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. 

Hello from the community foundation!

Many fund holders regularly tell us that they enjoy the summer months as an opportunity to reflect on their charitable giving goals. This allows them to be ready when September rolls around to implement charitable giving plans prior to year end. As you think about your 2023 charitable giving goals, we invite you to consider how the community foundation can help you reach them.

In this issue, we’re providing insights to help our current fund holders, as well as those who are considering establishing a fund, reflect on what they’d like to accomplish during the remainder of the year. Our article about anonymous giving might prompt you to think about what level of recognition you prefer for your charitable giving and why you might be feeling that way. Our piece about charitable remainder trusts and charitable gift annuities, on the other hand, is more about thinking; we want to provide a few quick pointers on why you might consider one or the other. Finally, as always, we’re including a couple of suggestions for further reading if you’d like to stay up-to-date on what’s going on in the philanthropy world.

Enjoy the month of June! Thank you for the opportunity to work together! We are grateful!

Angie Tatro, CEO
Central Kansas Community Foundation

Recognition or anonymity: Which one’s for you?

The community foundation is committed to working with you and your family to fulfill your charitable goals, whether those goals relate to making an impact, leaving a legacy, saving money on taxes, expressing gratitude, or a combination of objectives. If you have not yet established a fund at the community foundation (and even if you have!), it might interest you to know that a donor-advised fund or other type of fund not only offers flexibility to meet your giving goals, but also gives you options for recognition or anonymity, depending on your goals and preferences.

Many philanthropic individuals and families appreciate–and sometimes even seek–recognition for gifts to their favorite charities. In addition to feeling appreciated, donors give publicly for many other reasons, including knowing that their names can lend credibility to an organization and that their gifts can serve as an inspiration to other donors. The team at the community foundation also understands the perspectives of nonprofit organizations about anonymous giving. This means we can help you navigate your relationship with a favorite charity, which in turn allows us to help ensure that your intentions are achieved and the nonprofit’s mission is supported in the way you envision.

The community foundation carries out your wishes for recognition in a variety of ways. When you recommend grants to your favorite charities from your donor-advised fund, for example, the community foundation’s team typically will issue the grant checks to the charities noting that the gift is from your fund so that you receive the recognition. Sometimes, though, our fund holders have good reasons for wanting their support to be anonymous, whether because of modesty, religious convictions, avoidance of unwanted solicitations, or wanting to keep the focus on the charity.

Whatever the reasons you might prefer to give anonymously, whether from time to time or across the board, the community foundation respects your wishes and can help in a variety of ways.

–First and foremost, our team will listen intently to understand your charitable goals and interests and make sure that we are structuring your donor-advised fund, other type of fund, or series of funds to achieve your charitable giving and family philanthropy goals. Indeed, some individuals and families set up multiple funds to serve different needs, including the desire for anonymity for a portion of their giving but not all. Our team will be sure to ask clarifying questions to determine how best to structure your charitable funds to achieve your desired level of recognition. Do you prefer anonymity for every grant? Is there a threshold amount where smaller grants can be acknowledged? Does the restriction apply only to a public disclosure by the grantee, but the grantee organization is itself aware? We know these discussions can be delicate.

–You may wish to recommend that certain grants (but not all grants) from your fund be issued anonymously. The community foundation offers the ability to opt in to anonymity on a grant-by-grant basis. Also remember that no solicitations will flow directly to you; the community foundation handles all correspondence related to grants to nonprofits made from your fund.

–Remember that you can establish a donor-advised fund under a nondescript, less identifiable name, perhaps one that is generic sounding or honors ancestors who may have “seeded” the fund through a prior generation’s wealth transfer or inheritance. For example, you can select a name for your fund that is something less obvious than your own name. Instead of the “Sam and Vera Barker Fund,” for instance, you could name the fund the “SVB Fund,” “Desert Family Legacy Fund,” or something else. When the community foundation sends a grant check to a charity from your fund based on your wishes, the charitable recipient will see only the name of the fund, not your name.

–As always, with any fund (whether some or all of the grant making is anonymous) the community foundation’s code of ethics and operating principles mean that our team follows and enforces strict confidentiality. For example, we are careful about visibility and accessibility of donor information even internally, and we adhere closely to permissions and protections within the donor database.

–Finally, the community foundation does not disclose information about you or your fund to any third party, nor is detailed information available through a Form 990 filed with the IRS.

