NEW: Tax law changes in 2026 that may affect your giving

Our current and prospective fundholders, and anyone interested in giving to local causes, should be aware of the following changes and a few new tax laws that may impact charitable giving.

Social Security COLA increases

The Social Security Administration announced a cost-of-living adjustment (COLA) increase effective January 1, 2026. This increase reflects inflation’s trajectory and may result in increased Social Security benefits.

Standard deduction increases

For tax year 2026, the standard deduction increased to $16,100 for single taxpayers, $24,150 for heads of households, and $32,200 for married couples filing jointly.

 The standard deduction is a key factor in charitable giving strategies. If a person’s total itemized deductions—including charitable gifts—exceed the standard deduction, they are eligible to itemize. Reviewing this threshold and considering a “bunching” strategy (accelerating multiple years of giving into one tax year) can help maximize charitable support through 2026 and beyond.

Tax brackets

Though the tax rates remain at a range from 10% to 37%, the income levels that define each bracket for 2026 have shifted.

Limitation on itemized charitable deductions for high-income taxpayers

High-income taxpayers will face an additional limitation through a new cap on the value of itemized charitable deductions. Even if a donor is in the highest federal income tax bracket, the tax benefit of a charitable deduction will be limited to 35 percent of the contribution. As a result, taxpayers in the 37 percent bracket will no longer be able to offset their income at their full marginal rate when making charitable gifts.

Good news for the 60% cap

Another important change provides greater certainty for donors who make substantial cash contributions. The long-standing rule allowing cash gifts to qualified public charities to be deducted up to 60 percent of adjusted gross income has been made permanent. After satisfying the new 0.5% AGI floor, donors may continue to deduct cash contributions up to this level, while non-cash gifts or contributions to certain types of organizations remain subject to lower percentage limits. 

New incentive for non-itemizers

The new rules introduce an incentive for taxpayers who do not itemize deductions. Beginning with the 2026 tax year, individuals who claim the standard deduction will be allowed to take a limited charitable deduction above the line, meaning it reduces income before adjusted gross income is calculated. Single filers may deduct up to $1,000, while married couples filing jointly may deduct up to $2,000, provided the contributions are made in cash. This deduction is available in addition to the standard deduction and represents a meaningful expansion of tax benefits for charitable giving among non-itemizers, many of whom have received no tax benefit for donations in recent years. Note, however, that gifts to donor-advised funds are not eligible for this deduction, and neither are noncash gifts. (This is unfortunate because both gifts to donor-advised funds and gifts of highly appreciated assets are useful tools that incentivize charitable giving.)

New threshold to itemize charitable deductions

One of the most significant shifts affects individual taxpayers who itemize their income tax deductions. Beginning this tax year, charitable contributions will only be deductible to the extent that they exceed 0.5% of a taxpayer’s adjusted gross income. In practical terms, this means that a portion of charitable giving will no longer generate a tax benefit. For example, a taxpayer with an adjusted gross income of $200,000 will see no deduction for the first $1,000 of charitable contributions made in a year. Only donations above that amount will be eligible for deduction, subject to existing percentage-of-income limits. This new rule functions much like a deductible in an insurance policy, raising the effective threshold for receiving a tax benefit and reducing the immediate incentive for smaller annual gifts among itemizers.

QCDs may be even more useful

Retirees and older taxpayers will also see an important adjustment through an increase in the Qualified Charitable Distribution limit. For tax year 2026, the per-taxpayer limit for Qualified Charitable Distributions (QCDs) has been increased for inflation to $111,000, up from $108,000 in 2025. And the limit for a one-time QCD from an IRA to a split-interest vehicle has been adjusted for inflation to $55,000, up from $54,000.

This allows taxpayers age 70 ½ and older to further reduce their AGI and, if applicable, satisfy all or part of their required minimum distributions (RMDs). A QCD to a qualified fund at the community foundation (such as a designated or field-of-interest fund but not a donor-advised fund) remains one of the most tax-efficient ways to support charity. 

