This is a term used when someone makes a gift to charity while retaining some portion for their benefit. There are several types of split interest gifts and various reasons someone might choose to support a charity in this way. The most common types are charitable gift annuities (CGA) and charitable remainder trusts (CRT).

A reason frequently cited for split interest gifts is someone who wants to boost their annual income in retirement without cashing in highly appreciated assets such as stock. By donating the asset directly to charity, the person avoids capital gains taxes while creating an income stream. The charity invests the initial contribution and pays an agreed upon income stream (annuity) for the life of the donor (and/or spouse/child). Upon the donor’s passing (or second life), the remainder of the initial contribution goes to support the charity.

When someone enters into a split gift arrangement, the key is it starts with charitable intent. Not all charities are able to provide split gifts as a charitable option, but they are worth considering as a part of your overall giving plans. Questions? Contact me at 507.454.0441.

Donating appreciated assets to a charity can be an excellent way to help a cause you care about while minimizing potential taxes “trapped” in any long-term gains. Unfortunately, this doesn’t work with US savings bonds if gifted during your lifetime because they are non-transferable by order of the US Treasury. That means the bonds would need to be re-issued to name the charity the owner and you, as the donor, would need to recognize the accumulated earnings when filing your taxes.

So, what is your alternative?

You could can name a charity as a beneficiary of the bonds, and they would transfer to charity after your passing. TreasuryDirect.gov provides instructions on this process. You should also consider converting any paper certificates to electronic and sharing the serial numbers of all certificates with your charity. You will also need to secure the charity’s federal ID number.

If you’d like to learn more about the best assets to give to charity, contact me at the Winona Community Foundation. While I can’t provide tax or legal advice, I can provide you with information to take to your professional advisors to see what works for your personal situation.

The overwhelming amount of charitable giving happens in the last quarter of the calendar year. In addition to putting pressure on you to make tax deadlines, it can cause extra stress on the nonprofits that count on your donations. There are a couple of ways you can help reduce year-end stress on both you and your charities.

One, make a New Year’s resolution to start making monthly gifts – you could wind up being able to give more in smaller amounts over time, and your charity can better predict its donation income.

The other is to pre-fund your giving using a donor advised fund. This way, you capture the charitable deduction for the full amount of your gift while directing grants throughout the year. If you use appreciated stock for your donor advised fund, you avoid capital gains while receiving a deduction for the full value of the stock on the day it was received.

If you want to know about more options, contact me at 507.454.0441.

There are many benefits to donor advised funds. You make one gift; receive one receipt; and make multiple grants to the causes you care about when you are ready. You can contribute highly appreciated assets, such as stock, to maximize the size of your gift by avoiding capital gains taxes. Money in your fund is invested and grows over time – which means you have more to give!

When you use your local community foundation, you have direct access to the staff who you likely know – or will get to know. You have the benefit of local expertise on what the needs and opportunities are where you live, work, and play. And you’re supporting a local business (yes, nonprofits are businesses, too!) and increasing local grant-making capacity.

If you’re considering a donor advised fund, give me a call, 507.454.0441. It’s just that easy.

There are many wonderful causes to support; however, just because something is “for charity” doesn’t mean a gift is automatically eligible for a charitable tax deduction. This is a frequent misconception. The only gifts that can be deducted when filing taxes are those made to public charities (501)(c)(3), religious organizations, nonprofit schools, and governments.

So how do you know? You could ask for the organization’s IRS letter ruling, but that can be awkward. The most accurate online tool is the IRS tax exempt organization search. When you find the organization you are looking for, look to see “pub 78” on its listing. This is the specific indicator the organization can receive tax deductible contributions. An alternative is to use www.guidestar.org. This free database will help you find the organization and its federal ID number but won’t verify it’s a public charity.

The Winona Community Foundation wants to be your resource for charitable giving. So, if the above seems complicated, feel free to contact us at wcf@winonacf.org or 507.454.6511.

It is possible a charity might sell or share its donors’ name and contact information, but they should not disclose privileged or confidential information including donation amounts. Even though they can, most charities, especially local organizations, do not sell or share their lists. In fact, most have policies in place prohibiting the sale or sharing of donor names.

If you think your name has been sold, contact the organization and ask. According to the Association of Fundraising Professionals’ (AFP) Code of Ethical Standards, donors and clients must be given the opportunity to have their names removed from lists that are sold to, rented to, or exchanged with another organization.