At the community foundation, we’re here to serve the greater good. We welcome all conversations about giving, and we gladly strive to honor the charitable giving preferences of our donors and fund holders to the fullest extent allowed by law.

More alphabet soup: QCDs, CRTs, and CGAs

If you or a family member has reached the age of 70 ½, you might have heard of a tax benefit known as the Qualified Charitable Distribution (QCD), which allows you to direct up to $100,000 annually from your IRA to a qualified charitable organization (which includes a designated or field-of-interest fund at the community foundation). You don’t pay income taxes on the distribution, and, if you are required to take minimum distributions (RMDs) because you have reached the age of 73, the QCD counts toward your RMD.

One of the many components of a new set of laws known as “SECURE 2.0,” which was passed at the end of 2022, is a provision that expands the QCD by adding the opportunity for taxpayers to make a one-time $50,000 QCD transfer to a charitable remainder trust (CRT) or other split-interest gift such as a charitable gift annuity (CGA). This part of the new law is called the “Legacy IRA” provision.

Because of the new laws, many charitable-minded individuals and families are interested in learning more about CRTs and CGAs. CRTs and CGAs are similar because each provides an up-front tax deduction, a steady lifetime income stream, and a remainder gift to a charity, such as your fund at the community foundation, which will receive what’s left over at the end of the income term, such as your lifetime.

CGAs are often easier to establish than CRTs, especially if you plan to establish the vehicle with $50,000 or less. This makes the CGA an ideal tool to take advantage of the Legacy IRA provisions for QCDs noted above.

A CGA, like any other annuity, is a contract. You agree to make an irrevocable transfer of cash or assets to a charity, such as the community foundation. In return, the charity agrees to pay you (or a designated beneficiary such as a spouse) a fixed payment for life. You are eligible for an immediate income tax deduction for the “present value” of the future amount passing to charity.

The amount of income you can receive from a CGA is determined according to national standards, and it is based on “rate of return” assumptions that are revised from time to time based on what’s going on with interest rates.

By contrast, a CRT is actually a trust–a separate legal entity. To establish a CRT, you will work with your attorney to execute a trust agreement and also work with a person or entity (such as the community foundation) who will serve as the trustee. After you transfer stock or other property (ideally highly-appreciated assets) to the trust, you’ll receive an income stream from the trust based on a percentage specified in the trust document (and subject to IRS parameters).

The team at the community foundation looks forward to working with you and your advisors to determine whether a CGA or CRT might be a good fit for your charitable plans. For example, we will explore whether you already intend to leave gifts to charity following your death, discuss your income requirements while you are living, and review the types of assets you own and whether there is a particular highly-appreciated asset or assets (such as stock or real estate) that would make an ideal gift to a CGA or CRT to reduce your capital gains tax exposure.

As always, please reach out to the team at the community foundation whenever you or your advisors have questions about charitable planning techniques. We are happy to collaborate as you build your financial and estate plans to include support for your favorite charities and the community you love.

For further learning

Different generations do things differently. This is not a surprise to those who have watched their parents, children, or grandchildren in action! Catch up on how generational differences flow through to charitable giving. In particular, note that the donor-advised fund is popular across generations, not just with Gen X and Baby Boomers. Plus, given the hands-on preferences of Millennials and Gen Z, the community foundation is uniquely situated to cater to these new philanthropists as they seek to make their own mark of positive impact on the world.

Have you ever heard a philanthropist say how hard it is to give money away? There is truth to that, especially, as this article notes, where grants from private foundations are concerned. This is yet another reason why so many individuals and families are turning to the community foundation to help them structure charitable giving vehicles and navigate the best ways to support the causes they love, including forgoing the private foundation altogether in favor of the more straightforward and tax-friendly donor-advised fund.

Happy May!

Springtime has arrived in our region! We hope you are enjoying the change in seasons and warmer weather.

In this newsletter, we’re covering three topics that have recently risen to the top of conversations with our fund holders.

Our first feature this month is an article about balancing your goals for giving while you are alive, with leaving a family and community legacy through charitable bequests. This is one of our favorite topics because the community foundation is uniquely qualified to help with your full range of charitable intentions.

Questions about Qualified Charitable Distributions continue to flow in. We’re taking a shot at clearing up the confusion; that said, we hope you’ll continue to call and ask questions about QCDs and everything else related to your charitable giving.

