Giving appreciated stock to charitable organizations is certainly a highly-effective tax strategy. During years when highly-appreciated stock is in short supply, however, implementing this strategy may be easier said than done.
This is when Donor Advised Funds (DAF) with the PACF come in especially handy. Now is the time to discuss charitable giving with those clients who regularly added to their DAFs throughout the market’s long bull run. If these clients intend to ride out today’s market conditions in their personal portfolios, this year’s bear market doesn’t mean the clients’ year-end charitable giving has to take a hit. These clients can use their DAFs to support their favorite organizations, sometimes even at levels consistent with prior years.
For some clients, this may be a year to consider contributing cash to a DAF instead of donating highly-appreciated stock (which has been the go-to gift for so many of the last several years). Gifts of cash could reduce the burden on a client’s personal stock positions that may have fallen in value dramatically, giving these positions more time to recover value and, at some point in the future, be contributed to a DAF at a higher value (thereby resulting in a higher tax deduction for the client).
Now may also be a good time for clients to consider using their cryptocurrency in creative ways to meet their charitable giving goals. Clients holding cryptocurrency may have come to the conclusion that it does not necessarily provide the protection against inflation they thought it would. A client could, for instance, sell their cryptocurrency at a loss and contribute the cash to their DAF. Then, the client can keep an eye on the cryptocurrency market and decide when–or whether–to wade back in.
Finally, consider encouraging your clients who’ve not yet established a DAF at the PACF to consider doing so now. Not only does a DAF help organize charitable giving, but over the long-term it can also protect a client’s ability to support favorite charitable organizations even when market conditions are rough.
The team at the PACF is always happy to help your clients maximize both the philanthropic and financial elements of their charitable giving strategies. We look forward to hearing from you.
The great thing about having a fund managed by the Foundation, is that it will give forever.
- Lowell Jackson, Lowell and Wilda Jackson Community Fund
“Back when I was in college, I worked in the comptroller’s office,” said Lowell Jackson. “I would see them passing out scholarships and that’s where I first got the idea about making a difference for someone. It was 35 years later when I finally partnered with the Community Foundation here in the area.”
Lowell grew up in Pennsboro. After serving in the Army from 1957 to 1959, he was later hired by Ford Motor Company. After 30 years in southeast Michigan, he retired and moved back home to West Virginia, this time to Mineral Wells. At that point, he was thinking about ways to help Ritchie County.
“We talked with the PACF about setting up a fund that would help us [Lowell and his late wife, Wilda] to make a lasting difference in the community,” said Jackson. “The Foundation staff described all that was possible with a partnership. And so that’s what we did—we set up a fund and were the first donors to the PACF’s Ritchie County Community Foundation affiliate.”
Jackson’s Donor Advised Fund enables him to recommend grants to projects that help the area and its residents. Through his fund, Jackson has helped to improve schools and volunteer fire departments, provided food for the needy, and supported community centers. As part of the PACF, the fund benefits from a consolidated investment pool, which generates income from which meaningful grants can be made.
Jackson plans to leave a gift in his estate to his Fund to continue supporting the causes he cares most about long after he is gone. According to Jackson his reasons for giving were simple: because there was a need and because he could. “The great thing about having a fund managed by the Foundation,” said Jackson, “is that it will give forever.”