Happy New Year from the community foundation!

We hope your 2024 is off to a good start!

Many of you have been fund holders and fund advisors at the community foundation for years, and we are grateful. Some of you established a donor-advised fund, field-of-interest fund, scholarship fund, or unrestricted fund in 2023, and we’re so glad you did. Others of you are evaluating whether to start a fund at the community foundation in 2024. We are here to answer your questions, and we look forward to working together!

Here’s what we’re covering in this issue:

• As you build your charitable plans for 2024, remember that you can work with the community foundation to achieve your goals for supporting favorite charities with gifts this year and also establish plans to ensure that your support for these causes continues far into the future through tax-savvy “planned giving” techniques.
• Don’t leave your loved ones in the dark. As you compile lists of financial and personal information, be sure to include information about your donor-advised or other type of fund at the community foundation. Our team can help document your intentions.
• The new year brings new numbers! Be sure you’re up to date on the various IRS thresholds and inflation adjustments that could impact your charitable giving and tax planning through your fund or funds at the community foundation.

As always, please reach out anytime!

Angie Tatro, CEO

Planned giving pointers

As you’ve chatted over the years with the professionals working at your favorite nonprofits, you’ve likely heard the term “planned giving.” You may have even wondered what the term means–even if you have already structured so-called “planned gifts” to support your favorite charities!

Here are a few pointers to help break down the concept of planned giving, along with ways the community foundation can help you achieve your charitable goals.

It may help to think of “planned giving” in contrast to what’s sometimes called “current” or “annual” giving. For example, when you write a check (or, ideally, give highly-appreciated stock) to a charitable organization such as your fund at the community foundation, you’re transferring those funds right away in a relatively straightforward manner. You also may be making annual gifts to several charities, and from time to time you may also make gifts to a favorite charity’s endowment or reserve fund at the community foundation.

By contrast, a “planned gift” is more complex and forward-looking than current or annual support of your favorite charitable causes. Making structured future transfers to charity is often referred to as “planned giving” because, well, these gifts require planning. Here are examples of common “planned gifts”:

–A bequest in your will or trust allows you to name a charity, such as your fund at the community foundation, to receive a certain dollar amount, or a percentage of your estate, following your death. The team at the community foundation can work with you and your advisors to include a bequest in your estate plan using the proper bequest language.

–Beneficiary designations on life insurance policies, and especially on retirement plans, can be effective tools for making bequests. The team at the community foundation can work with you and your advisors to complete the paperwork required to properly designate your fund at the community foundation as the beneficiary of life insurance or IRA assets, including reviewing with you the many tax benefits of using retirement plans to fund your bequests.

–Setting up a charitable trust, such a charitable remainder trust, is often an effective way for you to ensure that money will flow from your estate to a charity, such as your fund at the community foundation, in a way that meets both your philanthropic intentions and your financial goals (including retaining an income stream and triggering an up-front charitable income tax deduction). A charitable gift annuity is another type of “split interest” arrangement, whereby you can retain an income stream and designate a charitable beneficiary to receive a future gift. Charitable trusts are complex, and we’re here to walk you and your advisors through the process every step of the way.

Please contact the team at the community foundation. We’d love to work with you to set up planned gifts to support your favorite causes, as well as work together to ensure that you’ll meet your charitable goals for current giving in 2024.

Providing guidance for loved ones about your charitable giving

Whatever their age or health status, most people are aware that they need to document important financial and personal information for loved ones, just in case the unexpected occurs. We’ve all heard stories about someone’s family member who passed away and left little, if any, information about where to find bank accounts, passwords, estate planning documents, life insurance policies, and other information. No one wants to leave their loved ones in the lurch with scant information, but it’s often hard to get motivated to write it all down in one place.

The start of a new year is an excellent time to get organized and provide your next of kin or key advisors with the information they’d need to take care of your affairs if something were to happen to you. The list of “must haves” includes the obvious: Will, trust, power of attorney, birth certificate and marriage license, titles to cars and boats, deeds to property, car keys, bank accounts, investments and advisor contact information, life insurance policies and contact information for the agent, funeral wishes, and, critically, passcodes and passwords to devices and accounts.