Third, we’re excited to dive deeper into the benefits of using your traditional IRA to fund your charitable bequests.

If you are already a fundholder at the community foundation, thank you! We hope you’ll continue to reach out to our team with questions and ideas about how you can deploy financial resources to achieve your charitable goals. If you’ve not yet established your own individual, family, or corporate fund at the community foundation, we encourage you to reach out to learn more.

Thank you for all you do. We are honored to work together.

–Angie Tatro, CEO Central Kansas Community Foundation

Have your cake and eat it too: A dual approach to charitable giving

The change of seasons is often an opportunity to catch our breath and reassess. We’re done with taxes, really done with cold weather (hopefully), and feel a sense of renewal as our attention turns to gardening and other growth-oriented, warm weather pursuits. And, many of us are wondering how in the world it can already be May. Wasn’t 2022 just five minutes ago?

Soon enough, the seasons will change yet again. Just as springtime is limited, so is the time any of us has to build a legacy for our families and communities and make a difference through charitable giving. Planning–and acting–with a sense of urgency is helpful, given life’s unpredictability and the many good causes many of us want to support.

At the community foundation, we’re frequently struck by the number of fund holders and donors who enthusiastically embrace strategies for both lifetime gifts and bequests. Indeed, planning techniques for each frequently work hand in hand. We’re inspired by champions of the ”do it now” approach to charitable giving; sadly, many people never have the opportunity to watch their money in action. We’re equally inspired by the longstanding commitment to estate giving that has been a part of the culture of philanthropy in our country for decades.

So, how can you take action now to ensure that you will experience both the joy of seeing first hand the difference you’re making, as well as the joy of knowing that you’re leaving a legacy to further the community priorities you’ve supported your whole life? A donor-advised fund with a bequest provision, established at the community foundation, is a great solution for many donors.

Here’s how this works:

• Donor-advised funds continue to be popular tools to help charitably-minded individuals organize their giving and support their favorite causes.
• Because of the community foundation’s deep knowledge of our region’s needs and the organizations addressing critical issues, a donor-advised fund established at the community foundation is an especially useful vehicle.
• If you are a current fund holder at the community foundation, or if you are considering establishing a fund, you already know that a donor-advised fund is easy to start and easy to use.
• You’re also likely aware of the donor-advised fund’s tax benefits, in that you are eligible for a tax deduction in the year of the gift and then you can work with the community foundation to use the funds to support your favorite 501(c)(3) organizations over the long term.
• What you might not know, though, is that the community foundation can work with you to include provisions in your donor-advised fund document to name your children or other family members as successor advisors to make recommendations following your death and you can provide that certain organizations or causes receive a portion of the grants each year after you’re gone.
• In this way, a donor-advised fund is not only a convenient giving vehicle during your lifetime, but it is also flexible enough to accommodate your wishes for leaving a legacy after your death.
• You can even name the community foundation itself to receive all or a portion of your donor-advised fund following your death.
• Bequests to the community foundation help keep our institution strong to grow the philanthropy required for our area’s nonprofits to serve the community for generations to come and respond to the most critical needs at any given time–needs that are impossible to predict.

Remember, with the help of the community foundation, you can give publicly or anonymously. We can help you fulfill your giving instincts by acting as a secure, knowledgeable, and trustworthy facilitator. Our team personally knows–and regularly vets–hundreds of charities every year, and we can help you navigate the options for both local and international giving.

If you are a current fund holder at the community foundation, we look forward to working with you to include bequest provisions in your existing donor-advised fund documents. If you are not yet a fund holder, we’d love to work with you to achieve your goals for lifetime giving and leaving a legacy. Please reach out anytime.

QCDs: Clearing up confusion

If you’ve been involved with the community foundation for a while, you’ve likely heard of the Qualified Charitable Distribution (“QCD”) because we mention it a lot. And with good reason!

If you are aged 70 ½ or older, it is well worth your time to investigate whether a QCD might be right for you. Actually, if you are not yet 70 ½ but know people who are, it is well worth your time to mention the tool to them! You will be doing them a great service.

Unfortunately, we hear from many donors and fund holders that they don’t understand how the QCD works. We totally get it. The QCD is a product of the Internal Revenue Code, after all, which does not always have the reputation for clarity. For starters, the name itself–Qualified Charitable Distribution–is long and not user-friendly.