In addition, if you receive unsolicited mail or contacts from an organization, you can tell them to remove you from future mailing or solicitations. Unfortunately, a few bad organizations will ignore your request. But keep in mind, the overwhelming majority of charities are doing good and important work and will honor your request.

When you make a gift to a public charity you can take a tax deduction for the gift, provided you itemize. With changes in tax law, you may be better off taking the standard deduction, thus losing the charitable deduction (not including the above-the-line deduction of $300 per filer). If you are someone who contributes more than $300, bundling multiple years of giving into one year, may prove advantageous when you combine that gift with other itemized deductions like mortgage interest and state and local taxes.

The advantage of using a donor advised fund for bundling gifts is you receive an immediate tax deduction in the year you make that gift. One gift, one receipt. You don’t have to determine where your gift goes immediately. You control when and how much you grant to your favorite nonprofits in subsequent years. They benefit from your continued support.

There are other ways for tax advantaged giving. To learn more, contact me directly.

Nearly one third of annual giving happens in December, and 12 percent of all giving happens in the last three days of the year, according to statistics shared by Neon One. That means the charities you love are busy. That may also mean something could fall through the cracks or take longer to complete.

If you don’t plan to make a gift with stock or mutual fund shares, don’t wait until the last week of the year. Start it no later than early December. At the end of the year, the process can take up to three weeks, especially for mutual fund shares. When making a gift using a credit card, be sure it gets processed by 11:59 PM on December 31, otherwise the gift goes into the new year. Due to changes at the USPS, your check may take longer to get to its final destination as well.

Time to think about making those gifts today!

An endowment is a fund where contributed dollars are never spent. Instead, the dollars are invested to provide a never-ending stream of income to support charitable work. You will usually find endowments at larger institutions such as universities, hospitals, and foundations, but any nonprofit can have an endowment. Among the many benefits of an endowment is it provides a permanent, predictable stream of income. Because the income is permanent, the charity can depend upon those dollars year in and year out, allowing them to focus on mission instead of fund raising.

If you have been donating to one or more charities during your lifetime, making a gift through your will or estate is a wonderful way to ensure that support continues. Or, if you would like to set up a scholarship to honor a friend or loved one, you can work with your community foundation to create an endowment fund that ensures your generosity continues for generations to come.

The first thing you should ask yourself before making a donation is “do I want to help” this cause. You should not feel obligated, coerced, or forced into making a donation. Giving should make you feel good.

If you are concerned a cause is not legitimate, there are different ways to confirm it. You can always ask the charity for a copy of its IRS letter of determination. That may not be the most convenient. An easier option is to check online resource such as irs.gov’s tax-exempt organization search function, GuiddeStar.org, or nonprofit review sites such as charitynavigator.com and give.org.

These sites tend to focus on larger charities. If you are looking at a local cause, contact your community foundation. Staff there are familiar with the various nonprofits in your community and can tell you if the effort is a public charity eligible to receive tax-deductible contributions. They may even be able to connect you to someone at that organization.

If you are not concerned about a tax deduction, whether a cause is a public charity or not doesn’t matter. What matters is that you care about the cause and have confidence in the people working on it. As I said in the beginning, giving should make you feel good.

Fewer than 1% of American estates pay federal estate taxes. Unless your estate is worth more than $11.7 million for an individual, you will not need to worry about the federal estate tax. Minnesota has a tax on estates valued at $3 million or more.

Even if you are not subject to state or federal estate taxes, if you hold any assets that have “income in respect of decedent” (IRD) such as a traditional IRA, you should be thinking about taxes. Current regulations and how your heirs handle this asset may incur significant income tax liabilities.

But what does this have to do with charitable giving?

Including charitable giving in your estate plan is an effective way to reduce taxes and may help you transfer more assets to your heirs. When it comes to IRD assets, gifting them to charity or establishing a charitable remainder trust, can significantly reduce the taxes paid by your heirs. There are easy and more complex ways to use charitable giving to successfully transfer assets and each estate is unique. The Winona Community Foundation does not offer legal or accounting advice, however, we can help answer your questions and prepare you for a visit with your attorney or other advisor.

Donor advised funds are a highly effective way to manage your charitable contributions while receiving maximum tax benefits. You are smart to be exploring your options. And there are many. However, choosing your community foundation has added benefits that a national organization or large investment firm simply cannot offer.

First, the greatest value of a community foundation is its knowledge of the community. The foundation staff and board members live, work, and volunteer in that very community. This gives them a deeper understanding of the issues, needs, and opportunities where your charitable contributions can have the greatest impact.