Generally, though, this change should help donors direct more funds to charitable causes without including those distributions in taxable income. Because Qualified Charitable Distributions can also count toward required minimum distributions, this higher limit enhances a tax-efficient giving strategy that is unaffected by itemized deduction limits, adjusted gross income floors, or caps on deduction value.

 

Case study: A QCD conversion in action

If you know the basics of Qualified Charitable Distributions (QCDs) but have a hard time envisioning exactly what to say and do when they come up in a client conversation, you are not alone! Whether you are an attorney, CPA, or financial advisor, at some point you will find yourself in the middle of a QCD conversation. Here’s a case study to help you be prepared. 

Margaret, a 74-year-old widow and longtime client of your practice, scheduled a meeting early in the year to discuss her charitable giving plans. In the email Margaret sent to set up the meeting, she mentioned that she was now taking required minimum distributions from her IRA and her taxable income was higher than she expected or needed. 

As you reviewed Margaret’s file prior to the meeting, you were reminded that Margaret had established a donor-advised fund at the community foundation several years ago. She has enjoyed using the donor-advised fund to organize charitable giving to dozens of favorite charities and appreciates how the foundation uses the fees to support valuable programs and initiatives.

After some initial conversation, Margaret jumps right in: “I’ve read about this thing called a Qualified Charitable Distribution. If I’m going to give to charity anyway, I want to understand whether doing a QCD in 2026 makes sense, especially if I want the gift to go through the community foundation where I already do all of my giving.”

You explain that a QCD does indeed allow individuals like her who are age 70 ½ or older to transfer funds directly from an IRA to a qualified charity without including that amount in taxable income. You mention that this can be especially powerful after age 73, when required minimum distributions begin, because the QCD can satisfy all or part of the RMD while keeping adjusted gross income lower. “This can help address Medicare premiums, taxation of Social Security, and overall tax efficiency,” you continue. “With the annual QCD limit increasing through inflation adjustments to $111,000 in 2026, it’s a timely strategy to consider.”

Margaret was glad to hear all of this.

“I already have a donor-advised fund at the community foundation. Can I simply direct my QCD straight into that fund?” She asked.

You are prepared for this question — a common point of confusion. “That’s a great question, and you’re not alone in asking it,” you reply. “Under current IRS rules, unfortunately, QCDs can’t be made to donor-advised funds, even if they’re housed at a community foundation.”

Seeing her puzzled expression, you continue with a broader explanation. “QCDs are limited to certain types of charitable recipients,” you say. “They can go directly to public charities that are ‘operating’ nonprofits, and in limited cases to certain split-interest arrangements like a charitable gift annuity or a charitable remainder trust, subject to specific rules. Donor-advised funds are excluded, evidently because the IRS does not want the money to flow into account where the taxpayer retains advisory privileges. Donor-advised funds are of course entirely dedicated to charity, so the rule does not make a lot of sense. Yet here we are.”

Margaret frowned slightly. “That feels frustrating,” she said. “I love the donor-advised fund because it gives me flexibility and lets me support multiple causes over time.” You acknowledge her concern. “I understand. The good news, though,” you say, “is that the community foundation offers other types of funds that do qualify for QCDs and can still accomplish many of the same goals.”

You go on to explain that instead of directing the QCD to her donor-advised fund, Margaret could direct the QCD to a designated fund at the community foundation that supports specific charities she already knows she wants to help, or to a field-of-interest fund focused on causes she cares about deeply, such as education or the arts, or to an unrestricted fund to support the community as a whole. “Those types of funds are fully managed by the community foundation, without your advisory role after setup which makes them eligible recipients of a QCD while still aligning with your charitable intentions.”

Margaret paused, considering the options. “I don’t want to make the wrong choice,” she said. “I also want to be sure the fund is set up properly and really reflects what I care about.”

Your response is that collaboration matters here. “This is where I’d recommend looping in the community foundation,” you say. “They can help us think through which type of fund fits best, provide a fund agreement document, and enable me to fulfill my professional duty to ensure that the structure complies with QCD rules.”

You go on to suggest a joint meeting with a community foundation representative. “The community foundation knows the nuances of the fund options and the local charitable landscape,” you explain. “That’s a great match for the legal and tax obligations on my side of the transaction. Together we can help ensure that your QCD in 2026 is clean, compliant, and aligned with your values.”

