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Advisors’ 2022 Year End Giving Strategies

2 weeks ago By Jake Tometich

The end of 2022 is drawing near, and that means that year-end planning conversations with clients are on the rise. Year end presents you with a unique opportunity to build relationships and trust with your clients—and their families—by showing them how they can increase their generosity through year-end giving. Set yourself apart and provide insight into unique ways your client can expand their end of year charitable giving, potentially increasing their tax deductions. Below is a checklist of key year-end giving strategies to share with your clients. 1. Year End Giving Strategy #1: IRA Qualified Charitable Distribution IRA accounts with owners 70 ½ or older can satisfy the required minimum distribution (RMD) up to $100,000 with a qualified charitable distribution (QCD) directly to a charity or designated fund. Since a QCD is a gift of pre-tax dollars, the income is never taxed. Read more on IRA giving here. Please note that QCDs must be clearly marked. A donor advised fund (DAF) is not an eligible recipient of a QCD. The Signatry offers other fund types that may receive a QCD, including designated funds. Grants from a designated fund can only be sent to a single charity. Learn more here. 2. Year End Giving Strategy #2: Stock Giving Selling publicly traded stock and giving the proceeds to charity has been a common year-end giving strategy for many investors. A better approach is to give publicly traded stock (which has been held for at least one year) directly to the charity before it’s sold. This method can increase the level of support to the charity because it will not incur capital gains tax on the donated stock once it is sold. However, charities are often not equipped to handle these types of noncash gifts. A donor advised fund (DAF) can help bridge the gap. DAFs at The Signatry are equipped to accept publicly traded stock gifts, which are generally liquidated quickly without incurring capital gains tax. The funds can then be granted out to a public charity your client recommends. It is a simple solution that helps minimize tax burden. By encouraging your client to set up a DAF, you can simplify the giving process and further the impact of generosity while eliminating a lot of extra work for the clients’ favorite charities. 3. Year End Giving Strategy #3: Charitable Bunching Bunching deductions is, in short, contributing more than one year’s worth of normal charitable contributions in a single tax year to achieve a deductible amount higher than the standard deduction. This is also known as charitable bunching, and it can help minimize your clients’ tax burdens in the long run and maximize what they can give to charity. Example: A donor contributes 3 years’ worth of donations into a DAF. Because the donation is so large, the donor itemizes in that year and receives a tax deduction for the entire amount of their contribution. In later years, the donor recommends grants to charities from the DAF. This creates no additional tax deduction for the donor, but in those years the donor takes the standard deduction instead of itemizing. – As year-end and year end giving conversations approach, remember that you have an incredible opportunity to come together for God’s Kingdom and support the ministries serving those in need by providing year end giving insights and options for your clients. 1 Corinthians 12:14 says “For the body is not one member, but many.” To learn more about how your gifts can make a lasting impact at The Signatry, contact me at [email protected] to get started. Disclaimer: The Signatry does not provide legal, tax, financial or other professional advice. You should consult professional advisors concerning the legal, tax, or financial consequences of your charitable activities.

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Cash Isn’t Really King: Noncash Contribution Strategies

3 weeks ago By Kristin Hammett

The Signatry works with nonprofit leaders to strengthen their development strategies by helping them engage in major donor conversations, including conversations about noncash contributions. We talk a lot about noncash gifts and we want to be sure our impact partners understand the significant opportunities available. Noncash charitable contributions can benefit both the donor and the recipient. What does “noncash” really mean? When talking about noncash contributions, we mean wealth outside of the checkbook. This can be anything from stocks to cryptocurrency to real estate and business interests. The Signatry’s team has experience managing all of these gift types. God owns it all and has entrusted it to donors’ care and stewardship. He wants us to hold everything we have with open hands. Isn’t cash king? Net Worth Breakdown   |   Giving Breakdown In a word? No. 90% of America’s wealth is in assets other than cash. Only 10% of our wealth is in the checkbook. Yet, 80% of giving happens in cash, and only 20% of charitable investment is given from the larger, noncash bucket. There is an enormous opportunity to help donors think differently about how they give: even their noncash assets could become part of their generosity plan. How can a nonprofit work with major donors? Nonprofit leaders are uniquely positioned to connect God’s resources and His work. That often starts with education. Donors don’t know what they don’t know. Before talking through the details of an asset gift, donors need to better understand the work the organization is doing and where their gift is going. A big vision, clearly expressed, serves as a catalyst for transformational generosity. When donors are engaged in the work and excited by the vision, development officers can share the opportunity to give differently and more generously. Here are some ideas to consider in your donor conversations: Start planting seeds. Include noncash contribution options on your donation page. Share the opportunity in your newsletter and your email footer. Discover more verbiage ideas in the Asset Gift Based Referral Language Guide. Share the opportunity. Look through your donor list for business owners. Begin to ask them questions about the business: What does your business do? What do you and your family like about it? You’ll find more questions in our Noncash Asset Fundraising Guide. Don’t overthink it. You don’t have to be the technical expert. Consider The Signatry your partner for complex, noncash contributions. We have attorneys and accountants who can help guide the donor through the process. Nonprofit and ministry organizations are doing the most important work there is. From Bible translation and evangelism to education and health care, the work matters, and it is worthy of all the generosity tools available. Transformational gifts have transformational impact.