If your head spins when you see the letters Q-C-D, here are two options for cutting through the complexity.

Your first and best option is to call us! The team at the community foundation is here to help. We talk with people like you about charitable giving techniques–including QCDs–literally all day long. We love this stuff. Reach out, and we will explain the QCD and help you figure out whether it could be useful to you or useful to a 70 ½-aged friend or relative.

If you are a DIY-type or love learning about tax techniques, here are a few quick bullets to help get your head around it:

• You can make a QCD if you have reached the age of 70½, and as such you can direct up to $100,000 annually from your IRA to a qualified charity (which includes, for example, a designated, unrestricted, or field-of-interest fund at the community foundation).
• If you’ve reached the age-73 threshold for IRS-mandated Required Minimum Distributions (RMDs) from qualified retirement plans, a QCD counts toward your RMD.
• QCD transfers are not included in your taxable income.
• QCDs are even more popular now that the $100,000 cap will be indexed for inflation under the new laws. Also, under the new laws, a one-time, $50,000 distribution to a charitable remainder trust or charitable gift annuity is now permitted.

Still clear as mud? Still curious? Just want to chat? Call us! We love working with you and welcome the opportunity.

Supersize your legacy: Stock to the kids, IRA to charity

To say that the total dollar amount in Americans’ retirement accounts is massive would be an understatement. Accounting for 30 percent of all household financial assets, at the end of 2022 total retirement assets in the United States topped more than $33 trillion dollars, including assets in IRAs, defined contribution plans such as 401(k)s and 457 plans, pension plans, and annuities. IRAs topped the charts at $11.5 trillion–the most assets of any category.

The large balances in traditional IRA accounts (not to be confused with Roth IRAs) are partially due to the fact that many taxpayers have rolled over–tax-free–assets from their employer-sponsored qualified retirement plans to IRAs after retiring or changing jobs.

If you have one or more traditional IRAs, you’re probably familiar with the basics:

• An IRA can have multiple beneficiaries following your death, and you can designate a dollar amount or percentage of assets.
• You can change your IRA beneficiaries as often as you like, and beneficiaries can differ across your multiple IRA accounts.
• If a beneficiary dies before you do, and you don’t change the beneficiary designation, the assets will be proportionately reallocated to remaining beneficiaries when you die.

Here’s a critical additional point that is often overlooked: Designating your fund at the community foundation or another charity as the beneficiary of all or a portion of your IRAs is extremely tax advantageous. If you intend to leave money to charity when you die, chances are that this technique is absolutely the best option if you own other assets, such as stock or real estate, to leave to your family members or other heirs.

Why is it so beneficial to leave your IRA to charity and other assets to your family? Three words: taxes, taxes, and taxes.

• First, IRAs are included in your estate for federal estate tax purposes when you die. The current exemptions are set at such high levels right now that they do not affect as many taxpayers as they used to, but for many families, estate taxes are still an issue. If you leave your IRA to charity, estate taxes do not apply to that balance.
• Second, the bulk of the balance in an IRA (sometimes the entire amount) is counted as income when IRA withdrawals are taken by your estate or your heirs. If a charity receives your IRA, the charity will not pay these income taxes.
• Third, highly-appreciated stock and other non-retirement assets you own outside of your qualified retirement plans when you die get a “step up” in basis, meaning that your beneficiaries who receive and then sell the assets won’t pay capital gains tax on the appreciation that occurred before you died. And, inherited, non-retirement assets are not included in the beneficiary’s income for tax purposes.

The bottom line here is that if you are choosing between stock and an IRA to leave one to your children and the other to charity, leaving the IRA to charity and the stock to your children is a no-brainer.

Have questions? Please reach out to the team at the community foundation. We are happy to help!

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.

Hello from Central Kansas Community Foundation!

We hope tax season has treated you well! We know it’s a busy time for our fund holders, and we’ve appreciated hearing from you in these early months of the year. We’re also encouraged by how many of you who are not yet fund holders have reached out about getting started with the community foundation. There are so many ways we can work together, ranging from helping you set up a donor-advised fund at the community foundation so that you can better organize your giving, to helping you and your family dig deeper into the community issues that interest you.

In this issue, we are taking a step back to explain RMDs and QCDs. We field so many great questions from fund holders about how these two concepts work together in the context of IRAs and charitable giving, so we are offering up a longer article to walk through the points one at a time.