Margaret smiled, clearly relieved. “That makes sense,” she said. “I don’t want this to be just about taxes. I want it to be meaningful.”

By the end of the meeting, you and Margaret have agreed on next steps: you said you would review Margaret’s IRA custodian requirements for executing a QCD, and the community foundation will set up a fund to receive the distribution. The plan will allow Margaret to use her required minimum distribution to support the community she loves, reduce her taxable income, and create a charitable structure she feels confident about.

As Margaret leaves your office, you can tell that she feels reassured that she didn’t have to navigate the rules alone. The conversation had clarified not only why a QCD in 2026 made sense for her financially, but also why working collaboratively with you and the community foundation was essential. Together, you and the community foundation can turn a confusing tax rule into a thoughtful charitable strategy that supports both Margaret’s personal financial goals and the broader community she intends to impact.

If Margaret’s situation sounds familiar, or if you anticipate any type of charitable giving conversation with a client, TCFHR is here for you. There’s a bipartisan tax law change that has been proposed that would allow Qualified Charitable Distributions into donor-advised funds. We’re encouraged by that, as it would make a big difference for our current and prospective fundholders.

OBBBA, new tax rules, and new urgencies in mapping out your clients 2025 charitable giving plans

It’s never been easy to navigate the ever-shifting tax rules to help clients structure charitable gifts, and now it’s even trickier. Major changes under the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, are creating complexity, opportunity, and, for some, urgency. The OBBBA reshapes both how much a client can deduct for charitable contributions and which clients can benefit from these deductions in the first place. 

As always, the team at the community foundation is honored to be your first call when the topic of charitable giving arises in client conversations. In most cases, the community foundation’s tools can be useful, and if we can’t help directly, we’ll point you in the right direction.

Here are three key issues to discuss:

Evaluate whether the client could benefit from “bunching” charitable contributions in 2025

Many advisors are recommending that their clients address head on the One Big Beautiful Bill Act’s expansion of the standard deduction—$15,750 for single filers and $31,500 for married couples in 2025, with even higher levels for taxpayers aged 65 and older. A technique known as “bunching” charitable donations can be particularly useful. For example, if a client typically donates $12,000 each year to charity, but the client’s other deductions do not push them over the standard deduction, the client could give $36,000 (three years’ worth of gifts) to a donor-advised fund at the community foundation in 2025. The idea is that the client can combine this gift with other deductions to substantially exceed the standard deduction, allowing the client to itemize and claim a much greater deduction for that year. Over the following two years, the client can take the standard deduction and lean on the donor-advised fund to distribute funds to favorite charities. 

Note that the higher standard deduction will likely impact tax-motivated charitable giving, even with the expected uptick in the number of itemizers thanks to the OBBBA’s new state and local tax deduction allowances (subscription required to the Wall Street Journal). 

Look ahead to 2026 as you help clients plan for 2025

For your clients who continue to itemize deductions, 2026 will bring even further changes. Only charitable donations exceeding 0.5% of AGI will be deductible. For example, a couple with $225,000 in AGI would see their deductible charitable amount reduced by $1,125 per year. Although clients who are large-scale donors may find this change proportionately less impactful, clients making moderate or smaller-sized gifts might see a significant reduction in their eligible deductions. What’s more, under the OBBBA, high-income taxpayers will see their maximum tax benefit from charitable deductions calculated at a top marginal rate of 35%, down from 37%, starting in 2026.

These changes may prompt higher-income clients to lean heavily on bunching strategies in 2025 to maximize current tax advantages before stricter limits kick in.

Watch the fine print on the charitable deduction for non-itemizers

Under the OBBBA, starting in 2026, taxpayers who take the standard deduction will be able to claim a direct deduction for charitable giving—up to $1,000 for single filers and $2,000 for married couples filing jointly. This provision mirrors temporary measures seen during the COVID-19 pandemic. Crucially, the deduction is limited to cash gifts made directly to qualified charities; donations of property or stock, and contributions to donor-advised funds, do not qualify. For the estimated 100 million Americans who do not itemize, which likely includes many of your clients, this provision is certainly good news. That said, gifts of appreciated stock and donor-advised funds are tax-effective and convenient charitable giving vehicles, and many clients may be disappointed that they can’t deploy these techniques to take advantage of this new deduction.

