Today’s donors are looking to their professional advisors for financial planning advice and tax strategies. As you consider solutions that will provide the most benefit for your clients, remember charitable giving through the Hamilton Community Foundation can play an important part in your clients’ financial plans.
For nearly 70 years, the Hamilton Community Foundation's expert resources have teamed with professional advisors to help their clients achieve their goals and support the causes they care about. By partnering with us you can build relationships, increase your understanding of community needs, and strengthen and improve our community through philanthropy.
Local Professional Advisors also receive invitations to Hamilton Community Foundation events offering networking and education.
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1 May 2023
Why Give to the Hamilton Community Foundation?
As an advisor, I meet my clients where they are. Some families are genetically philanthropic – walking into my office with definable goals and plans. Some families struggle to identify their passion, employ philanthropy in a scatter-shot sort of way, and react rather than plan. And, of course, there is every kind of family in between. A gift to the Hamilton Community Foundation is a perfect solution for all types of givers.
Let’s take gifts to a donor–advised fund for starters. Quick primer – a donor-advised fund created by a donor can be a target for charitable dollars annually or at the occurrence of an “event” (sale of a business or an inheritance, for example) without requiring a firm position on the ultimate recipient at the creation of the fund. This allows an indecisive donor to punt the decision of what cause to benefit into the future. On the other hand, these funds allow a more decisive donor to reap the tax benefits of a large gift to the Foundation now while funding donations to the charity of their choice later. All types of donors can use these funds to address needs as they arise in the community in the future – not just in the year of the gift.
Gifts to established funds, whether field of interest or unrestricted, can help fund more generalized charitable intentions. Economic development, scholarships, human needs – these are all categories, and more, in which the Hamilton Community Foundation’s fine staff have high levels of local expertise. When a family desires to benefit the community, but wants to leave it to the experts to determine best uses, these gifts are ideal. Many of these funds are also endowed, which means they exist in perpetuity and will ensure benefit to the community forever.
The Hamilton Community Foundation can also be the recipient of a wide range of gifts, during life and at death. Cash is the most common gift, of course, but provision can be made for gifts of stock, life insurance policies, retirement assets, and more. This flexibility may provide tax benefits beyond the normal income tax deduction, can help manage future estate tax liabilities and can provide a family with support in simplifying their portfolios.
Gifts to the Hamilton Community Foundation can serve other purposes beyond philanthropy and tax. The professionals at the Foundation provide a high level of service when they help a family design their gift, which is something a gift to a large, remote charity may not afford. Gifts to the Foundation also assist in creating a connection to the community across generations, reinforcing charitable giving as a core family value, teaching younger family members how to collaborate with their neighbors and other local partners, and leaving a legacy – both for charitable purposes and to honor the family itself.
As an advisor in this community, it is impossible to overstate the value and service the Hamilton Community Foundation provides to its donors and the Hamilton area. The variety of funds and gifting options available make it the number one tool in the planning toolbox when working with families. We are truly fortunate to have such a valuable resource at our disposal.
May 2023
A major portion of the $80 billion scheduled to be invested in Internal Revenue Service upgrades is earmarked to “increase tax compliance among wealthy taxpayers and businesses,” according to the IRS’s plan. Indeed, the IRS is investing upwards of $47 billion toward enforcement efforts, an amount that towers over the next-largest item on its spending plan, which is just over $12 billion slated for technology enhancements.
Little doubt remains that your high income-earning clients can expect more oversight and less room for error. This reality is of concern to attorneys, accountants, and financial advisors who are responsible for helping their clients adhere to the tax laws with integrity.
If you’d like to dig into the details about the IRS’s newly-secured tens of billions of dollars, you can peruse the agency’s Inflation Reduction Act Strategic Operating Plan submitted April 5, 2023 by IRS Commissioner Daniel I. Werfel. The 150-page plan covering 2023 - 2031 speaks primarily to five areas of priority spending:
• $47.4 billion to increase tax compliance among wealthy taxpayers and businesses.
• $12.4 billion for technology enhancements.
• $8.2 billion to recruit and retain a highly skilled, diverse workforce.
• $7.5 billion targeting taxpayer service improvements.
• $3.9 billion for cybersecurity.
Significant operational efficiencies are anticipated, and the heightened compliance efforts will generally apply to taxpayers making more than $400,000 annually. What’s raising eyebrows is that high-income earners and thus, donors to charity—and the financial professionals who serve them—should likely expect more in terms of attention, oversight, and audits.
According to the plan, “segments of taxpayers with complex issues and complex returns where audit rates are minimal today, such as those related to large partnerships, large corporations, and high-income and high-wealth individuals,” will be areas of focus.
The new-hire ramp up and technology implementation will take some time, per experts, with some believing that 2022 tax returns will be less subject to scrutiny than those in future years. But, the agency also has a three-year window to initiate an audit, giving it time to look back.
Of specific importance to the charitable community is Objective 3, Initiative 4 (PDF page 66 of the plan), which states: “The IRS will increase enforcement activities to help ensure tax compliance of high-income and high-wealth individuals.”
Increasing right along with the enhanced scrutiny is the need for solid charitable planning advice to assist your high net-worth clients. The community foundation is an ideal partner, offering secure and efficient vehicles for charitable giving—including the precise tax documentation and compliance that the IRS expects.