Beyond that, by choosing your local community foundation, you have the added benefit of contributing to your community’s economy. Regardless of where you set up a fund, there are administrative fees. When you use the local community foundation, those fees stay local. They support the general operations of the foundation and its community grantmaking.

So, the answer is simple, you already support your local community. The advantage of choosing your local community foundation for setting up your donor advised fund makes good community sense.

First, everyone’s situation is different. It’s important you talk to your accountant or tax advisor about your specific situation. With that, if you are age 70 ½, have a traditional IRA, and make gifts to charity, using your IRA may be a smart way to make gifts to the charities you love.

When you’re ready to make a gift, contact your IRA administrator to request a qualified charitable distribution (QCD) be made directly to your charity. The benefit of a QCD is you do not report the distributed amount as income while your charity receives the full amount to use toward its mission. If you’re age 72 or older, you have the added benefit of counting the QCD toward your required minimum distribution (RMD).

You can make as many QCDs as you want in a year, as long as the cumulative amount doesn’t exceed $100,000. Because you do not recognize the distribution as income, you cannot use the gift as a tax deduction. Which, if you claim the standard deduction, you would not be able to do anyway.

If you would like to learn more or wonder if your charities qualify, I’m here to help.

A donor advised fund (DAF) is a charitable account held and managed by a sponsoring organization, such as the Winona Community Foundation. A donor contributes money to the fund and receives an immediate tax benefit. The funds are invested and grow tax-free, and the donor recommends grants to the charities they love. Basically, you make one gift and get to keep on giving.

A DAF might be right for you if you like the convenience of making one gift and receiving one tax receipt. It might be because you had a taxable event or you are donating an appreciated asset such as stock or mutual fund shares. It also may be a way to “bundle” multiple years of giving into one year, allowing you to itemize. Family or corporate philanthropy may also be a motivator. DAFs work a lot like a private foundation without all the legal costs, tax filings, and IRS regulations.

If you are curious and want to learn more about DAFs, contact me.

Well, that depends upon how you define “smart.” Actually, if you have held stock for more than a year, donating it directly to charity is one of the most tax-smart ways to give. Why? Because when you donate stock (or mutual fund shares) directly to charity, you avoid paying capital gains taxes. In effect, you are giving up to 20 percent more than if you sold the stock first and then made a cash donation.

In addition to the tax advantage of giving stock to charity, today’s tax environment makes contributing to a donor advised fund (DAF) extremely attractive. With a higher standard deduction, fewer people are itemizing. By funding a DAF, you can bundle multiple years of charitable giving in one year and direct those gifts over time. If you use an appreciated asset, you benefit from both avoiding capital gains and the ability to take the charitable deduction.

Everyone’s situation is unique, and I am happy to answer questions and provide options on how to maximize your charitable giving, but since I am neither an accountant nor attorney, you should always contact your professional advisor for advice specific to your situation.

The short answer is: not in 2022. When congress enacted the CARES Act in 2020, it provided for a $300 charitable deduction for tax filers who took the standard deduction. In 2021, Congress extended the deduction but revised it to allow joint filers to deduct $600, while single filers remained at $300. The deduction is limited to cash contributions – check, credit card, or debit card, and only to “qualified” charities. Unfortunately, this act was temporary and was not extended into 2022.

Even if you do not itemize, there are tax-advantaged ways to support the causes you care about. This includes donating appreciated assets such as stock or mutual fund shares directly to charity, bunding your donations through a donor advised fund at your local community foundation, or using your IRA to make a qualified charitable distribution.

Because every situation is unique, and my answer is for general informational purposes, it is important that you talk to an accountant or attorney before making any significant financial/tax decision.

It is human instinct to want to help when you see people suffering. In fact, a recent study conducted by Engine Group on behalf of Fidelity Charitable indicates 25% of Americans have already helped the people of Ukraine in some manner. Others want to give but are concerned their donations might not reach the intended recipients or for the intended purpose. These are not uncommon concerns.

If you are responding to an international crisis, you can lesson those concerns by finding organizations that are experts in disaster relief and recovery. A quick internet search will provide many examples. Visit their websites. Then check them out on a charity review site such as Charity Navigator, GuideStar, or Give.org.

If you are responding to a domestic or local disaster, reach out to your community foundation. The staff there will known which local organizations are addressing what kind of needs. You can also give to an organization you already know or support that has a disaster or humanitarian aid fund. This may include your faith community or service clubs. And of course, if you know someone who is directly impacted, you can always support them directly.