2025 certainly is shaping up to be an important year for helping your clients plan their charitable gifts. Please reach out to our team to explore ways to leverage the community foundation’s tools, including establishing your client’s donor-advised fund to take advantage of bunching. And of course, always remember that regardless of the tax implications, your clients’ philanthropy addresses vital community needs—and this is a motivator that transcends any deduction.

How the One Big Beautiful Bill Act impacts philanthropy

The One Big Beautiful Bill Act was signed into law by President Trump on July 4, 2025.

The OBBBA, with nearly 900 pages of provisions, reshapes policy across major sectors of the U.S. economy. Included in the OBBBA are several provisions that impact philanthropy. Three major takeaways are of particular importance as the community foundation helps donors, fund holders, and nonprofits–as well as attorneys, CPAs, and financial advisors–navigate charitable planning opportunities over the months and years ahead. 

Insight #1: Standard deduction goes higher

What’s in the OBBBA?

The new law makes permanent the standard deduction increases under the Tax Cuts and Jobs Act of 2017 (TCJA), increasing the standard deduction for 2025 to $15,750 for single filers and $31,500 to taxpayers who are married and filing jointly. The new law also expands the “bonus” deduction for taxpayers 65 and older through 2028.

What’s more, under the new law, individuals who itemize may take charitable deductions only to the extent the charitable deductions exceed 0.5% of adjusted gross income. Furthermore, taxpayers in the top bracket can only claim a 35 percent tax deduction for charitable gifts instead of the full 37 percent that would otherwise apply to their income tax rate. Note also that the final bill permanently extended the 60% of adjusted gross income contribution limitation for cash gifts made to certain qualifying charities.

What does this mean for charitable giving?

With even fewer taxpayers eligible to itemize, and deductions capped for high-income earners, we’re likely to see a continuation of the chilling effect on charitable giving that occurred in the wake of the TCJA.

What can you do?

If you regularly support charities, it’s important to continue to do so whether or not you’re benefiting from a tax deduction. Our community needs you, now more than ever. If you’re a nonprofit, or if you’re an attorney, CPA, or financial advisor who works with charitable clients, remember that people do not give to charity solely to secure a tax deduction. Keep in mind that many other factors motivate charitable giving, and philanthropy is an important priority for many families. (This article in the Stanford Social Innovation Review has stood the test of time.)

Insight #2: Deduction for non-itemizers

What’s in the OBBA?

The new law includes a provision, effective after 2025, allowing non-itemizers to take a charitable deduction of $1,000 for single filers and $2,000 for taxpayers who are married and filing jointly. As has been the case in the past, gifts to donor-advised funds are not eligible. Unlike a previous (but smaller) similar provision, though, this law is not set to sunset. 

What does this mean for charitable giving?

After the TCJA went into effect, households that itemize deductions dropped to under 10%. Parallel to this trend, the number of U.S. adults who give to charity in any given year has dropped over the last 20 years from nearly two-thirds to less than half, according to some studies. Against this backdrop, the OBBBA’s deduction for non-itemizers has the potential to re-motivate charitable giving among a significant number of households. 

What can you do?

For everyone, now is the time to take a serious look at your charitable giving plans to support the causes you care about over the years ahead, especially if you are early in your career and not yet itemizing deductions. If you’ve already established a fund or you’re working with the community foundation in another way, please reach out to learn how we can help you make the most of the new tax laws, and even get your children and grandchildren involved.

If you’re a nonprofit, now is the time to attract and engage brand new donors.

And if you’re an attorney, CPA, or financial advisor, make sure you talk about charitable giving with your clients who don’t itemize; a $1,000 or $2,000 deduction could be just the motivation they need to begin a journey of philanthropy. 

Insight#3: No sunsetting estate tax exemption

What’s in the OBBA?

