Talking With Your Client About Giving
Help your clients create a legacy of philanthropy
Selling a business
You may have a client ready to sell a business which will create a large tax event. One effective way to avoid some of the tax liability is by donating a partial interest in the business to the Community Foundation.
Making a charitable gift, whether outright or to a charitable remainder trust, prior to the sale of a business provides maximum tax advantages. By giving an ownership interest or equity, the donor may avoid capital gains tax on the portion of the business that is donated, as well as claim an income tax deduction based on the fair market value of the gift. The seller simply gives the interest in the business to a donor advised fund or charitable remainder trust, and the buyer then makes the purchase from the charity which is tax-exempt. By contrast, when a gift is made from proceeds of the sale, the donor will have paid capital gains tax on 100% of the sale price so the tax benefit comes solely from the income tax charitable deduction.
Amounts from the sale would then create an endowment fund to carry out your client’s charitable wishes.
Establishing or running a private foundation
A fund at the Foundation provides an attractive alternative to a private foundation. Creating and maintaining a private foundation involves many regulatory requirements and administrative burdens. Our professional staff takes care of all administrative and grantmaking activities, allowing your clients to focus on the rewarding task of supporting their favorite causes. As part of a public charity, a fund at the Foundation offers greater tax benefits.
If your client has a private foundation already, it is not too late to take advantage of the Community Foundation’s services. Our staff has extensive experience facilitating the transition of all or part of the assets of a private foundation to a donor advised fund or supporting organization.
Leaving a legacy gift
Often the easiest way to support charitable interests, a bequest permits your clients to support the community while retaining complete control over their assets during their lifetimes. Bequests can be a specific dollar amount, a percentage of an estate or what remains after other bequests, such as those to family members, are satisfied.
For your clients, planned giving may be as simple as including a bequest to the Foundation. Donors may leave a percentage share of their estates, specify a dollar amount or designate the Foundation as a contingent beneficiary.
We work with you and your client to determine the type of fund that meets their goals whether that be a designated fund to support specific charities or a field of interest fund to support causes they care about most deeply.
Transferring stock to the foundation
Gifts of appreciated securities offer important tax advantages since their full fair market value is deductible as a charitable contribution up to 30% of adjusted gross income each year when itemizing deductions. Like gifts of cash, deduction amounts that exceed the limit can be carried forward for up to five additional years. Capital gains taxes do not have to be paid on the appreciated portion of the gift.
After the Foundation liquidates the securities, the value of the gift (net broker’s commission and fees) is available to support the donor’s charitable goals. The Foundation can accept gifts of publicly traded stock, publicly traded bonds, closely-held stock, restricted stock, partnership interests (such as limited partnerships), interests in limited liability companies and mutual funds.
Setting up a charitable giving fund
The Community Foundation offers a range of charitable funds, allowing your clients to choose the vehicle best suited to their philanthropic goals. Because the Community Foundation is an independent public charity, all contributions are eligible for an immediate tax deduction and many contributions may qualify for a larger tax deduction than those to other charitable entities like private foundations.
With all of our funds, we handle the due diligence, issue the checks and provide staff assistance through a wide range of donor services.
At the Community Foundation, knowledgeable staff is always available to discuss specific charitable scenarios that you are handling for a client. We can provide you with materials or gift illustrations to supplement your own materials. We are also available to attend joint meetings with your clients, as appropriate.
Whether you are an attorney, financial planner or tax advisor, the Community Foundation can assist you and your clients structure tax-wise gifts that carry out their wishes to create an enduring legacy. We add our expertise to yours to ensure that your client makes educated decisions while selecting from a full range of options.