Six tips for smarter giving, summer reading, and A POWERFUL PHILANTHROPIC CHOICE
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Hello from the Peninsula Community Foundation!
I can hardly believe the year is nearly halfway over. It’s been such a pleasure to talk with so many donors and fund holders about all the ways you are pursuing your charitable giving plans for 2024. I am equally inspired by those of you who have reached out to learn more about getting involved with the community foundation by setting up a donor-advised fund, field-of-interest fund, endowment fund, or bequest to align with your charitable priorities. In this issue, we’re covering a few topics that we think are especially appropriate for summertime. |
- Midyear is a wonderful time to check in on a quick punch list of “need-to-know” charitable giving tips. I’ve selected six items that every charitably-minded person really ought to be aware of, whether for purposes of current giving or future giving. You can scan the list of six items in six minutes or less!
- Summer is a great time to dive into deeper reading, while at the same time take a big picture look at industries and issues. I’m doing just that–with philanthropy. Check out my recommendations for studies and articles about the global role of philanthropy and how it hits home through the work of the community foundation.
- This summer let's celebrate the achievements of our graduates and invest in their peers! This newsletter explores how a scholarship fund at the Peninsula Community Foundation allows you to maximize your philanthropic impact by empowering the next generation of leaders while leaving a lasting legacy on our community.
Michael Monteith
CEO, Peninsula Community Foundation
Six for the summer: Mid-year reminders about charitable giving
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Welcome to summer! We've put together six tips to keep in mind as you plan your charitable giving for the coming months, years, and even decades. As always, the team at the community foundation is happy to be a resource!
#1 Donate appreciated stock to your fund at the community foundation. Yes, yes, we absolutely understand how easy it is to write a check when you want to boost your donor-advised or other type of fund with us. If you can remember to pause before you pull out your pen, though, it really does pay off to consider whether appreciated stock would be a better way to add to your charitable giving account. When you give shares of long-term appreciated stock, you can be eligible for a charitable tax deduction at the fair market value of the shares. Then, when the community foundation sells the shares and adds the proceeds to your fund, the fund–a 501(c)(3) charity–is not hit with capital gains tax. By contrast, if you were to sell those shares and give to your fund from the proceeds, you’d have a |
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lot less cash to work with. Please reach out to us anytime to learn more about how easy it is to take advantage of this tax-savvy giving technique.
#2 Plan ahead for your business exit.
If you own all or part of a private business, keep in mind that charitable giving can factor into your eventual exit strategy. You could be sitting on substantial unrealized capital gains if the business has grown a lot over time. Upon a sale, capital gains tax will be triggered, reducing the proceeds you get to keep. No capital gains tax will apply, however, to the sale of the portion of the business owned by your donor-advised or other type of fund at the community foundation. Plus, you can be eligible for a charitable income tax deduction in the year of the transfer based on the fair market value of the shares–not the cost basis, as would be the case if you’d transferred the shares to a private foundation. Keep in mind that a strategy like this only works with careful planning, so be sure to contact us well in advance of setting a plan in motion. We are happy to work with you and your advisors to help achieve your charitable and financial goals.
#3 Start paying attention now to the estate tax exemption sunset.
The estate tax exemption–the total amount a taxpayer can leave to family and other individuals during their life and at death before the hefty federal gift and estate tax kicks in–is scheduled to drop, rather precipitously, after December 25, 2025. For 2024, the estate tax exemption is $13.61 million per individual, or $27.22 million per married couple, an increase over 2023 thanks to adjustments for inflation. Later this year, the IRS will issue inflation adjustments for 2025. For 2026, without legislation to prevent it, the exemption is scheduled to fall back to 2017 levels, adjusted for inflation, which would roughly total $7 million per person. That is quite a drop! This means a lot more people–maybe including you–could be subject to estate tax in the not-too-distant future. The team at the community foundation is happy to work with you and your advisors to explore how charitable giving techniques can help you avoid estate tax and leave a legacy for the community, especially if you start planning now.
#4 If you can take advantage of the QCD, do it.
A Qualified Charitable Distribution (“QCD”) is a very smart way to support charitable causes. If you are over the age of 70 ½, you can direct up to $105,000 from your IRA to certain charities, including a field-of-interest, designated, unrestricted, or scholarship fund at the community foundation. If you’re subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. Through a QCD, you avoid income tax on the funds distributed to charity. Our team can work with you and your advisors to go over the rules for QCDs and evaluate whether the QCD is a good fit for you.
#5 Review your IRA beneficiary designations.