For affluent taxpayers updating financial and estate plans, and for the attorneys, CPAs, and wealth managers advising them, the last couple of years have been a roller coaster because of the looming possibility that the TCJA’s increase to the estate tax exemption would sunset at the end of 2025. Finally, there is clarity: Under the OBBBA, the sunset will not happen. The new law makes permanent the increase in the unified credit and generation-skipping transfer tax exemption threshold. The 2025 exemption is $13.99 million for single filers and $27.98 million married filing jointly. In 2026, these numbers increase to $15 million and $30 million respectively.

What does this mean for charitable giving?

Purely estate tax-based incentives to give to charity continue to apply only to the ultra-wealthy, likely resulting in a continuation of the taxpayer behavior triggered by the TCJA. In other words, most people will give to charity during their lifetimes and in their estates for reasons other than a tax deduction.

What can you do?

There is no guarantee that the estate tax exemption will stay high forever. As families work with their tax and estate planning advisors, many are viewing the next two years as an important window to plan ahead. The upshot of the new law is that high net-worth taxpayers now have more time to thoughtfully consider estate planning strategies, including charitable giving. For nonprofit organizations, this means that continuing to focus on long-term planned giving strategies is wise.   

This information is not intended as legal, accounting, or financial planning advice.

Donating business interests: Why a fund at the community foundation is the ideal recipient

If your client base includes business owners, you probably weren’t surprised by this observation in a recent Wall Street Journal article about the “stealthy wealthy”: “Behind a paycheck, the largest source of income for the 1% highest earners in the U.S. isn’t being a partner at an investment bank or launching a one-in-a-million tech startup. It is owning a medium-size regional business.”

What’s more, the chances are very good that most of your business-owner clients are charitably-inclined. Indeed, more than 90% of small business owners have supported charities and community activities in the last year.

This means that you and other tax and estate planning advisors ought to have at least a basic level of knowledge about the benefits and mechanics of giving closely-held business interests to charity. When properly executed, this technique can be extremely effective to achieve the client’s financial and philanthropic goals.

Here are three very important components of this strategy:

Stop before you use a private foundation.

Some of your business owner clients probably have established a private foundation. But the private foundation is not the ideal recipient of private business interests.

Donating closely-held stock to a fund at the community foundation is generally more tax effective than giving it to a private foundation due to several key differences in how the IRS treats these gifts. When your client donates closely-held stock to the community foundation, your client can typically deduct the full fair market value of the stock, up to 30% of adjusted gross income and also avoid paying capital gains tax on any appreciation.

By contrast, if your client donates the same stock to a private foundation, the deduction is limited to cost basis up to only 20% of AGI, which is a significantly less favorable tax outcome.

Mind the timing. 

Encourage a business owner client to start planning for a gift of closely-held stock before putting out feelers to potential acquirers and absolutely before any part of a deal is inked. This is crucial because a gift to charity will avoid substantial unrealized capital gains that have accrued in the business over the years only if the gift and the sale are genuinely separate events, avoiding the step transaction doctrine. Careful planning will help ensure that the client’s fund at the community foundation will receive 100 cents on the dollar for the portion of the stock it owns and the deduction won’t be thrown out. 

Respect the rules for valuation. 

Counsel your clients about securing a proper valuation for charitable deduction purposes at the time the business interest is contributed to the fund at the community foundation. Valuation has always been a critical factor in any type of tax or estate planning strategy. Recently, the additional wrinkle presented by the Supreme Court’s decision in Connelly v. United States makes things even more interesting. The Connelly decision impacts the way business interests are valued for estate tax purposes. In Connelly, the Supreme Court held that life insurance proceeds indeed ought to be included in the value of a company without offsetting the redemption obligation. This could translate to higher taxable estates for your business owner clients, creating further incentive to leave a portion of closely-held stock to charity. The decision is also a reminder that careful planning can potentially avoid pitfalls.

As always, please reach out to the community foundation when the topic of charitable giving arises in client conversations. Most of the time, we can help. If not, we will absolutely point you in the right direction.

Weighing the options: Private foundation or donor-advised fund?

