What is your philanthropist type? Tax laws up in the air, and forward-worthy reading material
Hello from the community foundation!
It looks like we are entering a very interesting and perhaps challenging summer. First, it’s very hot and the weather forecast is for it to stay that way. That is, by its self, not anything new for Hampton Roads. Then you add in a politically hot presidential election and sometimes it just feels like too much. This is especially the case for many nonprofits who are attempting to help others in our community who are struggling with mental, physical and/or financial problems. We at the community foundation have been partnering with you and others who care about our area for over 20 years. I’m very proud of the work we have done together. Thank you for continuing to care and for letting us help you grow your community support. |
In this issue, we’re covering topics that tend to be popular as we head into the second half of the year. The summer months are a great time to regroup with your family about your charitable giving plans and also ensure that you’re coordinating with your advisors to accomplish key estate and financial planning priorities before the year-end rush is upon us.
Michael Monteith
CEO, Peninsula Community Foundation
- Election years are interesting for many reasons! For philanthropists and their advisors, election years can be tricky because it’s impossible to predict what might happen with the tax laws. That’s certainly the case in 2024. The community foundation can help you and your advisors navigate various approaches to charitable strategies, even when the tax laws themselves are up in the air.
- Whether you’ve been involved in philanthropy for many years or you're just starting out on your charitable giving journey, you’ve likely noticed that there are many, many ways to support the causes you love. The community foundation can help you evaluate various giving vehicles based on your own “charitable giving personality type.”
- The team at the community foundation wants to help you help your advisors stay up to date on legal and tax developments that might impact the charitable giving components in your estate and financial plan. We’re happy to offer tips and reading material to share with your attorneys, accountants, and financial advisors, and our team is always available to join a discussion.
Michael Monteith
CEO, Peninsula Community Foundation
Philanthropy: Are you an investor, a connector or an activator?
Charitable giving traditions are a big part of many peoples’ lives. The ways philanthropic values translate into action and behavior, however, vary widely from person to person. And that’s a good thing! When you align your charitable giving activities with your own personality and the ways you like to do good, you’ll enjoy it a lot more and as a result, you’ll be more likely to get even more involved with your favorite causes.
Indeed, your choice of the causes you support may be based on personal experiences or even how you view your character. You may also find that philanthropy fosters personal growth and self-discovery. Some people find that getting involved in the community creates opportunities for networking and building relationships based on shared values and goals. That’s why it’s important to acknowledge that not everyone likes to “do good” in exactly the same way. To figure out what mix of charitable activities might best suit your personality, consider reflecting on whether you tend toward an ”investor,” “connector” or “activator” profile. |
Here’s what it might look like to be an “investor” type of philanthropist:
- You like to get involved in community activities where you can act independently, rather than scheduling dedicated time.
- You may feel that you often have more money than time.
- You’re happy to write a check or purchase a product that supports a cause.
- You like community activities where you can collaborate with friends and family.
- You enjoy the opportunity to meet people who care about a variety of causes, not necessarily a specific charity.
- You like attending charities’ fundraising events, and you might even regularly promote your favorite causes on social media.
- Your philanthropic passion lies with one or two specific causes.
- You like the idea of playing a small part in “changing the world” and impacting a single issue that could potentially benefit society on a broad scale.
- You might enjoy serving on charities’ boards of directors.
Up in the air: Charitable planning in a shifting tax landscapeIt’s an election year, which means you may have more questions than answers as you work with your advisors to build out your financial and estate plans. In particular, the looming sunset of key provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 has created a tremendous amount of ambiguity.
For many taxpayers, the potential sunset of the TCJA’s higher estate tax exemption is top of mind. Unless Congress intervenes, the exemption is set to fall after December 31, 2025, from roughly $27 million per couple to approximately $14 million per couple (depending on inflation adjustments). No one has a crystal ball, and it is impossible at this point to know whether or when you should implement planning strategies to address potential changes in the law. Nevertheless, if you are among those who would be affected by the estate tax exemption’s precipitous drop, it’s important to |
know that charitable strategies can fit nicely into a gifting plan that would help offset the sunset’s impact.
If you’re a business owner, for example, you could explore launching a gifting program now to transfer shares of the business not only to your heirs to take advantage of the higher exemption, but also to a donor-advised or other fund at the community foundation. With these gifts, you could reduce the value of your taxable estate while also executing a business transition and philanthropy plan that aligns with your overall intentions regardless of the tax laws.
Given the uncertainty about what might happen with the estate tax exemption, some people are updating their estate plans to increase a bequest to a donor-advised or other fund with us. This would help blunt the impact of estate taxes, and the bequest can be adjusted during lifetime as planning goals and estate tax laws evolve.
We are here for you! Our team is happy to help you navigate the opportunities and pitfalls presented by potential changes in the tax law. It is our pleasure to work with you and your family to maximize your charitable goals.
If you’re a business owner, for example, you could explore launching a gifting program now to transfer shares of the business not only to your heirs to take advantage of the higher exemption, but also to a donor-advised or other fund at the community foundation. With these gifts, you could reduce the value of your taxable estate while also executing a business transition and philanthropy plan that aligns with your overall intentions regardless of the tax laws.
Given the uncertainty about what might happen with the estate tax exemption, some people are updating their estate plans to increase a bequest to a donor-advised or other fund with us. This would help blunt the impact of estate taxes, and the bequest can be adjusted during lifetime as planning goals and estate tax laws evolve.
We are here for you! Our team is happy to help you navigate the opportunities and pitfalls presented by potential changes in the tax law. It is our pleasure to work with you and your family to maximize your charitable goals.
Summer reading that’s worth a forward
Every week, the team at the community foundation works with a wide range of charitably minded individuals and families who are either already working with the community foundation or are considering establishing a donor-advised or other type of fund to organize their giving. We also talk with attorneys, accountants, and financial advisors as they work alongside charitably minded clients. Indeed, many advisors are telling us that they’re taking advantage of summer’s slower pace to get a jump on 2024 tax planning and estate plan updates.
As you work with your advisors over the next few months, be sure to let them know that the community foundation can serve as the hub of your family’s philanthropy by administering a wide range of charitable giving vehicles, including: |
- Donor-advised funds, which are frequently a better fit for your family than a private foundation
- Field-of-interest funds and designated funds, which enable you to support specific causes and organizations and, if you are 70 ½ or older, can receive a tax-savvy “Qualified Charitable Distribution” from your IRA
- Bequests and other legacy gifts to help ensure that the causes you’ve supported during your lifetime can continue to benefit from your generosity for years to come
- Unrestricted gifts to support the community foundation’s work to grow philanthropy and improve the quality of life in our region across generations, especially as community needs evolve
Along these lines, some of you have requested that we provide a reading list to pass along to your advisors to help them stay up to date on legal and tax issues impacting charitable giving. Here are a few suggestions you could forward to your advisors (or simply forward this email):
- For advisors working with clients who support higher education, it’s important to stay on top of the tax treatment of NIL collectives. The team at the community foundation is happy to talk with your advisors about what’s going on here and how they can follow best practices.
- It’s becoming more and more popular for philanthropists to explore giving cryptocurrency to charitable causes. Encourage your advisors to reach out to the team at the community foundation as they encounter this issue with clients.
to serve as the go-to charitable giving resource as you build a comprehensive financial and estate plan that includes philanthropy.
The team at the community foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation.
For more information about establishing a fund, please [email protected]/757.327.0862