particular high school or those who plan to attend a particular college. Others are based on extracurricular activities or intended college majors.

“Since 1976, the Community Foundation has partnered with individuals and organizations who want to support students in their pursuit of higher education,” said Heather Larkin, Community Foundation president and CEO. “These generous people provide the funding and determine the size and eligibility criteria of each scholarship while we oversee the application and awarding process on their behalf.”

Scholarships with statewide eligibility include:

  • Abigail Robertson Scholarship Endowment, provides a scholarship for female students pursuing a business degree at a college or university in Pulaski County
  • Anne Pressly Scholarship Endowment, to memorialize the legacy of Anne Pressly and support a graduating high school senior woman who plans to pursue a career in Journalism
  • Arkansas Service Memorial Scholarship Endowment, for students who are children of Arkansans who lost their life in service in the state, nation or community
  • AT&T War Memorial Scholarship Fund, for Arkansas veterans enrolling full-time at an accredited two- or four-year college or university in the state of Arkansas
  • East Student Scholarship Endowment, provides a scholarship to a graduating senior who attends any high school with an EAST program
  • Elizabeth G. Redman Republican Party of Arkansas Scholarship Endowment, for students who are members of or active in the Republican Party of Arkansas
  • Herchel and Melba A. Fildes Endowment, provides a scholarship to students studying nursing and attending Harding University in Searcy, Arkansas or Arkansas State University in Beebe
  • Lillian McGillicuddy Republican Party of Arkansas Scholarship Endowment, for students who are members of the Arkansas Federation of Young Republicans or are active in the Republican Party of Arkansas
  • Lu Nedrow Graduate Scholarship Endowment, provides a scholarship for a member of the Epsilon Zeta Chapter of Alpha Gamma Delta at Arkansas State University in Jonesboro who is pursuing a graduate degree
  • Marie and Bob Marshall Republican Party of Arkansas Scholarship Endowment, for students who are members of or active in the Republican Party of Arkansas
  • Merwin T. and Agnes Bowman Nursing Scholarship Endowment, for students seeking a Bachelor of Science in Nursing or equivalent degree from a qualified institution.
  • Poultry Federation Scholarship Fund provides scholarships to students pursuing a degree related to the poultry industry and attending a school in the University of Arkansas system, Arkansas State University system, Arkansas Tech University or Southern Arkansas University
  • Robert P. Atkinson Hospital Leadership and Scholarship Fund, provides a scholarship to students pursuing an advanced degree with an emphasis in healthcare and/or hospital administration
  • Roy Burlison Honorary Scholarship Fund, provides scholarships to high school seniors who are fast-pitch softball players in the state of Arkansas
  • Ryan Mondy D.A.S.H. Memorial Scholarship Endowment, provides scholarships to graduating seniors whose lives have been affected by cancer

To apply, and for more information about these and other scholarships, visit  www.arcf.org/apply/scholarships/. Deadlines for scholarship applications differ and can be found on the application portal. Arkansas Community Foundation is a nonprofit organization that fosters smart giving to improve communities. The Community Foundation offers tools to help Arkansans protect, grow and direct their charitable dollars as they learn more about community needs. By making grants and sharing knowledge, the Community Foundation supports charitable programs that work for Arkansas and partners to create new initiatives that address the gaps.  Since 1976, the Community Foundation has provided more than $314 million in grants and partnered with thousands of Arkansans to help them improve our neighborhoods, our towns and our entire state. Contributions to the Community Foundation, its funds and any of its 29 affiliates are fully tax deductible.

###

The largest grantmaker in the state, Arkansas Community Foundation is a statewide nonprofit organization that offers tools to help Arkansans protect, grow, and direct charitable dollars while learning more about community needs. The Community Foundation engages people, connects resources, and inspires solutions to build community. You understand your clients’ charitable goals. We understand smart giving. Partnering with the Community Foundation, you stay in control of your client relationships while we provide the tools and resources to make the philanthropic process simple, flexible, and efficient.

Here is what is going on and how the proposed changes might affect charitable giving strategies. 

Under President Joe Biden’s proposed tax plan, taxpayers making more than $400,000 per year would be taxed at a top income tax rate of 39.6%, an increase from 37% under current law. That would mean charitable giving would become more advantageous under the new law for some taxpayers.

A separate provision in the proposed plan, however, would impose a 28% limit on charitable deductions for taxpayers who make more than $400,000 per year. This would mean that instead of avoiding income tax on charitable gifts at the rate of 39.6% as described above, these taxpayers would escape income tax only at a rate of 28%. (A similar provision was proposed, but never enacted, during the Obama Administration.) 

The tax proposal also calls for increasing—from a maximum rate of 20% to 39.6%—the capital gains and dividend tax rates for taxpayers whose annual earnings exceed $1 million. For affected taxpayers, this change would create opportunities to avoid significantly more tax than is possible under current law for gifts of appreciated assets. An increase like this would create a huge incentive for philanthropists to support charitable organizations.

Next, the tax proposal calls for a 3% reduction of itemized deductions for taxpayers making more than $400,000 per year. This is reminiscent of the so-called “Pease Amendment” that was repealed in 2018. Although the reinstatement of this rule could have some negative effects on charitable giving, the rule’s impact would be blunted for taxpayers for whom the reduction is absorbed by other types of itemized deductions (mortgage interest payments, for instance).

Perhaps the component of President Biden’s proposal with the biggest potential impact on ultra-wealthy philanthropists is his intention to raise estate taxes and change the way capital assets are taxed after death. 

Currently, the gift and estate tax exemption per person is $11.58 million and $23.16 million for a married couple. These amounts are effectively double what they were before the Tax Cuts and Jobs Act of 2017 (TCJA). The TCJA calls for an automatic sunset of these increases on December 31, 2025, at which point the exemption will drop back down to $5 million per person, as adjusted for inflation. Under Biden’s proposed tax plan, though, the estate and gift tax exemption and rates would be restored to the lower levels of more than a decade ago.

In addition, Biden’s proposal calls for substantial elimination of the step up in basis from the taxpayer’s cost to fair market value at the time of death, further complicating existing estate plans for many families. Some philanthropists have deferred charitable gifts to 2021 under the assumption that tax laws will change dramatically.

Despite the uncertainty about exactly what might happen with the tax laws in 2021 and beyond, there are still opportunities for you to advise your charitable clients with conviction that they are doing the right thing for themselves and for the causes they care about. To that end, keep in mind the changes to the charitable contribution deduction for 2021:

  • Extends until 2021 the above-the-line temporary charitable deduction that was included in the CARES Act. Non-itemizer individuals in tax year 2021 can deduct $300 for cash contributions to qualifying public charities, and non-itemizer couples filing jointly qualify for $600. Donations to donor advised funds and supporting organizations are not eligible for this deduction; however, we can create designated funds that qualify for the deduction.
  • Extends for one year the increased limit from the CARES Act on deductible charitable contributions for corporations and taxpayers who itemize. The limits for 2021 will be 100 percent of AGI for individuals and 25 percent of taxable income for corporations


As always, Arkansas Community Foundation can help you develop your clients’ charitable giving plans to maximize impact and tax savings. Contact us at 501-372-1116.