When you’re working on the charitable components of a client’s estate or financial plan, one of the first areas you’ll likely explore is the structure. Certainly you are familiar with both private foundations and donor-advised funds as useful charitable giving tools. Before you jump into one or the other for a particular client, though, it’s important to review the similarities and differences between the two so that you can best achieve your client’s goals. 

To help you evaluate a client’s options, here are three common myths about the differences between private foundations and donor-advised funds.

Myth #1: Donor-advised funds are all the same and only private foundations can be customized

Private foundations will always differ from donor-advised funds in important ways, not only because of their status as separate legal entities and the deductibility rules for gifts to these entities, but also because of the opportunities to customize governance. But it is a mistake to assume that a donor-advised fund is a cookie-cutter vehicle. Indeed, “donor-advised fund” is simply a term used to describe the structure of a fund and its relationship with a sponsoring organization such as a community foundation. The donor-advised fund vehicle itself is extremely flexible. Here’s why:

–Donor-advised funds are popular because they allow your client to make a tax-deductible transfer of cash or marketable securities that is immediately eligible for a charitable deduction. Then, your client can recommend gifts to favorite charities from the fund when the time is right. 

–A donor-advised fund at the community foundation is frequently a more effective choice than a donor-advised fund offered through a financial institution. At a community foundation, your client is part of a community of giving and has opportunities to collaborate with other donors who share similar interests. Plus, the community foundation is itself local and is deeply knowledgeable about the needs of our region and the nonprofits meeting those needs. 

–The community foundation can work with you and your client to build a charitable giving plan that extends for multiple future generations. That is because the team at the community foundation supports your clients in strategic grant making, family philanthropy, and opportunities to learn about local issues and nonprofits making a difference. 

Myth #2: Deciding whether to establish a donor-advised fund or a private foundation mostly depends on size

The size of a donor-advised fund, like the size of a private foundation, is unlimited. The United States’ largest private foundations are valued well into the billions of dollars. Information about private foundations, ironically, is not so private. The Internal Revenue Service provides public access to private foundations’ Form 990 tax returns. That is not the case for individual donor-advised funds.

Similarly, donor-advised funds are not subject to an upper limit. Although information on the asset size of individual donor-advised funds is not publicly available, anecdotal information indicates that some donor-advised funds’ assets may total in the billions of dollars.

Indeed, a donor-advised fund of any size can be an effective alternative to a private foundation, thanks to fewer expenses to establish and maintain, maximum tax benefits (higher deductibility limitations and fair market valuation for contributing hard-to-value assets), no excise taxes, and confidentiality (including the ability to grant anonymously to charities).

The net-net here is that the decision of whether to establish a donor-advised fund or a private foundation–or both–is much less a function of size than it is other factors that are tied more closely to the objectives a client is trying to achieve. 

Myth #3: Donor-advised funds and private foundations are mutually exclusive

Make sure you’re aware of the benefits of using both a donor-advised fund and a private foundation to accomplish clients’ charitable goals. For example:

–Donor-advised funds can help meet the need for anonymity in certain grants, which is typically difficult using a private foundation on its own.

–A donor-advised fund can receive a client’s gifts of highly-appreciated, nonmarketable assets such as closely-held stock and real estate, and benefit from favorable tax deduction rules not available for gifts to a private foundation.

–An integrated donor-advised fund and private foundation approach can help a client balance and diversify investment and distribution strategies to ensure that giving to important causes remains steady even in market downturns.

Some private foundations are even considering transferring their assets to a donor-advised fund at the community foundation to carry on the foundation’s mission. Terminating a private foundation and consolidating giving through a donor-advised fund is sometimes the best alternative for a client when the day-to-day management and administration of the private foundation has become more time-consuming than expected and is taking time and focus away from nonprofits, the community, and making grants. 

Along these lines, some families find that the tax rules related to investments, distributions, and “self-dealing” have become harder to navigate and are perhaps even preventing the family from maximizing tax benefits of charitable giving. Finally, the administrative load of managing a private foundation sometimes becomes overwhelming, especially if the family members who handled these functions initially have retired, passed away, or simply become busy with other projects.

