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How to Answer Your Clients' Top Five Giving Questions

The Foundation answers some of the questions your clients May ask about their giving this year.

Tax season is here, 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.

While there are many places to open a DAF, referring your clients to a community foundation has some unique benefits.

What is the SECURE Act and how does it affect qualified charitable distributions?

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.

As of December 31, 2019, people can access their required minimum distribution (RMD) starting at the age of 72. Thanks to the SECURE Act, the age has increased from 70½ to 72, allowing clients’ assets additional years to grow before distributions must be taken.

The minimum age for making qualified charitable distributions (QCDs) remains 70½, disincentivizing the desire to use QCDs to avoid tax implications of RMDs before the age of 72.

These new changes may be hard for donors to grasp and understand. To help your clients grow and best utilize their QCDs, we suggest having conversations about the tax benefits. At the Foundation, opening a donor advised fund 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.

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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