Spotting Client Opportunities, Unrestricted Giving, & Tax Trends to Watch | Advisor Newsletter (Jan. ’24)

Linda Speed, CFSI President & CEO

Happy New Year from the Community Foundation of Southern Indiana!

We appreciated the opportunity to work with so many of you at the end of 2023! Your work with philanthropic clients is inspiring. It is our team’s honor to serve as your behind-the-scenes partner to help execute your clients’ charitable giving plans in the most tax-savvy, community-minded way possible.

In this issue, we’re covering topics that are important to you and your clients as you kick off a new year.

First, we’re offering suggestions for how to spot potential charitable planning opportunities within your client base. Clients who gave large year-end gifts, families whose grown children are spread out geographically, and clients whose portfolios jumped in value are examples of types of clients who may benefit from proactive charitable planning. As always, we are here to help!

Second, we’ve continued to see an uptick in the number of families who are interested in diversifying their charitable giving portfolios by adding unrestricted giving components to their work with the community foundation. From gifts to our operating fund, to gifts to support CFSI’s grant-making initiatives, the options are plenty. We look forward to exploring the possibilities with your philanthropic clients. 

Third, our team is constantly on the lookout for trends and developments in the tax laws that govern charitable giving. We’re sharing five of the hottest topics that could impact the way you work with your philanthropic clients. 

As always, the Community Foundation of Southern Indiana is just a phone call or an email away to help you and your clients build charitable plans for 2024 to support the charities that are keeping our community afloat. 

Thank you for the opportunity to work together!


Big Gifts, Bullish Portfolios, and Kids Who Move Away

If you’re not talking about charitable giving with your high net-worth clients, 2024 is the year to start doing it! Recent studies show that 85.1% of affluent households give to charity. Certainly many of your clients are among them. 

Take a few minutes this month to scan your client list for three common scenarios and related opportunities for charitable giving solutions.

Clients who made significant charitable gifts at year-end. 

You’re probably aware of at least a few clients who increased their charitable giving at the end of 2023. Perhaps you worked with a client to establish a donor-advised or other type of charitable fund at the community foundation, or maybe you helped a client structure a Qualified Charitable Distribution to a field-of-interest or designated fund. Now that the dust has settled on year-end planning activities, go back to these clients to find out more about their overall philanthropic plans. You may discover that a client would like to work with you to update their estate plan to include a bequest to their fund at CFSI, set up a charitable remainder trust with highly-appreciated stock, or proactively plan their charitable gifts for 2024 to get a jump on tax strategies. 

Clients whose stock portfolios have rallied.

The year 2023 brought good news and record highs for the stock market. As always (and perhaps especially now!), giving appreciated, publicly-traded stock to charitable organizations is a highly effective tax strategy. This is because capital gains tax is avoided when your client transfers long-term, marketable securities to a fund at the community foundation or other public charity. The client is typically eligible for an income tax deduction at the fair market value of the securities, and when the charity sells the securities, the charity does not pay capital gains tax. This is a win-win for your client and the charity. Scan your client list for clients who are holding long-term stock positions that have appreciated substantially since they bought them, especially with the market’s latest rally.

Clients whose children have moved away. 

Children of affluent parents tend to move away. This means many of your clients may be seeking ways to stay in close communication with their children. Remember that while the community foundation can help your clients maximize the impact and tax benefits of their local giving, CFSI’s tools are also very geographically flexible. This means, for example, that your clients can use their donor-advised fund to support 501(c)(3) organizations across the country, including in communities where their grown children are living. When you demonstrate your interest in your clients’ charitable giving priorities, you not only are strengthening your client relationships, but you’re also helping clients strengthen relationships with their children.


Unrestricted Giving, the Trust Factor, & Why It Matters to Your Clients

The gifts Americans give to charity every year provide critical support for more than a million organizations that are helping sustain the quality of life in our communities. Philanthropy equates to 2% of GDP–that’s a little more than the home health care services sector! And, trust is growing as a must-have prerequisite before your clients decide to give to an organization, increasing from 63.9% to 69.9% between December 2021 and December 2022.  

With trust in charitable organizations driving so many giving decisions, it’s important for you and your clients to be aware of the community foundation’s role and commitment to stewardship. Every day, the CFSI team works with members of our board of directors, civic leaders, and nonprofit organizations to deeply understand the areas where the people in our community need the most help.