The bottom line here is that we encourage you to reach out to the team at the community foundation any time you are evaluating how to structure a charitable giving plan to achieve both your client’s charitable goals and financial goals. Our team is here to help. In many cases, the community foundation’s tools and services are a great fit for your client’s needs. If not, we will point you in the right direction.

Trust matters: Your clients’ go-to resource for community impact

As attorneys, CPAs, and financial advisors, you know very well that trust is at the foundation of your relationships with clients. Your clients are seeking a similar level of trust with the people and organizations that are helping carry out their philanthropic wishes.

Fortunately, trust in charities has shown an increase after a recent dip. According to the 2024 Edelman Trust Barometer and the Independent Sector’s “Trust in Nonprofits and Philanthropy” report, trust in nonprofits rebounded by 5 points to 57% in 2024, following a four-year decline. This increase positions nonprofits as the most trusted sector compared to government, business, and media. Still, nonprofits face challenges and concerns about maintaining this trust, including general skepticism about institutions, as well as increasing expectations that charities demonstrate transparency and accountability.

As you work with your charitable clients, keep in mind that the Community Foundation of Harrisonburg and Rockingham can help bolster clients’ trust in their favorite charities. Here’s how: 

Trustworthy information about particular charities

The community foundation is a valuable source for objective, timely information about specific charities and the impact of particular programs. By working with the community foundation, your clients can leverage a transparent and trustworthy avenue for learning about how best to make a difference for their favorite causes.  

Wide-ranging expertise about community needs

At its core, the community foundation is committed to achieving impact. This means that our team keeps a finger on the pulse of local needs, whether related to social services, health care, education, the environment, the arts, community development, or any other community priority. With a deep understanding about community needs, the community foundation team can be an excellent sounding board for your clients who want to learn which charities are addressing each need and how those charities are measuring results. 

Broad set of tools for structuring charitable gifts

The community foundation can help establish a tax-efficient structure to achieve each client’s goals for community impact. Available vehicles include not only donor-advised funds, but also other types of funds such as designated funds to support specific charities and field-of-interest funds to address particular causes, as well as multi-generational funds to involve clients’ children and grandchildren. The community foundation offers your clients a flexible and effective way to manage charitable giving by simplifying their giving processes and maximizing potential tax benefits.

Generational shifts: Fulfilling clients’ charitable wishes

Chances are, you’ve already begun to notice that a major transfer of wealth is happening as your Baby Boomer clients establish financial and estate plans to pass their wealth to their Gen X and Millennial children.

Chances are, you’ve already begun to notice that a major transfer of wealth is happening as your Baby Boomer clients establish financial and estate plans to pass their wealth to their Gen X and Millennial children.

The dollars involved are eye-popping. Most attorneys, financial advisors, and CPAs have seen the Cerulli study’s estimate that $124 trillion in wealth in the U.S. will transfer through 2048. The research estimates that most of this wealth–$105 trillion–will pass directly to children, grandchildren, and other heirs. And, notably, the study estimates that $18 trillion will flow to philanthropy. 

As the transfer of wealth gains momentum, advisors have a major opportunity to position themselves as trusted experts who can help clients not only structure efficient lifetime and estate gifts to heirs, but also help ensure that clients’ charitable wishes are achieved. It’s crucial for advisors to know that the community foundation is here to help incorporate philanthropy into clients’ financial and estate plans.  

Here’s why this is so important:

–There’s a knowledge gap. Clients may not be aware of the options and benefits of charitable planning. Even many of your affluent clients may still be writing checks to their favorite charities, not realizing that gifts of appreciated stock, for example, can be more tax-efficient, and that tools at the community foundation, such as donor-advised funds, can be incredibly useful.

–Next-level strategies are key. Your ultra-wealthy clients will likely need to implement sophisticated strategies for transferring assets smoothly and tax-efficiently. Clients want to maximize the results of their charitable gifts while also protecting their families’ interests. Leaning on the community foundation to help structure gifts of complex assets, such as closely-held business interests, can make a huge difference in reducing a client’s tax bill and achieving meaningful community impact.