Indeed, a silver lining for advisors and their clients who work with the community foundation may be that the added potential IRS oversight plays to the foundation’s strengths. By offering donors fully-vetted grantee organizations, plus gift execution, documentation and compliance services, your charitable clients who’ve established donor-advised, field-of-interest, designated, or other funds at the community foundation can rest more easily knowing that their philanthropy is being handled as intended and able to withstand questioning, whether your clients are funding their contributions with Qualified Charitable Distributions, highly-appreciated stock, or complex assets such as closely-held businesses and real estate.
We look forward to working with you and your clients as we navigate a new era of IRS scrutiny.
8 March 2023
No one has to tell you about the sense of dread that can arise when asking some clients to pull together their receipts and documents. It’s never too early to start thinking about how to avoid that dread next year.
When it comes to charitable giving, your clients may find that organizing their giving through one or more funds at the Hamilton Community Foundation will make their lives easier. A client can take advantage of this feature by making a single, tax-deductible contribution each year to HCF, to be added to their donor advised, field of interest or other type of fund.
An especially tax-savvy technique is for the client to make this contribution using highly-appreciated stock. After the stock has been transferred to the Community Foundation, the proceeds from the foundation’s sale of the stock
The subject of gathering up tax receipts for charitable donations is often a prompt for clients to get organized with the rest of their financial lives, too. At the very least, the subject of charitable giving can pave the way for a discussion about the basics of estate planning. Many clients are simply not aware of the meaning and importance of critical elements, such as:
1. The difference between a will and a living trust and how charitable wishes fit into these documents.
2. Why it’s critical to be intentional about how each and every asset is titled so that the assets actually pass as intended.
3. The dangers of hurriedly filling out life insurance and retirement plan beneficiary designations and why these documents are absolutely critical components of a financial, estate and charitable plan.
4. Reasons for having both a “living will” and durable power of attorney, both of which have a major impact in the event of incapacity.
5. A reminder to make sure someone in the family knows where to find a list of logins and passwords.
Charitable planning is one of many steps in your work with clients, but it can be a catalyst for helping clients understand why they need that comprehensive estate and financial plan you’ve been encouraging them to complete. The Hamilton Community Foundation team is at the ready to help with the charitable components of your service to clients.
Call Katie Braswell at 5163.805.0220 to discuss ways in which HCF can be your partner in establishing your clients’ charitable portfolio.
Founded in 1951, The Hamilton Community Foundation (HCF) has the largest collective impact on the quality of life in Hamilton, Ohio. By professionally managing more than 1,000 individual, family and corporate funds, as well as nonprofit agency endowments, the Foundation awards more than $5 million in grants and scholarships annually. HCF works to address new and emerging issues of community concern, while remaining focused on health and social issues, education and community revitalization. As the largest community foundation in Butler County, HCF is a public charity with $140 million in assets.
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1 March 2023
Most attorneys, accounts and financial advisors are well aware of donor advised funds and the reasons behind their popularity. Especially when a donor advised fund is established at the Hamilton Community Foundation, this vehicle is an excellent way for your clients to organize their charitable giving and get even more connected to the causes about which they care.
Enter the QCD
Your clients can give nearly every type of asset to a donor advised fund at the Community Foundation. A notable exception, though, is the Qualified Charitable Distribution (QCD). The QCD allows a taxpayer 70 ½ or older to make a direct transfer of up to $100,000 annually from an IRA to a qualifying charity. A donor advised fund is not considered to be a qualifying charity.
Although donor advised funds cannot accept QCDs, the Community Foundation offers other types of funds that can accept QCDs. For example, designated funds and field of interest funds held at HCF are ideal recipients of QCD transfers. These fund types are often overlooked but many times provide the exact right opportunity for a donor to give where their heart is.
What is a field of interest fund?
A field of interest fund is defined as a fund held by a community foundation that is used for a specific charitable purpose, such as education or health research. Perhaps your client is passionate about rare disease solutions, feeding the food insecure or preserving works of art, for example. Your client selects the name of the fund and then HCF distributes the grants from the field of interest fund in a way that is aligned with your client’s values and charitable wishes outlined in the fund agreement.
What is a designated fund?
Designated funds are restricted funds in which the fund beneficiaries are specified by the grantors. These are a good choice for a client who knows they want to support a particular charity or charities for multiple years. The client names the fund and HCF fulfills the distributions. Made over time, these funds can help the charity’s or charities’ cash flow planning. Again, distributions are aligned with the client’s wishes set forth in the original fund agreement.
Call Katie Braswell at 5163.805.0220 to discuss ways in which HCF can be your partner in establishing your clients’ charitable portfolio.
Founded in 1951, The Hamilton Community Foundation (HCF) has the largest collective impact on the quality of life in Hamilton, Ohio. By professionally managing more than 1,000 individual, family and corporate funds, as well as nonprofit agency endowments, the Foundation awards more than $5 million in grants and scholarships annually. HCF works to address new and emerging issues of community concern, while remaining focused on health and social issues, education and community revitalization. As the largest community foundation in Butler County, HCF is a public charity with $140 million in assets.
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