You’re right to be thinking of this possibility. Although it doesn’t happen frequently, sometimes charitable organizations fold. Other times they may merge with another organization, or even change focus. If you want to ensure your intended legacy is met, a good way to do that is to work with your local community foundation. Together you can draft an agreement that clearly outlines your intentions and advises the community foundation how to fulfill them after you’re gone. You can include alternative charities or a more general field of interest.

Example: You want to benefit a specific animal rescue. Your fund agreement states gifts will benefit that animal rescue. In case the rescue no longer exists or later folds, you include language that either specifies a different charity or a broader field of interest such as animal well-being. Your legacy continues to address a cause important to you.

While I wouldn’t say the options are endless, when you work with a community foundation, you have a lot of flexibility in designing your legacy.

Donor advised funds are a simple, flexible way to manage your charitable giving. You make one gift. Receive one receipt for tax purposes. And get to make grants to multiple charities over a period of time. During that time, your gift is invested for tax-free growth. That’s a pretty nice benefit.

Your local community foundation is one number of types of organizations that sponsor donor advised funds. However, they stand out for a few different reasons. When you choose a community foundation, you will receive personalized service from someone you know. Community foundation staff have local knowledge and expertise in the challenges and opportunities in need of funding. And there is the added bonus that their service fees are re-invested into the community, increasing your charitable impact.

If you’re considering a donor advised fund. Consider your community foundation first.

When people hear the word “foundation,” they will often think of big foundations such as the Bill & Melinda Gates Foundation or the Ford Foundation. These foundations are considered “private” foundations. They are private because there is a limited number of donors to them, and it is unlikely an unrelated person would make a contribution to them.

A community foundation, however, has a wide range of donors and funds. They serve a geographic area. The Winona Community Foundation serves the greater Winona area – about a 15-mile radius, and most of its donors come from that same area. Community foundations are governed by a volunteer board of directors with a variety of skills and representation. The basic purpose of a community foundation is to build a permanent source of charitable funds through endowments along with funds for immediate needs.

Ah, professional lingo. Why don’t we say what we really mean? I agree, most gifts are planned. Sure, there are times when you casually drop some coins in a red kettle, but in the fundraising world, planned gifts are ones that require a donor to take some steps beyond writing a check.

The most common type of planned gift refers to a gift someone makes in their will – it is something they are planning to have happen in the future. The same can be said for a gift of life insurance proceeds or retirement funds. As a donor, it helps to let the charity know of your plans. That way they can anticipate and understand how you want them to use your gift.

Other types of planned gifts can happen during your lifetime but may require the help of an attorney or accountant. For example, someone who gifts their home during their lifetime and retains the right to live in it; a farmer that wants to gift grain directly to a charity and receive a tax deduction; a business-owner donating to charity as part of transition plan; and so much more. Regardless of how they are labeled, there are many excellent ways to help the causes you care about.

If you are thinking about making a planned gift or want to learn more, contact the Winona Community Foundation. While we don’t offer legal or accounting advice, we can provide you with helpful information to get the conversation started.

Many people understand the advantage of donating appreciated stock to charity: donate stock you’ve held for more than one year and you will get a tax deduction equal to the value of the stock on the day the charity receives it, you avoid paying capitol gains, and the charity receives the full value of the stock. Great! But what about stock that has lost value?

If you’ve been reluctant to sell a stock because it’s lost value, but you also don’t want to keep hanging on to it, you may be able to make lemonade out of lemons. Instead of making a direct transfer to charity, sell the stock, recognize the capitol loss, and then donate the proceeds to charity for the most beneficial tax result. Recognizing a capitol loss may offset other gains. Donating to charity provides you with an income tax deduction. Since everyone’s situation is unique, you should seek appropriate legal, or tax advice from a professional.

Unfortunately, the Universal Charitable Deduction was not included in the recently signed spending bill. That means in order to take advantage of the federal tax deduction for charitable giving, you must itemize your taxes. However, if you are a Minnesota filer, the Minnesota Charitable Deduction provides a 50 percent tax deduction for charitable contributions over $500. It’s important that you work with your tax professional in determining if your contributions qualify.

On a positive note, the Legacy IRA Act did make it into the spending bill with some enhancements. This act is behind the ability to make Qualified Charitable Distributions directly from an IRA and have it meet your required minimum distribution. Enhancements include indexing the $100,00 maximum distribution for inflation and the ability to make a one-time donation to establish what is known as a life income gift, including charitable gift annuities and charitable reminder trusts. The Winona Community Foundation is here to help get you started in your charitable journey, but a tax professional or attorney is your best friend in answering questions about your specific situation.