What might not be obvious, though, is that you also ought to leave your loved ones with information about your charitable giving, including details about favorite charities you’ve supported over the years and information about your donor-advised or other type of fund (or funds) at the community foundation. In many instances, one member of a family has managed a family’s or a couple’s donor-advised fund, for example, while others have not been as involved in the mechanics. Be sure to include your funds at the community foundation on your list of key information, and include the community foundation’s contact information. You might also like to include a copy of your donor-advised fund agreement outlining successor advisors, as well as login credentials to the community foundation’s online fund portal.

The team at the community foundation is happy to help you put together documentation about your donor-advised fund and charitable wishes to include with the information you provide to your loved ones so they are not completely lost as they navigate how to carry out your philanthropic wishes. Even better, we’re happy to work with you anytime to show your family members exactly how your donor-advised or other type of fund works so that they are involved and participating with you in your philanthropic pursuits during your lifetime.

Making it easy for you to share the joy of giving, and also helping ensure that family members have the information they need, are top priorities at the community foundation. We are honored to work with you to help make your philanthropy easy, effective, and rewarding for everyone involved.

Clean slate: Tips for charitable giving in 2024

A new year is such a great time to plan and reboot. Cliche as it may be to talk about resolutions this time of year, it’s tough to deny that January represents a clean slate for “to do” lists, goals, and your overall mindset.

As you think about your 2024 charitable giving goals and priorities, here are a few items to consider:

You may have more capacity to give to charity.

The IRS issued inflation adjustments for important thresholds such as the standard deduction, Social Security cost-of-living adjustments, annual exclusion gifts, Required Minimum Distributions, Qualified Charitable Distributions, and levels of income for each tax bracket. Talk with your advisors about how these adjustments might impact your charitable giving goals–or even create opportunities for you to do more to support your favorite causes in 2024.

You may soon get a charitable deduction even if you do not itemize.

Many eyes are on the Charitable Act, which, if passed, would allow even non-itemizers to deduct certain charitable gifts on their income tax returns. This legislation has generated strong public support; 77% of Americans are reportedly in favor of the proposed “universal” charitable deduction.

You’ll likely still receive requests to fund disaster relief efforts.

Disaster giving is likely to remain high on the fundraising radar, meaning you will likely continue to get requests for donations to support disaster-related causes. As always, please reach out to the community foundation to strategize about effective deployment of your charitable dollars to help people who need it most in the wake of disasters and humanitarian crises.

This is a good time to review your estate plan without being rushed.

The beginning of the year is an excellent time to be sure your estate plan is in order. Many people scramble at the end of the year to execute tax planning transactions, which is understandable, but this often leaves little time for a thoughtful, strategic evaluation of the various components that make up a comprehensive estate plan, including financial planning, retirement planning, tax planning, investments and wealth management, business succession planning, planning for disability, evaluating wills and trusts as children get older and needs change, and, of course, charitable planning.

Reach out to the team at the community foundation as you and your advisors evaluate the steps you’d like to take in 2024. We’re here to help ensure that you achieve your charitable giving goals in the most tax-savvy and impact-minded way possible so that you can continue to help the causes you care about the most.

This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. 

Hello from the community foundation!

We hope this note finds you well. In our community and across the country, families are gearing up for a busy fourth quarter. Giving season shifts into full gear, and we look forward to working with you! Whether you’ve already established your donor-advised or other type of fund at the community foundation or are currently considering it, please reach out. We would love to help you get even more connected to the causes you care about while maximizing tax benefits at the same time.

In this issue, we’re covering topics that are on the minds of many people as the year winds down.

Retirement and charitable giving continue to be intertwined. Over the last few years, we’ve all seen retirees who’ve gone back to work, colleagues who decided to retire early, and everything in between. Because IRAs and other retirement accounts are such useful assets for charitable giving, it is important to recognize the opportunities presented for charitable giving at every stage of retirement, from contemplating retirement all the way through to permanent retirement. Learn how the community foundation has you covered!

