Starting a conversation about charitable giving with clients can be a bit of a dance. Their interests and current financial situation, as well as your knowledge and expertise when it comes to charitable giving all must be in step.
Philanthropic planning is an important element of overall financial planning. By discussing charitable goals with your clients, you can help them increase their impact, decrease tax liability, engage their families in philanthropy, and leave a lasting legacy.
Consider starting the charitable conversation with clients if you are working with:
Clients who are charitably inclined.
If your client regularly gives to their school, house of worship, or other nonprofits, they might benefit from streamlining their giving—and tax receipts—by establishing a Donor Advised Fund. Donor Advised Funds are effective tools for donors who desire ease and flexibility in their giving. The Columbus Foundation offers Donor Advised Funds along with a range of other charitable giving vehicles.
Clients who are on the cusp between itemizing and taking the standard deduction.
The Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction to $24,000 for a married couple and $12,000 for a single person. As a result, many taxpayers who used to itemize deductions are now taking the standard deduction. Some charitably inclined individuals are enjoying the best of both worlds by condensing several years’ giving into a select year and itemizing to gain the maximum tax benefit, then taking the standard deduction during other years. This technique is known as “bundling.” Donor Advised Funds make it possible for donors to bunch giving one year for an immediate charitable tax deduction, and then suggest grants out of that fund gradually over time, so they can continue to support their favorite charities on their own timeline while taking full advantage of their charitable deduction.
Clients with a sizeable individual retirement account (IRA).
Individuals who are 70½ or older are required to withdraw a certain amount of money from their IRA each year. That amount is called a required minimum distribution (RMD). If your client does not want their full RMD counted as income come tax season, they have the option to roll over up to $100,000 annually from an IRA directly to a qualifying charity without recognizing the assets as income. This technique, known as a qualified charitable distribution—or more colloquially, an IRA charitable rollover—also allows individuals to make gifts from their IRAs to fund charitable giving vehicles at community foundations, including Designated Funds, Field of Interest Funds, or Scholarship Funds. (Current restrictions do not allow individuals to fund Donor Advised Funds, private foundations, or supporting foundations using an IRA rollover.)
Clients who are facing a large tax event.
If a charitably-minded client comes to you seeking advice on a way to offset the tax liability connected to a large tax event, such as the sale of a business, charitable giving is an option to consider. The Columbus Foundation can work with you to help your client avoid some tax liability by accepting a gift of an interest in the business. Your client may be eligible for a tax deduction, and, if there is a liquidation event, The Columbus Foundation generally pays no tax on its portion of the proceeds of liquidation. Your client’s gift of the business interest can establish a charitable fund, with proceeds from a liquidation event ultimately being available for grantmaking. Similar principles apply to the sale of other appreciated assets, such as real estate and publicly traded securities.
Clients who desire to engage their family in philanthropy.
Often charitably-inclined clients are interested in engaging future generations in philanthropy. We work with many families—each with their own charitable philosophy. We can share resources on family philanthropy and work with your clients to clarify their unique philanthropic values and design a fund that will facilitate their charitable goals.
Clients with no descendants.
If you have a client who does not have children or descendants, or does not want to provide exclusively for children or descendants through their estates, charitable giving is an option. The Columbus Foundation facilitates a variety of charitable giving vehicles that can be funded through lifetime giving or planned gifts.
Clients wishing to honor a loved one.
If you have a client who wants to do something to memorialize a loved one’s legacy, but is not sure how, The Columbus Foundation can help. We can work with you and your client to create a fund that is designed to honor a loved one for years to come—or even in perpetuity.
There are many options for your clients to fully leverage charitable giving vehicles to meet his or her philanthropic and financial goals. Finding the best way to do so begins with a charitable conversation—one that, with these tips, you’re now well-equipped to start. Charitable conversations open up further opportunities for you and your clients and The Columbus Foundation is happy to discuss these with you.
Contact us if you are interested in learning more about The Columbus Foundation’s services and how we can assist you and your clients.
About The Columbus Foundation
The Columbus Foundation serves nearly 3,000 individuals, families, and businesses that have created unique funds and planned gifts to make a difference in the lives of others through the most effective philanthropy possible. The Columbus Foundation is Your Trusted Philanthropic Advisor® and is one of the top ten largest community foundations in the country.