As you review your assets and how they are titled, perhaps in connection with an annual financial and estate plan review, pay close attention to tax-deferred retirement plans such as 401(k)s and IRAs. Typically, you’ll name your spouse as the primary beneficiary of these accounts to provide income following your death or to comply with legal requirements. But as you and your advisors evaluate whom to name as a secondary beneficiary of these tax-deferred accounts, don’t automatically default to naming your children or your revocable trust. You and your advisors may determine that naming a charity, such as your fund with us, is by far the most tax-efficient and streamlined way to make gifts to your favorite causes upon your death and establish a philanthropic legacy. A bequest like this avoids not only estate tax, but also income tax on the retirement plan distributions. That’s why non-retirement fund assets may be better-suited to pass to children and grandchildren.
#6 Embrace a holistic approach to philanthropy.
When you work with us, charitable giving is easy, flexible, and rewarding. As the hub of your charitable giving, the community foundation offers a wide range of fund types, services, and ways for you and your family to get involved with the community you love. Many of our fund holders use a donor-advised fund to organize annual giving to charities. We can also help you establish a designated or field-of-interest fund to complement the function of 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 our expertise. We’d also be honored to work with you and your advisors to structure a bequest to the community foundation in your estate plan to support important causes, as well as the community foundation’s work, beyond your lifetime. We are here to help you make the most of your philanthropic intentions.
#2 Plan ahead for your business exit.
If you own all or part of a private business, keep in mind that charitable giving can factor into your eventual exit strategy. You could be sitting on substantial unrealized capital gains if the business has grown a lot over time. Upon a sale, capital gains tax will be triggered, reducing the proceeds you get to keep. No capital gains tax will apply, however, to the sale of the portion of the business owned by your donor-advised or other type of fund at the community foundation. Plus, you can be eligible for a charitable income tax deduction in the year of the transfer based on the fair market value of the shares–not the cost basis, as would be the case if you’d transferred the shares to a private foundation. Keep in mind that a strategy like this only works with careful planning, so be sure to contact us well in advance of setting a plan in motion. We are happy to work with you and your advisors to help achieve your charitable and financial goals.
#3 Start paying attention now to the estate tax exemption sunset.
The estate tax exemption–the total amount a taxpayer can leave to family and other individuals during their life and at death before the hefty federal gift and estate tax kicks in–is scheduled to drop, rather precipitously, after December 25, 2025. For 2024, the estate tax exemption is $13.61 million per individual, or $27.22 million per married couple, an increase over 2023 thanks to adjustments for inflation. Later this year, the IRS will issue inflation adjustments for 2025. For 2026, without legislation to prevent it, the exemption is scheduled to fall back to 2017 levels, adjusted for inflation, which would roughly total $7 million per person. That is quite a drop! This means a lot more people–maybe including you–could be subject to estate tax in the not-too-distant future. The team at the community foundation is happy to work with you and your advisors to explore how charitable giving techniques can help you avoid estate tax and leave a legacy for the community, especially if you start planning now.
#4 If you can take advantage of the QCD, do it.
A Qualified Charitable Distribution (“QCD”) is a very smart way to support charitable causes. If you are over the age of 70 ½, you can direct up to $105,000 from your IRA to certain charities, including a field-of-interest, designated, unrestricted, or scholarship fund at the community foundation. If you’re subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. Through a QCD, you avoid income tax on the funds distributed to charity. Our team can work with you and your advisors to go over the rules for QCDs and evaluate whether the QCD is a good fit for you.
#5 Review your IRA beneficiary designations.
As you review your assets and how they are titled, perhaps in connection with an annual financial and estate plan review, pay close attention to tax-deferred retirement plans such as 401(k)s and IRAs. Typically, you’ll name your spouse as the primary beneficiary of these accounts to provide income following your death or to comply with legal requirements. But as you and your advisors evaluate whom to name as a secondary beneficiary of these tax-deferred accounts, don’t automatically default to naming your children or your revocable trust. You and your advisors may determine that naming a charity, such as your fund with us, is by far the most tax-efficient and streamlined way to make gifts to your favorite causes upon your death and establish a philanthropic legacy. A bequest like this avoids not only estate tax, but also income tax on the retirement plan distributions. That’s why non-retirement fund assets may be better-suited to pass to children and grandchildren.
#6 Embrace a holistic approach to philanthropy.