Meeting your 2023 charitable goals does not have to be stressful. The end of the year is a well-documented season of anxiety for many people. Fortunately, working through the list of organizations you’d like to support can be a bright spot. The team at the community foundation can help you accomplish your charitable giving objectives efficiently, effectively, and joyfully, including tapping into tax benefits. Learn why waiting until the end of the year to complete your giving actually has a silver lining.

Do good, feel better. It is not your imagination! When you give to charity or do something good for others, you really do feel better. From reductions in risks for high blood pressure to sleeping better at night, learn why philanthropy is such a powerful catalyst for well-being–both your own well-being and the health and happiness of the people whose lives you are improving through gifts to your favorite nonprofits.

Thanks again for all you do. We are honored to work together and wish you the best.

–Angie Tatro, CKCF CEO

Retirement strategies: Tax benefits and beyond

At the community foundation, we regularly talk with retirement-age donors and fund holders about the tax benefits of Qualified Charitable Distributions and leaving bequests of IRAs to a donor-advised fund at the community foundation. But getting involved in philanthropy can be so much more than that for retirees and people who are gearing up (or down!) for retirement. This is particularly relevant as some retirees consider returning to work and contemplate what that means for their charitable giving and volunteering plans.

You’ve likely heard the statistic that 10,000 people in the United States are turning 65 every day. And while 65 may be the “traditional” retirement age in this country, the milestone appears to be anything but traditional nowadays. While Covid-19 did not impact retirement ages as much as some might have predicted, many of those who did retire actually now regret it. While many retirees are seeking work for financial reasons, two of the top six reasons to go back to work involve boredom or loneliness.

For people who’ve reached a theoretical retirement age, working or returning to work provides many opportunities that tie into philanthropy. For example:

–You can still contribute to your IRAs (which many people do not realize), and if there’s an employer-sponsored 401(k) plan, all the better.

–You can use your extra income to fund your donor-advised fund at the community foundation, making you eligible for an income tax deduction as well as removing assets from your taxable estate.

–As you take advantage of the opportunity to get more involved with causes you care about in your free time (which has perhaps increased because children have grown), you can update your estate plan to leave additional bequests to your donor-advised fund at the community foundation to support your favorite causes after you’re gone.

–And of course, if you are 70 ½ or older, you can take advantage of the Qualified Charitable Distribution (QCD) which allows you to direct up to $100,000 annually from your IRA to a qualified charity, and even more in future years as the $100,000 cap is indexed for inflation. Plus, if you’ve reached the age when you are required to take distributions from your IRAs, QCDs will offset those Required Minimum Distributions (RMDs).

For those who’ve retired for good, remember that many of the organizations you care about could likely use your help not only financially as a donor, but also as a volunteer, board member, or community advocate.

Please reach out to the team at the community foundation. We’d love to work with you on your charitable giving plans for retirement, un-retirement, or re-retirement, as the case may be! Your seasoned professional skills and civic commitment are truly valuable to improve the quality of life in our community.

Fourth quarter jitters: Charitable giving tips to reduce your stress

You are not alone if you begin to feel a little anxious when October rolls around. Many people experience year-end stress, whether because of looming deadlines at work, tax-related estate planning cut-off dates, anticipating a busy holiday season of travel and social engagements, or simply the realization that another year is coming to a close and there’s not a lot of time left to check off items on the 2023 punch list.

To top it all off, many families do a lot of their charitable giving at year end, too. But that’s one area that does not need to be stressful. Your giving can be more easily accomplished than sending invitations, herding family members, guessing colors or sizes, and remembering who to include–or not!

Here are three tips for alleviating fourth-quarter stress and still be able to hit your charitable goals for 2023.

–Using your donor-advised fund at the community foundation makes giving very convenient. Through the foundation’s online portal, you can easily view a list of all of the organizations you’ve supported so far this year, make note of the ones you missed or want to add, and then finish the annual task.

–Your late-year timing could actually be useful for the organizations you care about, given the pronounced need for support during the gift-giving time of year, whether that’s to an organization seeking to achieve its own year-end goals or an organization that provides food or utility bill relief during the cold winter months. According to National Giving Month, 31% of charitable giving occurs in December; 12% of giving typically occurs between December 29 and 31; and 28% of nonprofits raise as much as 50% of their funding in December.

