With the end of the year quickly approaching, professional advisor Leslie Smith hopes individuals, families and businesses recognize that expertly managed and cost-effective donor-advised funds offer numerous financial advantages. Leslie, Senior Managing Director with Chevy Chase Trust, notes that a fund at the Greater Washington Community Foundation offers a special opportunity to learn about the issues facing the community and can support worthy causes, such as providing scholarships for students or helping to create a brighter future for vulnerable neighbors. There’s no better time to consider the financial benefits than in the last days of December.
Leslie has a long history with The Community Foundation—including as co-chair of The Foundation’s Professional Advisors Council and serving on The Community Foundation’s Advisory Board in Montgomery County and its Sharing Montgomery Grants Committee.
“I quickly went from having an academic understanding to comprehending the tremendous benefits of community foundations and donor-advised funds,” she says. “The bottom line is private foundations are not a very efficient option for most donors.”
Leslie estimates that she and her colleagues have helped dozens, if not 100 or more clients set up donor-advised funds over the years. One client told Leslie that she wanted to focus on her own charitable giving after her husband passed away. A volunteer with the Literacy Council, the client was personally moved by stories of her immigrant neighbors who were determined to learn English while raising their families and working full-time, usually at low paid jobs. She wanted to find a way to help their children go to college. Leslie introduced her to Anna Hargrave, executive director of The Community Foundation’s local office for Montgomery County. Anna arranged a meeting with staff from the Literacy Council and Future Links, a nonprofit that provides academic support, internships and scholarships to underserved high school students. Fast forward four years: Leslie’s client has provided scholarships to three students, so far.
“Every time we meet, she talks about those students and her terrific experience with The Community Foundation,” Leslie says. “Of course we also talk about her portfolio, but it’s her charitable giving and those scholarships that really make her light up.”
Leslie and her colleagues at Chevy Chase Trust not only refer clients to The Community Foundation, they also host learning events for clients on topics like hunger and poverty and roll up their sleeves and volunteer in the community. They are not alone. The Community Foundation partners with many corporations, professional advisors and financial institutions throughout the region who have demonstrated a strong commitment to addressing the community’s greatest challenges.
Leslie recognizes that giving through The Community Foundation makes it possible to maximize the tax benefits and impact of philanthropy. As 2018 comes to a close, Leslie offers these five tips for end-of-the-year giving:
As you are considering your 2018 tax situation, you may find the cap of the deduction for state and local income tax as well as property taxes (a $10,000 deduction limit for all) results in higher than expected taxes, despite the reduction in federal rates. It may make sense to give more to charity, or to accelerate charitable giving into the current year.
Always consider gifting appreciated securities rather than cash, to avoid the capital gain on the securities.
If you want to take advantage of the standard deduction rather than itemize, it could make sense to bunch charitable giving into alternate years so that one year you itemize and the next you use the standard deduction.
If you don't want to make larger gifts to your usual charities in one year, a donor-advised fund can provide the mechanism to make a large deductible gift now, then take your time deciding how it will be used to benefit the community in the future.
If you are at least 70 1/2 years old, consider using your IRA to make a direct contribution to charity. You may give up to $100,000, which can include your Required Minimum Distribution. A donor-advised fund does not qualify for these donations, however, The Community Foundation offers other giving vehicles that allow you to take advantage of this type of gift.