CICF News

CICF News / 2012 / August / News Post
August 27, 2012
Advisors Inspiring Philanthropy

by Jan Edmondson, CFRM, Senior Gift Planning Advisor, CICF

Jan Edmondson, CFRM, is Senior Gift Planning Advisor with CICF. She can be reached at jane@cicf.org.

With the continued uncertainty in the future of the tax laws, financial markets, and the effects of the Presidential election, your clients still have unique opportunities to take advantage of the favorable tax laws in 2012 with charitable contributions.

As you know, tax planning doesn't necessarily mean your clients have charitable intentions or interests. However, in planning with your clients in the midst of this fluid environment, consider how flexible, customized, and cost-effective the creation of donor-advised funds (DAFs) can be with Central Indiana Community Foundation (CICF).

According to a Forbes magazine article entitled, How To Find The Right Donor-Advised Fund (And Why), from February 28, 2011, DAFs “outnumber traditional private foundations by more than two to one.” Donor-advised funds offer federal income tax deductions, cost far less to establish and maintain than private foundations AND provide donors with increased involvement in grantmaking – which is why community foundations created them to begin with. “In fact, it was such institutions [sic, community foundations] that originally pioneered the DAF as an alternative to the relative inefficiency of checkbook giving or the more complicated process of establishing a private foundation,” Forbes’ article states.

Citing the National Philanthropic Trust's 2010 Donor-Advised Fund Report, Forbes notes that DAFs also exceed the combined number of charitable remainder unitrusts, charitable remainder annuity trusts, charitable gift annuities and pooled income funds.

Now is the time to find out how quickly a charitable fund can be created with CICF. According to the Wall Street Journal's June 8, 2012 article Invasion of the Charity Snatchers!, “As the tax-code debate heats up this election season, one cherished break for taxpayers in upper brackets—the deduction for charitable contributions—is under fire. Not only are tax overhaulers on both sides of the congressional aisle taking aim, but so are both presidential candidates. That means well-heeled donors should consider whether to accelerate donations planned for future years into 2012, while the tax treatment is still favorable. ‘We're raising this question with all our clients,’ says Beth Kaufman, an attorney at Caplin & Drysdale in Washington.”

Don't let your clients wait too long to take advantage of the beneficial tax laws for charitable giving in effect until December 31, 2012 (see accompanying article by Sara Smith).

As you know, clients depend on their own knowledge, experience, and especially the advice of their trusted professional advisors. It is our job, like yours, to take a holistic approach with your clients - to listen to their experiences (for what is said and what is not), what they want to accomplish, how they want to use all their days and their dollars, what life they would like to live, and what they would like to see continue when they are gone. The solution to making their dreams come true is cross-training and team building among allied professionals, at least one of whom is a philanthropic advisor (CICF). This advisory team will help them think strategically about their wealth and estate - including how charitable giving can be a tax incentive to be a voluntary philanthropist! Now is the time.

No matter why a person contacts us, they are always surprised by how easy, flexible, and appropriate a donor-advised fund can be for them. It works for someone who is single with no family, as well as for a couple with multiple generations of family they would like to be involved. It is perfect for those who know exactly what charities they would like to benefit over time, or for those who would like to take advantage of our expertise in matching their personal and family values to causes that respect their history and the legacy they would be proud of, in addition to protecting their privacy.

Your clients can make a charitable contribution for tax purposes this year, receiving the tax deduction now, but then take their time to explore interests and make the grants next year and thereafter. DAFs work for anyone who: needs to offset income taxes from converting their traditional IRA into a Roth during the last couple of years; is thinking of selling a business; has stock that has significantly increased in value over their cost-basis; doesn't have time to create a private foundation before year-end; or, just hasn't taken the time out of their busy lives to consider the possibilities of being a voluntary philanthropist. But now is the time.

Working together, we can help you and your clients take advantage of the favorable tax laws in 2012 AND experience the fun and excitement of helping others - to become a voluntary philanthropist and affect lives (their own, the receivers, and the community as a whole).

For more information, please contact Jan Edmondson at 317.634.2423 ext. 510 or jane@cicf.org, or read more here about donor-advised funds.