–Charitable needs are heightened during the fourth quarter because it is especially stressful for people experiencing financial challenges. For 52% of respondents surveyed in a 2023 study, money was the most cited factor that negatively affects their mental health, a level 25% higher than a year ago. The organizations supporting these people are in high gear during the fourth quarter and holiday season.

–By the end of the year, you will likely have a better idea of your financial situation, ideal target amount for charitable tax deductions, and the performance of stock in your portfolio. This will allow you to make gifts to your donor-advised fund of highly-appreciated stock, avoid capital gains, and reduce your taxable estate. And, of course, the proceeds of that stock will hit your donor-advised fund tax free, so the full amount of the sale price is available to support your charitable giving priorities.

Completing your 2023 charitable giving can reinforce philanthropy’s win-win value proposition: You can check a task off your list by supporting causes and organizations that are important to you and receive key tax benefits, and those in need will appreciate your generosity while feeling a greater sense of the season’s spirit.

Do good, feel better: Philanthropy through the lens of well-being

Philanthropy means “love of humanity”—and, according to some, “philanthropy” includes acts that benefit both the giver and the receiver. This is surprising to some people who have been taught “it’s better to give than to receive.”

Somehow we have popularized the idea that giving should “hurt.” But that is not what the research says. Consider just a few examples:

• Research on the connection between volunteering and hypertension revealed that four hours of volunteering a week reduced the risk of high blood pressure–by 40%–in adults over 50.
• Another study indicates that giving reduces cortisol levels.
• Yet another study found a link between unselfishness and a lower risk of early death because “helping others” reduces stress-related mortality.
• Research has linked doing something good for someone else to an increase in endorphins.
• An altruistic attitude in the workplace makes you more productive and less likely to quit.
• Doing good and being grateful helps you sleep better at night.
• People who do just one good thing a week for someone else actually become happier over time.

When people were asked to reflect about all the ways they do good (giving to charity, volunteering, serving on boards, donating canned goods, purchasing products that support a cause, celebrating at community events, sharing with others, and so on), 92% reported that they felt better about themselves.

Even just thinking about what you’ve given others–and not only just being grateful for what you’ve received–is a huge motivator to do good things for others, over and over again.

The “do good feel good” benefits of philanthropy is just one of the many reasons that so many individuals and families work with the community foundation. If you’ve already established a donor-advised or other type of fund with the community foundation, we look forward to continuing to help you fulfill your charitable wishes to improve the lives of others. If you’ve not yet established a fund at the community foundation, we look forward to working with you to make a difference in the causes you care about.

This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. 

Hello from the community foundation!

We hope the end of summer has treated you well and that you are gearing up for the busy months ahead as 2023 begins to wind down. We have heard from many of you that charitable giving is on your minds. Certainly, philanthropy is an important topic during the latter part of any year as you and other charitably-minded individuals and families plan out the support you’d like to provide to your favorite charities. This season, charitable giving is even higher on the radar because of the recent natural disasters and the desire of so many to do whatever they can to support relief efforts.

We are grateful to have the opportunity to work with so many of you who are already donors and fund holders at the community foundation. For those of you who are considering establishing a donor-advised or other type of fund with the community foundation, thank you! We appreciate your consideration and look forward to meeting with you soon to put together a charitable giving plan that meets both your philanthropic goals and your goals for your financial and estate plan.

In this issue, we are covering four topics that are bubbling up in many conversations:

–Helping those affected by the Maui fires and Hurricane Idalia is a top priority for many of you. Our community foundation, as well as many community foundations across the country, are rallying support for people in need in the wake of these and other disasters. Please reach out. We can help ensure that your generous gifts are deployed in the most efficient and effective way.

–Several of you have reached out to ask about the Roth treatment of 401(k) “catch up” contributions for some workers over 50 that has appeared to be a moving target! What does this even mean for charitable giving–and for you? The net-net is that those of you who would have taken a tax hit now are getting a two-year reprieve, which could leave you with potentially hundreds of extra dollars, which you can now give to charity if you are so inclined.

