Imagine the future. Your community foundation helps bring your charitable goals to life.
Greetings from the community foundation!
It’s our honor to work with so many individuals, families, and businesses to structure your charitable plans! If you are already working with the community foundation, thank you! If you are considering opening a donor-advised fund or other fund this year, we look forward to it!
As always, the community foundation is committed to sharing tips and insights to enrich your experience with philanthropy.
–Tax time can be filled with to do lists and complexity. The community foundation is always here to offer simple tips and reminders about the tax rules related to charitable giving. Check out five important reminders that can help you get oriented as you gear up for this year’s filings.
–In some cases, monthly giving to your favorite charities makes a lot of sense and can help organizations meet cash flow needs. In many cases, though, it might actually be better for a charity to receive a single gift each year. The community foundation can help you structure a giving plan that is a win-win for both you and the causes you love.
–We’re honored to work with so many individuals who have made arrangements for a gift to the community foundation in a will, trust, or IRA beneficiary designation. Many legacy donors have discovered that giving while they’re living is a wonderful way to get involved and make a difference right now, in addition to later. Learn how the community foundation can help you do both.
Thank you for being part of the community foundation! We’re honored to be your home for charitable giving. Together through philanthropy, we can help our region thrive.
Angie Tatro,
CKCF CEO
Just the facts: Five tax reminders for charitable giving
Tax time is a great reason to review the basics! At the community foundation, our goal is to help make the tax aspects of your charitable giving as easy and effective as possible. If you’ve already established a donor-advised or other type of fund at the community foundation, or if you’re considering starting a fund in 2025, it may be helpful to scan a quick reference guide of FAQs for a few of the tax rules that apply to charitable giving.
Where charitable giving is concerned, why does it matter whether or not I itemize my deductions?
Charitable contributions can only be deducted if you itemize your deductions. If you do your own taxes, you’ll report deductions on Schedule A of IRS Form 1040. Itemization is only available if your total deductions exceed the standard deduction. For example, for tax year 2024 (the tax return you’ll file in 2025), the standard deduction is $14,600 for single filers and $29,200 for joint filers. As you look at 2025 and beyond, check with the community foundation about how your donor-advised fund can help you cross the itemization threshold while still carrying out your multi-year annual giving plans to support your favorite charities.
If I use my donor-advised fund to make all of my gifts to charity, do I need receipts for all of those gifts?
No! A big advantage of organizing your giving through a donor-advised fund at the community foundation is that you can make a single gift of cash–or even better, appreciated stock–to your donor-advised fund, and then support your favorite charities from that fund. This means the only tax receipt you need is the one that documents your gift to the community foundation for your donor-advised fund.
What documentation is required for me to take a charitable deduction?
Donations over $250 require written acknowledgment from the charity. The community foundation provides this for gifts you make to your donor-advised fund or other type of fund. Use IRS Form 8283 for non-cash contributions valued at $500 or more. Appraisals are required for donations valued over $5,000 (such as private stock and real estate).
How much of my income can I deduct for charitable donations to the community foundation and other public charities?
Cash donations to public charities (including your fund at the community foundation) are deductible up to 60% of adjusted gross income. Donations of non-cash assets, such as appreciated stock or real estate, are deductible up to 30% of AGI. Remember that donating appreciated assets held for more than one year to a fund at the community foundation can avoid capital gains tax; the community foundation does not pay tax when it sells the asset, leaving more money in the fund to support your favorite causes than you would have if you had sold the asset and donated the cash.
What are the rules for IRA distributions to a charity?
If you’re age 70 ½ or older, you can make Qualified Charitable Distributions (QCDs), up to $108,000 in 2025, from IRAs to certain types of funds at the community foundation (such as designated funds or unrestricted funds, but not donor-advised funds). QCDs can satisfy your required minimum distributions.
As always, the community foundation is here to help you achieve your charitable goals during tax season and throughout the year as you implement a philanthropy plan that meets both your financial goals as well as your goals for making a difference in the community.
“Thanks, but …”: The hidden cost of small gifts to your favorite charities
Your favorite charities are grateful for your support over the years. Whether you make your gifts outright or support charities using a donor-advised or other type of fund at the community foundation, every gift makes a difference in the quality of life in our community.
