Helping Clients with Charitable Giving
Philanthropy is a very personal decision. Giving money to improve the community
reflects the values and beliefs of an individual. Many clients may wish to
be more charitable, or more effective in their giving, but may be unaware of
some of the opportunities for charitable giving. An attorney or advisor can
help clients realize their charitable objectives by listening for charitable
giving opportunities, explaining options and suggesting solutions.
How do you know when you're hearing a charitable opportunity? Timing is key.
Significant giving opportunities often arise when clients are making major
business, personal and financial decisions.
Community foundation staff can work with you and your client to recommend
the best charitable solution.
There are a number of situations that lend themselves to charitable planning:
- Year-End Tax Planning. Your client just earned a large bonus
and wants to give a portion back to the community, but has no time to decide
on the most-deserving charitable organizations. Recommend establishing a
donor-advised fund through their community foundation for an immediate tax
deduction and the ability to stay involved in recommending uses for the gift
for years to come.
- Preserving an Estate. Estate planning identifies significant
taxes going to the IRS, but your client wants to direct dollars for local
benefit. The community foundation can work with you and your client to reduce
his/her taxable estate through a charitable bequest or other planned gift.
Your client's gift will create a legacy of caring in the community that stays
true to his/her charitable intent forever.
- Retiring in Comfort. Your client is concerned about running
out of money during his/her lifetime but has always been charitable. Recommend
establishing a life income gift (such as a charitable remainder trust) at
their community foundation that pays income potentially for life. Upon your
client's death, the gift can be distributed by the community foundation in
accordance with his/her charitable interests.
- Establishing a Private Foundation. Your client is thinking
about establishing a private foundation but is looking for a simpler, more
cost-efficient alternative. The community foundation can help you and your
client analyze the pros and cons of creating a donor advised fund, a supporting
organization or a private foundation.
- Closely-Held Stock. Your client's personal net worth is
primarily tied up in a closely-held company, but it's important to him/her
to give back to the community. Recommend establishing a donor-advised fund
or planned gift; your client is eligible for a tax deduction measured by
the fair market value of appreciated stock (less any planned gift value).
- Sale or Disposition of Highly-Appreciated Stock. Your client
has appreciated stock and wants to use a portion of the gains for charitable
giving, but the identified charities are too small to accept direct stock
gifts. Suggest establishing a fund at a community foundation with a gift
of appreciated stock. Your client receives a tax deduction on the full market
value while avoiding the capital gains tax that would otherwise arise from
the sale of the stock. Your client can even be involved in recommending uses
for the gift, including the organizations and programs he/she cares about
- Sale of a Business. Your client owns highly-appreciated
stock in a company that is about to be acquired. The community foundation
can work with you to suggest several ways to structure a charitable gift
(including the use of planned giving techniques) to help your client reduce
capital gains tax and maximize impact to the community.
- Strategic Giving. Your client is passionate about helping
meet a specific community need and wants to make a meaningful gift. You and
your client can work with grant-making experts at your local community foundation
to understand community needs and programs and then direct gift dollars to
make the greatest impact.
- Substantial IRA/401(k) Assets. Your client wants to leave
his/her estate to the community and family and has substantial assets in
retirement accounts. The community foundation can help you and your client
evaluate the most-beneficial asset distribution to minimize taxes, giving
more to his/her heirs and preserving charitable intent.
What This Means for Your Practice
Taking an active approach to charitable planning can build deeper, richer
client relationships, enhance client loyalty and result in better service.
Earning a reputation in the community as the advisor who cares about philanthropic
planning is well-worth doing.
What is most important is that you are knowledgeable about the many ways
charitable planning options can help solve every day tax, estate and financial
planning problems while adding value to the client's family and the community.
Community foundations can work with you to enhance the services clients seek
from you and your firm –
always respecting and working within the relationships you have developed and
lead with your clients. For more information, or to connect to a community
foundation near you, visit www.mdcommunity
Buffy Beaudoin-Schwartz is Director of the Maryland
Community Foundations Initiative.