–Always popular in discussions about charitable giving, retirement plans continue to be at the forefront of many donors’ plans for bequests to their donor-advised funds at the community foundation. This is a good thing; donors who leave IRAs to their kids, for example, and leave their stock to charities are missing out big time on tax benefits. Call the team at the community foundation to learn how you can be even more savvy about the way you provide for both charities and your children in your estate plan, especially now that the “stretch IRA” is no longer.

–This is the time of year when we start to get a lot of questions from donors about food insecurity, and especially about how to involve children in the charitable giving conversation. The community foundation is happy to provide tips and insights about why food insecurity is such a big deal and how even the youngest donors can get their heads around the magnitude of the issues.

As always, we look forward to hearing from you! Thank you for everything you do for the community we all love.

Wishing you all the best,
Angie Tatro, CKCF CEO

Disaster relief efforts and the community foundation’s collaborative role

Our hearts go out to the people of Maui—and all of Hawaii—in light of the tragic fires that occurred early in the month. By all accounts, those will take years, if not decades, to recover and rebuild from. Restoration costs are already estimated at $5.5 billion, although only time will tell just how much time and money will be needed.

As if that weren’t enough, much of the U.S. slogged through what has been called the hottest summer ever—and July as the hottest month ever—with uncomfortably high temperatures affecting land and sea even before the start of hurricane season. And then there was Tropical Storm Hilary and a simultaneous magnitude 5.1 earthquake that struck Southern California. To round out the month, Hurricane Idalia made landfall on August 30, with extensive damage reported and tens of billions of dollars of losses projected.

Fortunately, community foundations are well-suited to facilitate and manage relief funds for disasters and humanitarian tragedies, no matter where they occur. Certainly local community foundations in the areas most affected by a disaster consistently jump in immediately to establish funds to accept donations, which the community foundation then deploys rapidly and effectively to high-performing nonprofit organizations that are delivering relief where it is needed most urgently.

Even community foundations and other charitable foundations that lie outside of affected geographic areas are committed to responding quickly by launching their own fundraising efforts, either promoting the funds established by community foundations in the affected areas or their own funds created to directly support relief efforts. Indeed, disaster relief funding is frequently coordinated by community foundations, which are widely viewed as one of the very best vehicles to help donors provide financial support to relief efforts. Community foundations understand, for example, that the most immediate needs in the wake of a disaster are often for food, shelter, water, and hygiene kits. In addition, the community foundation knows which nonprofit organizations on the ground are best qualified to meet those needs.

With a deep understanding of philanthropy and charitable giving tools to effect meaningful change, the team at the community foundation is here for you. Whether your interests include disaster relief, education, the arts, social services, or other causes near and dear to your heart, the community foundation can help you fulfill your goals and intentions.

Relief from catch-up requirements: More money for charitable giving?

Legislation known as SECURE 2.0 contained a dizzying array of changes to the laws governing retirement plans. Passed at the end of 2022, SECURE 2.0 is 130 pages long; overall, its purpose is to encourage more retirement savings through vehicles like employer-sponsored 401(k) plans.

Lately, the buzz around SECURE 2.0 has been focused on a very specific provision addressing what are known as 401(k) “catch up” contributions. A “catch up” contribution allows a worker aged 50 and older to pump more money (an extra $7500 in 2023) into their 401(k) plans, beyond the usual $22,500 statutory maximum for employee deferrals.

Normally, an employee’s contributions to a 401(k) are not included in adjusted gross income for tax purposes, which is a big perk. But under the provisions of SECURE 2.0, if you are at least 50 years old and earned $145,000 or more in the previous year, these catch-up contributions would be treated like Roth IRA contributions–meaning the money used to make those contributions is after tax. Essentially, you will be paying tax on the money you use to make the catch up contributions. Depending on your tax bracket, the extra tax could possibly tally into the thousands of dollars.

But! The IRS’s recent ruling has delayed the Roth treatment provision, so that it will not become effective until 2026. This means your catch-up contributions are still “pre-tax,” at least for the next couple of years.

What is the bottom line here? If this situation applies to you–if you are over 50, earn more than $145,000 a year, and want to make catch-up contributions to your employer-sponsored 401(k) plan–you now have an extra couple of years to enjoy the tax perks of these contributions. This relief, in turn, might allow you to make larger charitable gifts than you had originally planned when you budgeted for 2023’s charitable giving.

