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How to Answer Your Clients' Top Five Giving Questions

The Foundation answers some of the top questions your clients are going to ask about their giving during the pandemic.

The Saint Paul & Minnesota Foundation is here to help answer any questions your client may have about giving during the COVID-19 pandemic. In addition to the questions below, read our article on giving during COVID-19 to gather some ideas on how to best assist your clients.

Tax season is here as well, which means your clients are likely thinking about how their philanthropic plans will affect their tax returns.

Below are a few questions our expert staff anticipate you may receive from clients, along with some insight on how to best answer.

What is a donor advised fund (DAF), and what are the benefits?

Donor advised funds provide a flexible and efficient way for your clients to organize their charitable giving by empowering them to support community efforts that align with their values.

Your clients receive a potential tax deduction the year they give to the fund and can then decide how to direct the funds over time.

While there are many places to open a DAF, referring your clients to a community foundation has some unique benefits. We are about relationships, not transactions. A donor advised fund with us allows your clients to focus on giving — while we handle the accounting, legal and investment services. We can also be a hands-on partner to help donors make an impact on the causes they care about most. You may also be able to keep your client’s assets under management while we support your client’s giving.

What are the SECURE and CARES Acts and how do they affect qualified charitable contributions?

The Setting Every Community Up for Retirement Act (SECURE Act) is designed to strengthen retirement security across the country by expanding access to retirement accounts, promoting charitable participation and preserving savings.

The SECURE Act increased the age for Required Minimum Distributions from most retirement accounts from 70½ to 72, for people turning 72 after December 31, 2019. This allows clients’ assets additional years to grow before distributions must be taken.

The minimum age for making qualified charitable distributions (QCDs) remains at 70½. Even though some clients may not be required to take a distribution before age 72, they can still make tax-free QCDs from their IRAs after age 70½.

The Coronavirus Aid, Relief and Economic Security Act (CARES Act) created a number of economic stimulus provisions to provide assistance during the COVID-19 pandemic. Included were two provisions that apply specifically to charitable giving.

First, a new above-the-line charitable income tax deduction is available for taxpayers who do not itemize their deductions. This new deduction is limited to $300 and applies only to cash gifts. Donor Advised Funds are not eligible for this provision.

Second, the 60 percent of Adjusted Gross Income (AGI) limit for cash gifts has been lifted for 2020. This means that donors can deduct up to 100 percent of their AGI for gifts of cash to charity this year. Donor Advised Funds are not eligible for this provision. Cash gifts to DAFs are still limited to 60 percent of AGI.

These new changes may be hard for donors to grasp and understand. To help your clients make the best gifts possible, we suggest opening the conversation with what impact they want their gifts to make. Tax benefits are nice, but they aren’t the primary motivation behind charitable giving.

Opening a donor advised fund with the Foundation is one way your clients can receive potential tax benefits in the year of their gift, while allowing them to distribute funds out of their DAF on the timeline that suits their needs.

Charitable giving tools like DAFs are especially helpful during times of global need. Throughout the COVID-19 pandemic, we have heard from many donors who were grateful they had opened a DAF, allowing them to distribute funds where they are needed most without impacting their own personal finances.

As you continue to navigate changing circumstances, our staff members are here to help. Whether you want to provide your clients with a personalized, professional charitable giving experience, or have questions on how you can help your clients navigate changing tax laws, you can always contact a member of our Gift Planning team.

How do I engage my family members in philanthropy?

Involving clients' families in philanthropy has many benefits. Your clients’ philanthropy can be a path to educate the next generation about the value of giving.

You may suggest that before diving in, your clients think about what they want to accomplish by engaging their family and who they want to include. Understanding their goals and defining who makes up their family will help them decide how to move forward.

Next, suggest they gather family members together to share stories about their history. Telling stories can bring a family together, as well as illustrate the experiences that have shaped their values and their charitable giving.

Every family is different, so it might be difficult for them to know where to start. As a partner, we can help your clients navigate their families’ philanthropy. We can recommend a variety of resources and exercises to make the process easy and fun. Our donor toolkit offers a suite of resources designed to inspire and guide your client’s giving journey.

What are the best assets to give?

The Saint Paul & Minnesota Foundation can help your clients give in ways that align their goals with the needs of their family and their community. We accept a wide range of assets, including complex assets ranging from farm equipment to cryptocurrency.

We can work with your clients to convert private foundations into DAFs or provide your clients with lifetime income through charitable gift annuities or charitable remainder trusts.

If your clients are considering an exit, sale or transition of a business, we also accept shares of closely held business, which could help them avoid potentially significant gains.

What is the most effective way to carry out my charitable legacy?

Everyone’s charitable journey is different. The Foundation offers a variety of ways for your clients to approach their legacy.

One way to do that is by creating a legacy letter. A legacy letter, or ethical will, is a way for your clients to share their values, family history and philanthropic interests with family members, friends and future generations. These documents are often a combination of a memoir and directive — articulating the charitable wishes of that person or family.

The Foundation can assist you and your clients in carrying out their charitable legacies. We know the importance of having a trusted partner, so we are here to assist you and your clients in clarifying that approach.

We know these may not be all the questions your clients have, and we are here to help. Call 651.224.5463 or contact us at philanthropy@spmcf.org to discuss how we can support your practice and your clients.

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