When a client has very limited time to make plans (i.e. at year-end), he or she may find it difficult to quickly determine what specific charities to support. The PACF can help by establishing a Donor Advised Fund usually in just one meeting. Establishing a Donor Advised Fund allows your client to gain an immediate tax-deduction and still remain involved in the distribution of the gift, as the distribution is not connected to the deduction timing. Your client can then later work with our staff to learn more about non-profits in the area that may be of interest and to make grants at his or her convenience.
We can suggest several ways to structure a charitable gift, including planned giving techniques that can mitigate or eliminate capital gains tax. These options then allow for the highly appreciated stock to do volumes of good work for our community. Your client receives market value (average of the high/low values on the date of the gift) for his or her charitable gift while the gains get put to work for charitable purposes.=
It’s never a good idea to have “all your eggs in one basket,” and it’s especially risky during a volatile economic climate. If your client has charitable intent, a charitable remainder trust is a great way to diversify the holdings in a client’s portfolio and to create an income stream for your client, while at the same time doing good for our community. Donating stock to a donor advised fund, again, if one has charitable intent, will result in a diversification of the assets with the gain able to be used for charitable gift making purposes.
Introducing your client to the PACF can help your client to make a lasting difference for good. By identifying the most advantageous tax strategy, the most appropriate vehicle, and the best way to extend the charitable benefit (type of fund, etc) your client will be confident that their charitable gift will be put to good use. We can help you to help your client identify if his/her interest is in community grantmaking, student scholarships, support of specific nonprofit organizations, etc., and how he/she wants to help.
Some clients may be under the impression that creating a private foundation is the only option available to them to preserve their family name through charitable giving. The PACF can assist your client in establishing a Donor Advised Fund. These types of funds provide advantages to clients and keep them actively engaged in the distribution process. The chart below offers a comparison to assist you and your client when exploring the option of establishing a Donor Advised Fund.
|Items To Consider||Private Foundation||PACF Donor Advised Fund|
|Setup||Must incorporate and apply for IRS tax-exempt approval||Simple template style agreement. Can be created in as little as a day|
|Initial Costs||Set up and legal fees||No set-up fees|
|Ongoing Costs||Liability insurance, direct administrative, tax and accounting services, and investments management costs||Pooled administration and investments management and access to institutional shares, low annual all-inclusive minimal fees|
|Tax Benefits for Cash Gifts||Up to 30% of adjusted gross income||Up to 50% of adjusted gross income|
|Excise Taxes||Usually up to 2% of investment income annually||None|
|Reporting Requirements||Annual 990-PF must be filed (and paid for) by private foundation or hired staff||None required by the donor. The Community Foundation handles all reporting and provides an annual independent audit|
|Grantmaking||Must research and identify agencies and programs to fund on one’s own||The PACF's staff educates donors regarding agencies and programs; provides information on qualified giving opportunities|
|Grant Management||Must ensure all recipients are qualified 501(c)(3) organizations||The PACF verifies an organization's status and donors have easy access to the Foundation's grantmaking services at no added cost|
|Distribution Requirements||5% annual distribution required. Self-dealing restrictions||None - Donors make grant recommendations at their discretion, more or less than this amount|
|Privacy||Full tax return is public record||Donor may choose to remain anonymous if they desire; while 990 is public, individual gifts are not, and giving is not identified at the fund level|
Many banks work in partnership with the PACF as we serve as remainderman for many trust instructions’ clients Charitable Remainder Trusts or as lead beneficiary for Charitable Lead Trusts. The major difference between our organizations is that the Foundation’s staff work for a nonprofit public charity; the Foundation's staff are not compensated based on funds under management, volume of funds generated or any other transactional sort of basis. There are no relationships between our institution and particular brokerage houses, etc. We exist, and we operate in, as transparent a manner as is possible, functioning solely in the donor’s best interest. Our staff have no personal stake in the outcome of the donor’s decision concerning whether to place funds with our institution.
Many commercial entities offer “charitable gift funds” that are donor advised accounts. The PACF introduced its donor advised fund program in 1986 – five years BEFORE the earliest commercial gift fund. The major difference that you will quickly notice is the ability to access local staff who have strong knowledge of the region’s nonprofit sector and local needs. Our staff is not simply a voice at the end of a long-distance phone line – a physical meeting in the region is always possible and you can count on our staff to have the local knowledge that you need, or to find it quickly if it’s not readily available.
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The PACF is here to help you serve your clients better. We can help with philanthropic planning, adding value to your practice and your client relationships.