Rethinking inherited IRAs

As you build your estate plan and consider how to provide for your adult children, keep in mind that naming children as the beneficiary of an IRA or other qualified plan probably is not something that should be automatic.

For starters, if you are charitably-minded and have other assets, such as highly-appreciated stock, to leave your children, those assets should come first. This is because your children will inherit the stock at a “stepped up” basis, meaning their capital gains tax hit upon sale will be far less. Plus, if you name a charitable organization, such as your donor-advised fund at the community foundation, as the beneficiary of your IRA, the IRA proceeds won’t be depleted by either income tax or estate tax. Your kids, on the other hand, will have to pay income tax on the proceeds of an inherited IRA.

This dynamic became even more important to consider when the law changed a few years ago, such that a child who was named as the beneficiary of a parent’s IRA, for example, could no longer count on a relatively straightforward and tax-savvy method of withdrawals called the “stretch IRA.” With the passage of the SECURE Act, that changed for many children who inherited an IRA after December 31, 2019. Instead of taking distributions over their lifetimes, affected children now need to withdraw the entire inherited IRA account within a 10-year period as calculated under the law.

If you’re evaluating options for how to handle an IRA in your estate plan, talk with your advisors and the community foundation about leaving an IRA to your donor-advised fund or other charity via a beneficiary designation. Or, if you’d still like to provide an income stream to your children following your death, in some circumstances it might be worth considering establishing a charitable remainder trust to name as the IRA beneficiary (assuming the stars align vis-a-vis children’s health, their tax brackets, projected returns, and other factors).

Importantly, if you are a child of parents who own IRAs, they will appreciate you bringing this opportunity to their attention! Your parents might not realize that their good intentions to leave their IRAs to their children could be saddled with tax burdens down the road. Encourage your parents to talk with their advisors and give the community foundation a call. We are here to help make IRAs a win for everyone–your parents, their favorite charities, and you!

Community need spotlight: Food insecurity

Though natural disasters and the resulting humanitarian needs are frequent but sporadic, the need for food in our community is an everyday constant. And with school back in session, the needs among the food insecure and food banks—often met through philanthropic generosity—are heightened.

Compounding the issue is that food inflation remained relatively high at 4.9% in July, despite being less than half of its mid-2022 11.4% rate. Typically second only in household budget importance to shelter, food’s nearly 5% year-over-year increase frustratingly occurred when prices for gasoline, natural gas, and airline fares registered double-digit declines, according to July’s Consumer Price Index figures. Digging deeper into the food price conundrum, food-at-home importance was more than double of food-away-from home. Deeper still, the prices for produce and convenience foods like cereal and bakery products led the price increases.

Together, food’s high demand and prices are straining philanthropic food dollars. This reduces funding availability for other needs, especially seasonal back-to-school clothing and supplies, and also utility relief due to the scorching summer temperatures.

Many donors and fund holders at the community foundation like to stay up-to-date on what’s going on with the need for food. Indeed, many families discuss food insecurity with their children and grandchildren as an opportunity to learn about philanthropy because it is easy for even young children to understand how important food is to well-being and what it might feel like to be without it.

Here are three insights you can consider as you talk with your family about the importance of charitable giving to support families in your community who are faced with challenges putting food on the table:

• Approximately 49 million people—about 1 in 6 Americans—received charitable food assistance sometime in 2022.
• During an average day in the 2021-2022 school year, 15.5 million children received a school breakfast and nearly 30 million children received a school lunch.
• Research has documented improved academic performance in math and English language arts by students participating in Universal Free Lunch programs.

By working with the community foundation, you and your family can learn about charitable organizations in our community that are striving to help people who are facing hunger. Whether you’d like to support a local organization, or perhaps an organization in the community where you were raised or have a particular interest such as the locale of a second home, the team at the community foundation can help you make a difference through your donor-advised fund, arrangements for bequests and other planned gifts such as retirement plan beneficiary designations, a field-of-interest fund, and many other charitable giving vehicles that are designed to meet your charitable goals as well as your financial and tax goals.

This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.