A qualified charitable distribution (QCD) is when someone age 70 ½ makes a direct distribution to a qualified charity from their IRA. It’s a great way to benefit charity with the added benefit of lowering your adjusted gross income for tax purposes. Because the charity is tax exempt, it gets the full value of your gift. You can make distributions up to $100,000 annually and when you reach the age of required minimum distributions, your QCD will count toward your RMD.

New in 2023, QCDs may be used to establish a charitable gift annuity (CGA). CGAs can be a wonderful way to benefit your charity while providing you with a guaranteed income stream. The ability to fund a CGA with a QCD is a one-time only opportunity to distribute up to $50,000 to a qualified charity which will in-turn pay you at least 5% annually for the rest of your life. There are some additional restrictions with a QCD-funded CGA so it is important to meet your accountant and your charity when making a decision. The Winona Community Foundation is a great resource to get you started. Feel free to contact us with your questions.

The role of a community foundation varies from one city to the next. However, they all share a similar purpose to support and encourage charitable giving for the benefit of the community served. They are created by those who live, work and play in that community. At the Winona Community Foundation, that includes the communities in the greater Winona area – not just the City of Winona. In fact, the Winona Community Foundation is proud to support the Goodview Community Foundation – with a purpose to support projects and programs for the benefit of Goodview.

Where do the Foundation’s funds come from? The community, and that’s why we grant back exclusively for the benefit of the community. Individuals and families, as well as businesses and organizations will donate to any number of fund types. These funds are pooled for investment purposes with the goal of increasing the amount of dollars that can be granted out to our local nonprofit community.

A strong community foundation has the capacity to proactively address challenges and opportunities as well as respond to requests for funding. A strong community foundation is integral to the fabric of the community and reflects the community as a whole. To learn more about how you can be a part of the Winona Community Foundation, please give me a call or send an email.

People give to the charities they care about. Most will give to multiple charities. Some will receive a tax benefit, but many more won’t. With the standard deduction for 2023 increasing to $13,850, fewer and fewer households will itemize, meaning they will not receive any tax incentive for giving to charity.

There are currently bipartisan efforts in the U.S. Senate to pass the Charitable Act which would provide for a Universal Charitable Deduction for all tax-filers, regardless of their income. Individuals would be able to take an above-the-line deduction of up to 1/3 of the standard deduction. The purpose is to recognize all donors, not just those making large contributions or earning higher income, should receive some incentive for supporting charity.

In the meantime, using a Donor Advised Fund at the Winona Community Foundation to bundle your donations may be an effective tool. Now that the tax season is behind us, talk with your accountant or other professional advisor to see how you can maximize your donations to benefit the charities you care about most. And keep in mind, Minnesotans who do not itemize deductions on their federal income tax returns are eligible to take a deduction for charitable contributions on their state return. It is important to talk to your accountant for your specific situation.

Community foundations work to encourage and grow charitable giving in a community. They do this with the goal of ensuring the community it serves is vibrant and thriving in many areas including health, safety, education, arts, environment and more.

Unlike most charities, a community foundation does not provide direct services or programming. Instead, they carry out this broad mission by building permanent endowment funds as well as non-endowed funds established by local individuals, families, businesses, or charitable institutions. The funds are invested back into the community’s nonprofits through grants.

They also serve as a resource to donors who may need advice or assistance on how to maximize their charitable giving. This includes answering questions on the best assets to make a gift, how to include charitable giving in estate plans, or how to evaluate a charity. Ultimately, a community foundation is a resource and tool for charitable giving whether directly to or through the foundation.

Questions?

Nancy M. Brown, CFRE
President/CEO
nbrown@winonacf.org
507-454-6511

Nancy M. Brown, President/CEO of the Winona Community Foundation, shares her wisdom on fundraising topics through the Winona Post’s Professional Forum. Click on the subjects below to learn more about them.

Brown’s past experience includes Senior Director of Development at Saint Mary’s University; Vice President/Consultant at Thompson & Associates, an independent consultant, Executive Director of Development at Winona Health, and Director of Major Gifts and Advancement Services at Winona State University. She is also an adjunct faculty member in the Master’s in Philanthropy and Development program at LaGrange College in LaGrange, GA.

She received her Bachelor of Arts degree from University of Wisconsin-Madison, and a Master of Science in Administration Degree from University of Notre Dame. She is also a Certified Fundraising Executive.