The impact the economy is having on the ability of clients to support causes they care about through the most effective and efficient means possible is another question. Surprisingly, many clients are still making outright gifts of cash by check or credit card and have yet to take advantage of powerful charitable instruments such as donor-advised funds. With another of the administration's tax proposals involving the increase in the capital gains tax rate from 15% to 20%, it becomes even more important to manage asset liquidation and gifting collaboratively and not in separate silos.
Donor-advised funds allow donors to make gifts of appreciated assets such as stocks, art, real estate, collectibles, even cattle, to an account designated for the donor's or family's philanthropy. It has been estimated that only 5% of the country is aware of these tools despite the fact they are a powerful alternative to family or private foundations and can be established by donors for as little as a $5,000 contribution. Donor-advised funds avoid capital gains tax on the liquidation of the contributed asset and provide a deduction for the full value of the gift, coupled with the ability for the donor to provide advice on the distribution of gifts to their choice of grantees.
Clients get control, efficiency and a means to leverage appreciated assets to maintain their philanthropy rather than using cash.
Finally, consider the fact that clients are making a conscious shift from their traditional sources for philanthropic guidance, the development officers and planned giving staff at community foundations, to their other trusted advisors-their financial, legal and tax counselors. We can read from this that clients are looking for a more broad-based or objective philanthropic footprint than they may have felt they could receive from their local foundations. The opportunity here is for the financial community to reach out to local foundations, federations, and health and human services organizations to explore ways to collaborate on providing better support solutions for their joint clients/donors.
This may be as simple as delivering joint educational sessions for potential or existing donors which highlight efficient philanthropic and financial strategies. Or it could be as expansive as providing the financial and fiduciary oversight over a more competitive private-labeled charitable platform that enhances their competitive positioning and enables their donors to maintain advisor management over assets in charitable accounts. By working collaboratively toward solutions that support both advisors' clients and the development needs of the nonprofit community, the financial community can take the small collective steps necessary to mobilize the social capital to keep our global nonprofit community out of crisis.
William H. Hewitt is chief marketing officer of Crown Philanthropic Solutions LLC in New York City. He can be reached at [email protected].