Today, the most pressing needs might be for emergency assistance in response to a disaster. Tomorrow, our community might need scholarships for inner city youth, or investments in research to improve access to healthcare for the underserved. Indeed, the needs of our community are ever-changing. CFSI always has its finger on the pulse of the community’s top priorities and the best way to address them. Through its convening power, community knowledge, and perpetual mission, your community foundation is an unparalleled resource to make our region better for everyone.  

As you talk with your clients about their philanthropic plans, keep in mind that many individuals and families establish multiple funds at the community foundation to meet all of their various charitable giving needs. For example, a family might establish a donor-advised fund to organize their regular annual giving, making it easy to track gifts of appreciated stock and support for a large number of individual charities. A member of this family might also set up a charitable remainder trust with the community foundation to accept a gift of highly-appreciated real estate and retain an income stream for life. And, this family might also establish an unrestricted fund or make gifts to existing funds that are specifically designated by the community foundation and its board of directors to address the most critical needs of our community. For example, your client may decide to:  

  • Unrestricted Fund: Contribute to an unrestricted fund to support the Foundation’s long-term grant making. 
  • Operating Endowment: Donate to the Foundation’s operating fund to support the its mission for years to come. 
  • Special Cause: Support a special initiative fund to help people who need assistance right now to get back on their feet, relying on the community foundation’s network and expertise to invest the dollars where they’re needed most critically. 

Whatever ways your clients choose to get involved, you’ll know that you and your clients can trust the Community Foundation of Southern Indiana to make a lasting difference in the community we all love.


Tax Law Twists & Turns: Five Developments Impacting Charitable Giving

2023 was a busy year! We understand that charitable giving topics may not always be at the top of your reading list. That’s why we’re here! The Community Foundation of Southern Indiana is committed to keeping you up-to-date on what you need to know. Here’s a recap of five key developments last year that are most certainly worth keeping an eye on in 2024.

NIL Collectives

The IRS has had a lot to say lately about NIL collectives. In addition to offering insights for athlete recipients of NIL (name, image, and likeness) dollars, the IRS has also issued guidance pertaining to organizations that help develop NIL opportunities for athletes, suggesting that the activities of these entities, known as “collectives,” may not qualify as “charitable.” This development could be problematic for your clients who believe that their contributions to NIL collectives will qualify for a charitable tax deduction.  

Donations of Cryptocurrency 

It’s still a thing! At least a few of your clients are likely still invested in cryptocurrency, despite the whirlwind in that industry over the last year or so. You should know that in early 2023, the IRS published guidance confirming that a taxpayer cannot take a charitable deduction for a gift of cryptocurrency over $5,000 without submitting a qualified appraisal. Cryptocurrency, in the eyes of the IRS, is treated as property, not cash. And it is not a security, either. Note that the IRS also said that a price quotation from a cryptocurrency exchange (such as FTX!!) doesn’t count; a qualified appraisal is still required. 

Charitable Act

Senate Bill 566, which is still pending, was introduced in early 2023 to address what is sometimes called the “universal charitable deduction,” meaning that even taxpayers who do not itemize their deductions would be able to claim a charitable deduction, potentially in an amount up to one-third of the taxpayer’s standard deduction. Keep an eye on this; the bill enjoys broad support and, if it becomes law, could be a real perk for both your clients and the charities they care about.  

Exempt Purpose

It seems that at least once a year, the IRS issues guidance on what it means for an organization to be organized for an exempt purpose under Section 501(c)(3). In Private Letter Ruling 202349014, we are once again reminded that personal activities that have no direct public benefit simply will not be viewed by the IRS as exempt. While private letter rulings are of course not binding, they are nevertheless useful tools to provide to a client to show specific examples of what the IRS considers to be non-exempt. Estate planning attorneys and CPAs tell us that every few months, a client comes to them with an idea for starting a nonprofit, and it’s easier to tell a cautionary tale than it is to recite Internal Revenue Code sections!   

Proposed Regulations

Proposed regulations issued by the IRS are not binding, and often they are revised–or even shelved or canceled entirely–before they go into effect. Still, your community foundation is always keeping an eye out for these and other forms of IRS rulemaking that could potentially affect your work with your charitable clients. A recent example of this type of IRS activity is a set of proposed regulations concerning donor-advised funds, issued in November 2023. The public comment period ends in mid-January 2024, and then the IRS will take time to review the comments, so we won’t know anything definitive for quite some time. For those who are interested, we like the detail provided in this podcast series on the topic. You can take a long winter walk and learn everything you want to know about what’s being proposed! And of course, you’ll hear from us when (and if) the proposed regulations ever go into effect and what to do about it. 


Disclaimer: The Community Foundation of Southern Indiana is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.  

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