You will also see that we are building on the theme of tax time as a great point in the year to solidify your charitable giving plans, and we are touching on three hot topics to keep you up to date on what’s going on in the charitable giving world.

Thank you for the opportunity to work together! We are grateful!

–CKCF

Boiling down the alphabet soup: What actually are RMDs and how do they relate to QCDs?

If you get cross-eyed when you start reading about Required Minimum Distributions (RMDs) and Qualified Charitable Distributions (QCDs), you are not alone! And, given the December 2022 passage of SECURE 2.0 legislation, changes to RMD rules are especially important to understand if you are involved in charitable giving and have reached the age of 70 1/2.

What is an RMD in the first place?

A little history may help here. RMDs date back to 1974 when the Employee Retirement Income Security Act (ERISA) was enacted to provide for pension reform and to offer a retirement savings vehicle to non-pensioned workers through vehicles referred to as “qualified retirement plans” that are allowed to grow tax-free while assets are in the plan.

By requiring that a taxpayer start taking distributions from qualified retirement plans when the taxpayer reaches a certain age, the United States government is able to start collecting tax revenue on these “required minimum distributions” from assets that have grown tax-deferred for all those years and decades.

Now here is where we get into the weeds. The distributed amount of the RMD is reported by the plan administrator on IRS Form 1099-R (but–and here’s a nuance–not if the RMD was “satisfied” by a Qualified Charitable Contribution [QCD]—see below!). A taxpayer enters this amount on Line 4B of the Form 1040 Federal income tax return, and, of course, the amount is included as taxable income for the year it was distributed. So, the net-net here is that RMDs add to taxable income but not in the case of direct transfers to qualifying charitable organizations (the QCD).

What types of accounts require RMDs?

For 2023, account owners aged 73 and older who participate in qualified retirement plans such as these are subject to RMDs:

Traditional IRA

Simplified Employee Pension (SEP)

SIMPLE IRA

Employer-sponsored 401(k), 430(b) or 457

Once begun, RMDs occur annually, until account depletion or the owner’s death. (Note that distributions must also be taken from inherited IRA accounts, though under different rules.)

How is the RMD amount calculated?

A qualified retirement account’s entire balance is considered for calculating an RMD calculation, although of course only a fraction of the balance must be distributed each year. Unfortunately, the distribution amount is not easily or consistently determined. This contributes to some retirees’ confusion about RMDs and the requirements. Online RMD calculators can be found here or here, and your retirement account administrator can provide guidance.

When do the RMDs start?

That’s tricky, too! For years 2023 – 2032, the start date is your age-73 calendar year. For example, a 1955-born account owner would begin in 2028. Beginning in 2033, it’s your age-75 calendar year. Account holders born in 1960 enjoy a sort-of “two-year extension,” given that they would turn 73 in 2033. But since the age-75 provision begins January 1, 2033, their RMD begins in 2035.

For all account owners, the big benefit of the now-later RMDs comes from retaining account balances longer. You avoid adding unnecessarily to your taxable income and therefore reduce the risk of bumping to a higher tax bracket. Prior to SECURE Act increases passed in 2019 and 2022, RMDs began at age 70 ½ and age 72. So taxpayers can now enjoy a few more years of tax-free investment growth.  

How charitable taxpayers can check the RMD box with a QCD

Here’s where the QCD comes in (finally!) Now, armed with an understanding of how the RMD rules apply to your situation, you can begin to see how the QCD can provide a huge benefit if you own IRAs. QCDs are truly taxpayer and charity-friendly vehicles.

For starters, you can start making QCDs at age 70 ½–well before you’ve reached the age when you’re required to take RMDs. A QCD happens when you direct a distribution from an IRA of up to $100,000 annually (or $200,000 if you file tax returns jointly) to one or more qualifying charitable organizations, including a designated, field-of-interest, or unrestricted fund at the community foundation. While the QCD is itself not tax deductible per se, the overall effect of the QCD is to lower your taxes because the QCD counts toward your RMD but, unlike an RMD, it is not included in your taxable income.

The bottom line? If you have reached the age of 70 ½, own an IRA, care about charitable causes, and don’t need a full RMD income to cover your living expenses, reach out to the community foundation to learn how a QCD could work beautifully for you.

