Frequently Asked Questions – Professional Advisors

Frequently Asked Questions – Professional Advisors

As a professional advisor you will undoubtedly be faced with many questions from clients concerned with various aspects of charitable giving. Hopefully, the following suggestions will be helpful when facilitating these conversations and introducing to them the benefits of the Community Foundation of Central Wisconsin.

Why shouldn't I prepare my estate plan using the internet?

The document below fully describes why internet isn't the best planning option.

How do I reduce the amount of taxes at the year's end?

If your client wants to increase charitable giving but has some practical concerns, the Community Foundation of Central Wisconsin can help. If your client has limited time to make plans (i.e. during year-end tax planning) they may not be able to make the most knowledgeable decision on specific charities they would like to support. The Community Foundation of Central Wisconsin can help them establish a Donor Advised Fund in just one meeting. Your client can then work with our staff to learn more about nonprofits in the area that may be of interest to them. Establishing a Donor Advised Fund allows your client to gain an immediate tax deduction and still remain involved in the distribution of their gift.

How do I significantly reduce the amount of estate taxes?

Once your client has left provisions for family in their estate, they may soon realize they don't want their remaining assets to go to the federal government; instead they wish to use those assets to benefit charitable causes of their choosing. The Community Foundation of Central Wisconsin can assist you in establishing remainder gift through your client's will or trust. This will allow for them to provide for local charities and reduce estate taxes.

How can I reduce (or eliminate) capital gains tax on my highly appreciated stock?

The Community Foundation of Central Wisconsin can suggest several ways to structure a charitable gift, including planned giving techniques that can help to reduce (or eliminate) capital gains tax. These options then allow for the highly appreciated stock to add volumes of good work to the community.

What options do I have for charitable contributions if my assets are tied up in a closely held company?

If your client has an interest in charitable giving but has few liquid assets, the Community Foundation of Central Wisconsin can help structure an arrangement where the client donates some company stock to the Foundation (after valuation), and the company repurchases the stock at fair market value. The Community Foundation of Central Wisconsin establishes a fund in your client's name and distributes grants according to their charitable wishes.

How can I make a lasting difference, in the most effective way, to benefit my community?

If your client is unsure of how to give, we would be happy to help you introduce the Community Foundation of Central Wisconsin to them. 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.

How do I establish a scholarship fund for deserving students?

The Community Foundation of Central Wisconsin can help your client identify criteria for a scholarship (academic performance, financial need, etc.) and focus on the most effective process for establishing the fund. The Community Foundation of Central Wisconsin currently administers over 120 scholarships annually.

What are the advantages of establishing a Donor Advised Fund at the Community Foundation of Central Wisconsin instead of creating my own private foundation?

Some clients may be under the impression that creating a private foundation is the only option available to them in preserving their family name through charitable giving. The Community Foundation of Central Wisconsin can assist your client in establishing a Donor Advised Fund. These types of funds can provide advantages to clients while keeping them actively engaged in the distribution process. The chart below offers a comparison that may also be of assistance to you and your client when exploring the option of establishing a Donor Advised Fund.

Items to
Consider
Private
Foundation
Community Foundation
Donor Advised Fund
Setup Must incorporate and apply for IRS tax-exempt approval Simple agreement. Can be set up in as little as one day
Initial Costs Set up fees No set-up fees
Ongoing Costs Liability insurance, direct administrative costs Pooled administration, low costs
Tax Benefits for Cash Gifts Up to 30% of adjusted gross income Up to 50% of adjusted gross income
Excise Taxes Usually 2% of investment income annually None
Reporting Requirements Annual 990-PF must be filed by private foundation or hired staff None required by the donor. The Community Foundation handles all reporting
Grant making Must research and identify agencies and programs to fund Community Foundation 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 Community Foundation verifies an organization’s status. Plus, donors can access the Community Foundation’s strategic grant making services
Distribution Requirements 5% annual distribution required. Self-dealing restrictions None – Donors make grant recommendations at their discretion
Privacy Tax return is public record Donor may choose to remain anonymous

Leah Lueck
Community Foundation of Central WI
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