–Legacy planning starts now. It’s tempting to put off addressing a client’s wishes to support favorite charities in an estate plan. “We’ll look at that in a few years,” is a common but less-than-ideal approach. That’s because charitable bequests are best addressed as part of a comprehensive estate and financial plan. Naming a fund at the community foundation as the beneficiary of a client’s IRA, for example, is an extremely tax-efficient way to accomplish charitable wishes.

Our team is here to augment your expertise in charitable giving strategies. Not only will you be better able to meet clients’ needs, but you’ll also strengthen relationships and improve client retention. Please reach out to learn more about how the community foundation can help your clients make a lasting impact with their wealth while achieving their financial goals.

ICYMI: Three things you need to know about tax legislation

Keeping up with an ever-evolving landscape of tax legislation can be a full-time job! Many attorneys, CPAs, and financial advisors regularly ask the community foundation to provide a refresher course on the potential tax changes on the horizon in 2025, especially those that might impact charitable planning techniques. 

Here’s a quick rundown of three things you need to know:

–Sunsetting provisions of the Tax Cuts and Jobs Act of 2017. The TCJA’s scheduled expiration at the end of 2025 will revert key tax policies to pre-2017 levels, potentially affecting charitable giving incentives. For example, the top individual tax rate is scheduled for a bump from 37% to 39.6%, potentially increasing the benefits of charitable tax deductions for your high-income clients. At the same time, the limit for cash donations to public charities is slated to drop from 60% of AGI to 50%, reducing the deduction for some of your clients. Finally, the estate tax exemption is scheduled to drop to approximately $7 million per individual. Because the exemption would nearly be cut in half, and therefore more estates would be subject to tax, a larger subset of your clients could benefit from charitable bequests to avoid estate tax. All of this assumes, of course, that intervening legislation won’t prevent the sunset. 

–Potential expansion of charitable deduction. Proposals like the Charitable Act aim to introduce a universal deduction for non-itemizers, broadening tax incentives for your clients across income levels. The bill is still popular among industry leaders and appears to have maintained momentum since it was introduced. 

–Consequences remain to be seen. Above all, the 2025 “cliff” may trigger the first major tax code rewrite in decades, which in turn surely would have a ripple effect in many areas of your clients’ lives, including within the charities your clients support. Post-TCJA, for example, charitable giving dropped by as much as $20 billion, according to one study, in the wake of reduced tax benefits. 

The team at the community foundation stays on top of legal developments at the intersection of tax policy and charitable giving. We keep our fingers on the pulse of potential implications for you, your clients, and the charities they support, and we are here to help you navigate the changes.

For clients who love local causes, the community foundation is the place

Most of your philanthropic clients likely support a wide variety of charities year after year. The causes they support represent a range of motivations, including personal experience, a role as a volunteer or board member, family tradition, or alignment with values and community priorities. 

Many of the charitable organizations your clients support are local. That’s important to note because it means that your clients are especially well-positioned to lean into the community foundation’s unique position as the hub for charitable giving and local knowledge.

Here are three reasons that matters:

–Clients can tap into the team’s knowledge about specific organizations, including financial information, data about the impact of a charity’s programs, and observations of an organization’s areas of greatest need.

–Clients can choose from a variety of fund types depending on what they’d like to achieve. A designated fund, for example, allows your client to set aside tax-deductible dollars that are dedicated to supporting a specific organization. Through the community foundation’s services, funds are distributed over time to the charity while the assets remaining in the fund are protected from the charity’s creditors. Another example is an unrestricted fund, which leverages the community foundation’s extensive research about the needs of the community and the nonprofit programs that are addressing those needs.

–Clients can work with the community foundation to leave a bequest to an endowment fund to support community needs for generations to come. As a perpetual organization, the community foundation ensures that charitable giving stays strong in our region to address important needs as they evolve over time.

Of course, if your client establishes a donor-advised fund at the community foundation, the fund can support local causes as well as causes across the country.

As the hub for your clients’ charitable giving, our tools and our team are dedicated to helping your clients achieve their charitable goals both near and far. Working with the local community foundation, no matter what a particular client’s charitable priorities may be, is itself a strong show of support for philanthropy right here in our community.