‘Tis the season: Why tax time is often the best time to get serious about your charitable plans

Though often unappreciated, the annual passage of tax season has benefits.

For one, it offers some finality to the prior year in that we finally know if we owe or are due a refund. For example, for the 2021 tax year, the IRS processed 88 million refunds averaging $3,039 each. Simultaneously, filing a 2022 tax return often comes with finalizing quarterly tax estimates for 2023, which many people use to build a framework for current-year spending.

Fortunately, charitable giving ranks high on many “how to use your refund” lists. Whether you have “bonus” money in the form of a refund or gain some peace of mind by knowing your upcoming tax obligations, giving intentionally and strategically always helps that gift go further.

Unfortunately, though, strategic and intentional giving may get lost when gifts to charity are made through a quickly mailed check or an online payment in response to a phone solicitation, television ad, mailer or online advertisement. The community foundation, however, offers remedies for this!

Lean into intentionality

Many donors give to the same causes annually, with causes tied to faith, health and community ranking high among charitable giving trends. Recently, gifts involving food or home insecurity, natural disasters and international conflicts have become increasingly popular.

Most important is to give to causes that are near and dear to you and for which you can see the ways your giving is contributing to meaningful, positive change in the lives of people in our community. And if you can add to your current list of beneficiary organizations to achieve meaningful impact, all the better.

The community foundation is a knowledgeable source of ideas, best practices, and data-driven approaches to helping you measure your impact. Our team can be especially helpful if you have a cause in mind but may not immediately have an organization name or local chapter to support. Our team has vetted and even pre-qualified many worthy organizations, and as a bonus, offers security against sending gifts to scammers or bad actors who often start or perpetuate their deceit by using familiar-sounding names of well-known organizations or websites.

Level up your strategy

Now that you’ve identified budget targets for your charitable giving and have a strong sense of the causes you’d like to support, structuring your gift for maximum impact and tax savings should be a top priority.

If you already have a donor-advised fund at the community foundation, you know that this vehicle has many benefits, including ready access to our staff of experts; the convenience of jumping online to supporting favorite causes from your fund; the ability to maximize a gift with accompanying tax benefits; and even the opportunity to schedule a gift to coincide with the occasional matching campaign hosted by a favorite charity. With full tax deductibility in the year of the contribution, donor-advised funds are an ideal way to “mentally offset” current year tax estimates that become known in April. If you don’t yet have a donor-advised fund at the community foundation but are considering it, this may be the perfect time to jump in.

With these tips in hand, and with the help of the community foundation, you can better plan for the tax year ahead, knowing that causes important to you, whether legacy or new, will benefit from your generosity.

Popular topics: Banking fall out, proposed legislation, and new stats on volunteerism 

Not a day goes by at the community foundation without our team talking with fund holders–and potential fund holders!–about philanthropy in our community and all the ways charitable giving can make life better for everyone who lives here. Recently, we’ve noticed an uptick in interest on a few important topics.

Ripple effects of banking’s bumpy road 

Understandably, our team has fielded a lot of questions from fund holders working with their advisors about transferring bank and especially tech stocks to their donor-advised or other funds at the community foundation. Although the current market climate may be rough, we are nevertheless encouraged by evidence suggesting that technology is increasing the opportunity and efficiency of charitable giving overall, and certainly we are hearing about (and talking with) more and more donors who are deploying their business and financial success toward charitable initiatives. Silver linings do indeed appear to be a real thing!

Tax perks on the horizon?

It appears that there may be renewed hope for non-itemizers to be able to deduct at least a portion of their charitable gifts. As you and other charitable-minded taxpayers are undoubtedly aware, because of the higher standard deduction passed as part of the Tax Cuts and Jobs Act of 2017, tens of millions fewer households itemized their deductions, leaving many nonprofits with shortfalls in projected donations. In addition, a “universal charitable deduction” may be back in play.

Generational factors can impact charitable behavior

Many fund holders at the community foundation regularly involve their children and grandchildren in philanthropic activities, including attending community foundation events together and meeting with our team to explore giving opportunities and assessing impact. It may interest you (but it may not surprise you) to learn that studies continue to point out generational differences in approaches to charitable giving. Recently, for example, research has shown that volunteerism and related behaviors are shifting, making it difficult for some charities to build and maintain volunteer programs.

We look forward to working with you and your family this spring to set in motion your charitable goals for 2023! Please reach out anytime.