When you work with us, charitable giving is easy, flexible, and rewarding. As the hub of your charitable giving, the community foundation offers a wide range of fund types, services, and ways for you and your family to get involved with the community you love. Many of our fund holders use a donor-advised fund to organize annual giving to charities. We can also help you establish a designated or field-of-interest fund to complement the function of 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 our expertise. We’d also be honored to work with you and your advisors to structure a bequest to the community foundation in your estate plan to support important causes, as well as the community foundation’s work, beyond your lifetime. We are here to help you make the most of your philanthropic intentions.
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Philanthropy snapshot: A global priority with local impactSummertime can mean vacations, travel, a slower (or at least different) pace, and time to reflect. This year, we are thinking about the significant role of philanthropy across the world and how that widespread enthusiasm drives so much energy for charitable giving right here at home.
If you’re spending time this summer reflecting, you might enjoy digging into a few of the sources we found thought-provoking,
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- Every June, Giving USA releases its annual statistics on the state of charitable giving. We are looking forward to the 2024 report and digging into the numbers from 2023. Last year’s report showed that while individual giving was down, major gifts were ticking up. We’re curious to see what’s changed!
- Some say context is everything, and that may be why we always enjoy going back to the Smithsonian’s Giving in America exhibit and online resources. Even in its semi-archived and “under construction” format, the site is captivating; every time we revisit the site, something different catches our eye. (This time, we were struck by the side-by-side images from 2014’s Ice Bucket Challenge and the collection box from the early 1800s. And by the way, how can nine years have gone by since the Ice Bucket Challenge?)
Investing in Your Community's Future: Why a Scholarship Fund at the Peninsula Community Foundation is a Powerful Philanthropic ChoiceFor many, philanthropy is about giving back and making a positive impact. The Peninsula Community Foundation offers a unique opportunity to do just that by establishing a scholarship fund. But why choose a scholarship fund as your philanthropic vehicle? Here are some compelling reasons:
1. Empower the Next Generation: The rising cost of education is a major barrier for many deserving students. Your scholarship fund can bridge that gap, ensuring talented individuals have the chance to pursue their academic dreams. Investing in education strengthens our community by creating a more skilled and qualified workforce. |
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2. Leave a Lasting Legacy: A scholarship fund at PCF is a permanent endowment. This means your gift will continue to provide financial support for generations of students, allowing your philanthropic impact to live far into the future.
3. Align with Your Passions: PCF allows you to tailor your scholarship to a specific cause you care about. Do you want to support students in a particular field of study, from STEM fields to the arts? Perhaps you want to help students from a specific background or high school. PCF offers the flexibility to create a scholarship that reflects your values.
4. Maximize Your Impact: PCF has the expertise and resources to manage your scholarship fund effectively. This frees you from administrative burdens, allowing you to focus on the joy of giving. PCF also ensures your donation is tax-deductible to the fullest extent allowed by law.
5. Become Part of a Community of Givers: The Peninsula Community Foundation connects you with other like-minded philanthropists who share your passion for investing in the future. Together, you can create a ripple effect of positive change throughout our community. A scholarship fund at PCF is a permanent endowment. This means your gift will continue to provide financial support for generations of students, allowing your philanthropic impact to live far into the future. Since its founding in 2003, PCF has already helped hundreds of students through scholarship funding exceeding $1.9 million. Imagine the collective impact we can create together!
Ready to invest in the future of our community? Contact PCF today to learn more about how you can establish your own scholarship fund and start empowering the next generation of leaders. Visit our website or call us at 757-328-0862 to get started.
3. Align with Your Passions: PCF allows you to tailor your scholarship to a specific cause you care about. Do you want to support students in a particular field of study, from STEM fields to the arts? Perhaps you want to help students from a specific background or high school. PCF offers the flexibility to create a scholarship that reflects your values.
4. Maximize Your Impact: PCF has the expertise and resources to manage your scholarship fund effectively. This frees you from administrative burdens, allowing you to focus on the joy of giving. PCF also ensures your donation is tax-deductible to the fullest extent allowed by law.
5. Become Part of a Community of Givers: The Peninsula Community Foundation connects you with other like-minded philanthropists who share your passion for investing in the future. Together, you can create a ripple effect of positive change throughout our community. A scholarship fund at PCF is a permanent endowment. This means your gift will continue to provide financial support for generations of students, allowing your philanthropic impact to live far into the future. Since its founding in 2003, PCF has already helped hundreds of students through scholarship funding exceeding $1.9 million. Imagine the collective impact we can create together!
Ready to invest in the future of our community? Contact PCF today to learn more about how you can establish your own scholarship fund and start empowering the next generation of leaders. Visit our website or call us at 757-328-0862 to get started.
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