You may even care about your favorite charities so much that you strive to send over a donation every month throughout the year. In some cases, this works well for the charity, especially if its budget is particularly lean month-to-month or if monthly recurring donations are a priority for the charity’s public relations goals or other strategic reasons. It’s worth knowing, however, that in some situations, consolidating your gifts into a single annual donation is actually better for everyone, including the charity.
Here’s why:
Although recurring donations offer predictable cash flow for organizations, the processing fees and administrative burdens can disproportionately affect charities when donations are fragmented. By giving one substantial annual contribution to each of your favorite charities—whether personally or through your donor-advised fund at the community foundation—you can maximize impact while reducing operational costs for the charities.
Indeed, you might not realize the degree to which processing fees can erode small donations. Every transaction carries fixed costs, of course, regardless of size. A check, for example, can cost charities more than $3.50 to process by the time you add up bank fees, processor charges, and staff time. Even supposedly “streamlined” digital donations via credit cards and digital wallets incur fees that sometimes can add up to more than 4% of the donation amount.
As an example, a single $100 annual gift via check might cost a charity $3.61, but four $25 quarterly donations via check could result in more than $14 in processing fees—consuming more than 14% of the donated amount!
The direct costs associated with each check are just part of the expense. Nonprofits spend valuable resources reconciling accounts and managing donor records for each transaction. A single annual contribution can help reduce these often hidden costs, allowing charities to focus on mission-driven work rather than processing paperwork. This efficiency gain can be particularly crucial for small charities, which often operate with lean teams and tight budgets.
If you’re interested in shifting from monthly to annual giving and you’ve not yet established a donor-advised fund, you might consider doing so. A single contribution to your donor-advised fund each year allows you to claim an immediate tax deduction, and then in turn process an annual grant to each of the charities you’d like to support. This approach can help eliminate processing costs.
For example, if you typically give a total of $1,200 each year to your place of worship and you started providing that support in a single annual transaction, such as through your donor-advised fund, instead of writing twelve $100 checks, you could save your place of worship nearly $50 in processing costs. Plus, you’ll personally benefit from simplified record-keeping with one annual receipt for the gift to your donor-advised fund rather than tracking multiple transactions.
Whether you’re supporting local social service agencies, arts organizations, alma maters, or places of worship, consolidated giving ensures that more dollars flow directly to services rather than getting eaten up by processes and fees. What a terrific example of financial stewardship to honor both your own generosity as well as your favorite charities’ operational realities. Please reach out to the community foundation today to learn more about how annual consolidated giving might fit into your philanthropy plan.
Giving later and now: Make an impact even before your legacy gift
According to the 2023 Giving USA Report released in June 2024, charitable bequests, totaling nearly $43 billion, are up 4.8% over the previous year, keeping pace with inflation. This extraordinary generosity signals the possibility of tremendous impact in our community and in communities across the country.
We are grateful to so many of you who have chosen to leave an estate gift to the community foundation. Whether your will or trust includes a bequest to your fund at the community foundation, or whether you’ve named the community foundation as the beneficiary of your IRA, your gift will help improve the quality of life for people in our region for years to come.
At the community foundation, we’re honored to work with donors who are not only interested in leaving a legacy, but also want to maximize giving during their lifetimes. Indeed, many donors are interested in establishing a donor-advised or other type of fund at the community foundation for a variety of reasons:
–They want to experience the joy of seeing the results of their gifts.
–Parallel to providing financial support through their community foundation fund, many donors enjoy the opportunity to get involved, whether as a volunteer, board member, or simply an observer at site visits to charities they support.
–They want to involve their children and grandchildren in supporting favorite charities, especially by working with the community foundation through a family donor-advised fund.
–They like the added perk that they may be eligible for an income tax deduction for lifetime charitable gifts and that the gifted assets are no longer subject to potential future estate taxes.
Please reach out to our team. The community foundation would be honored to work with you as you incorporate lifetime giving into your charitable giving plan that already includes a generous and much-appreciated estate gift to the community foundation. Thank you for being part of the community foundation!
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.
