For all the challenges and unpredictability of 2020, this year-unlike-any-other also brought new opportunities for year-end charitable giving.
The pandemic has more people revisiting their estate plans. And changes to tax laws have created unique opportunities to boost year-end giving power and accomplish your charitable goals.
The Community Foundation of Broward can be a go-to resource to navigate charitable planning opportunities during these uncertain times. Here are a few examples of how we can help you make the most of tax law changes:
SECURE Act: IRA Changes Bring Giving Opportunities
The SECURE Act brought big changes to inheritance rules for IRAs. This law basically eliminated the stretch IRA, which had enabled non-spousal heirs to inherit an IRA and spread distributions and tax payments over a lifetime. Now, most non-spousal heirs must take the full distribution and tax burden within 10 years of the IRA owner’s death.
An attractive alternative is to donate these highly taxed assets and use other assets for heirs. The Community Foundation makes it easy to use IRAs for charitable giving. Making the Community Foundation the beneficiary of an IRA enables you to create a charitable Fund in your name at the Community Foundation. Then grants from your Fund, given in your name, support the causes or organizations you love.
“If the IRA owner is interested in philanthropy, an income tax-friendly alternative may be to name a nonprofit as a beneficiary or to designate a charitable remainder annuity trust. A charitable remainder trust provides income to a loved one during their lifetime, with the remaining balance going to a charity. It enables donors to help their loved ones and also accomplish their charitable goals.” - James B. Davis, shareholder at Gunster, Community Foundation Board Member
CARES Act: Pandemic-Inspired Tax Benefits For Giving
The CARES Act provides an election that raises the deductibility of cash donations from 60% to 100% of AGI. For those in a cash-rich position, this is a great opportunity to create a bigger philanthropic impact. In addition, the CARES Act tax benefits provide a counter balance to capital gains resulting from a sale of a business or other liquidity event. Note that in the case of a sale of a business, it may be even more advantageous to donate a portion of the ownership to the Community Foundation before the sale, eliminating capital gains taxes on the donated portion and providing a charitable deduction.
The CARES Act may make 2020 the perfect year to bunch contributions into a single tax year by itemizing deductions rather than making smaller gifts that do not exceed the standard deduction.
The CARES Act tax benefits don’t apply to donations to Donor-Advised Funds, supporting organizations, or private foundations. However, the Community Foundation offers several types of charitable Funds that do qualify for the CARES Act tax benefit. Gifts to an Unrestricted Endowed Fund, Field of Interest Fund or a Designated Fund at the Community Foundation all qualify for the CARES Act’s extraordinary opportunities.
“Now is the time to make the charitable contributions you’ve been thinking about. Needs in the community have never been greater. Recognizing that, the CARES Act provides additional tax benefits for contributions made in 2020. You can rely on the Community Foundation of Broward to direct your contributions to where they are needed most.” - Greg Medalie, Medalie & Medalie, P.A., Community Foundation Professional Advisors Council Member
Your Philanthropy Partner
Partnering with the Community Foundation is a great way to make the most out of tax benefits available through charitable giving. A gift to the Community Foundation creates a charitable Fund, in your name, that supports the causes you care about the most. You get more than a tax benefit; you create a legacy of bold impact in the community you love.
And as always, we encourage you to consult with your tax and legal advisors when considering charitable giving.
“Many of our clients who are business owners have been successful over the years because of the support of local residents and it is natural for them to want to give back to the community which has been so supportive of them in their business endeavors. They find that the Community Foundation of Broward focuses on issues that matter to them and is an excellent way to give back to the community that has created their success.” - William Snyder, Snyder & Snyder P.A., Former Community Foundation Board Chairman
To learn how the Community Foundation of Broward can help you make a BOLD impact with your end-of-year giving, contact Vice President of Philanthropic Services Nancy Thies at firstname.lastname@example.org or 954-761-9503.