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Maximize Impact: 2022 Charitable Contribution Limit

2 months ago By The Signatry

For many families, the last three years have provided a rollercoaster of emotions, finances, schedules, and lifestyle. Throughout the same period, charities encountered new operational challenges and similar hardships. One thing remained strong throughout the first two years of the pandemic: the generosity of God’s people impacting ministries on a global scale. Therefore, how can we continue to maximize our impact through charitable contributions as we near the end of 2022?  Looking Ahead Tax benefits for charitable contributions: Current tax law offers charitable deductions to donors who itemize taxes and contribute cash or appreciated non-cash assets held for more than a year. So, what is the charitable contribution limit in 2022? Donors may claim a tax deduction for non-cash asset gifts to qualified public charities and donor advised funds up to 30% of their adjusted gross income (AGI). For cash gifts, the charitable contribution tax deduction limit rises to 50% to 60% of one’s AGI, depending on other charitable giving. Donation amounts in excess of these limits may be carried over for up to five tax years.  Giving More in 2022 There are a few main strategies to know as a donor seeking to maximize impact through charitable contributions with their current assets in 2022.  Give appreciated non-cash assets instead of cash For those who itemize deductions, giving capital assets such as stock, cryptocurrency, real estate, or business interest to a donor advised fund may maximize your generosity and minimize taxes. Beyond claiming a deduction for the fair market value of an asset, donors can avoid the capital gains tax they would otherwise incur if they sold the asset and then donated the cash proceeds. This can mean even more going to charity and less to taxes, as shown in the example below.  This example is only for illustrative purposes of a publicly traded appreciated stock gift. This scenario assumes a cost basis of $20,000, a fair market value of $50,000, ordinary income tax rate of 37%, and capital gains tax rate of 25%. Leverage deduction rules or a bunching strategy Bunch contributions. You may find that the total of your itemized deductions for 2022 will be slightly below the level of the standard deduction. You might find it beneficial to bunch 2022 and 2023 charitable contributions this year: itemize deductions on 2022 taxes, and take the standard deduction on 2023 taxes. In addition to achieving a large charitable impact now, this strategy could produce a larger deduction in the first year than two separate years of itemized deductions, depending on your contribution amounts and filing status. With a donor advised fund, you can recommend a schedule of gifts to go out across the two years and add any additional amounts from the itemized 2022 return as bonus gifts to charities.  Stocks and Charitable Giving Appreciated stocks donated to a DAF before they are sold do not affect the donor’s capital gains taxes. Donating appreciated stocks before they sell is another strategy to minimize tax burden and maximize generosity. Learn more here  Consider Retirement Assets Make a Qualified Charitable Distribution (QCD) of IRA assets. Individuals age 70½ and older can direct up to $100,000 per year, tax-free, from their Individual Retirement Accounts (IRAs) to operating charities through qualified charitable distributions (QCDs). By reducing your IRA balance, a QCD may also reduce your required minimum distribution (RMD) in future years, lower your taxable estate, and limit your beneficiaries’ tax liability. A donor advised fund is not an eligible recipient of a QCD—a distribution from your IRA to a DAF will not be tax-free. The Signatry offers other giving methods that may receive a QCD, including designated funds. Grants from a designated fund can only be sent to a single charity. Learn more here.  What Can You Do Next to Maximize your Impact? The Signatry has resources and information online to help guide your charitable contributions strategy and generosity journey:   Create a family mission statement Invest in alignment with your goals and passions Bring your advisor into your generosity journey Become a Cause Champion giver For insights specific to the strategies discussed in this article, donors are invited to review these articles:  Donating a complex, non-cash asset Bunching charitable contributions Making Qualified Charitable Distributions (QCDs) If you are contemplating any of the strategies highlighted above, consult with your tax, financial, and legal advisors. Donors and advisors can also call us at 913-310-0279 for more information and to set up a meeting.   

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Exploring Noncash Charitable Contributions with Clients

3 months ago By Jake Tometich

Since most American citizens’ wealth is held in non-cash assets, many of your clients may be interested in gifting these types of assets to their church or other nonprofit organization. Some nonprofits might not be equipped to facilitate such gifts, but this should not be an impediment to your client’s generosity goals. Navigating noncash charitable contributions is a specialty of The Signatry. Gifting complex assets provides your client the opportunity to use more of their resources to deepen their Kingdom impact. But with added complexity, gifting these assets requires extra planning and care. Our team can bridge the knowledge and experience gap. We can work with you and the donor to review issues such as timing, taxes, and potential risks and benefits to help determine if a complex, noncash charitable contribution is the right choice. When might a noncash charitable contribution make sense? Complex asset gifts are a natural by-product of major liquidity events you may be discussing with your clients and investors—especially C-suite executives, business owners, and entrepreneurs. The key is to complete the donation before your client sells the asset. Complex assets often have a low-cost basis, which can generate large capital gains and capital gains taxes. Gifting these assets can significantly lower (or eliminate entirely) capital gains taxes while providing income tax deductions on the fair market value of the asset. What steps are involved in preparing a noncash gift? To determine the fair market value of a complex asset, you and your client must arrange a qualified appraisal of the asset. There are restrictions on the timing of the appraisal relative to the potential gift, and the obligation to obtain the appraisal falls to the donor. The donor is also responsible for submitting an IRS Form 8283 with his or her tax return, which states the gift’s fair market value. The form must be signed by the appraiser, the organization receiving the gift, and the taxpayer. Every noncash charitable contribution looks different Because complex assets vary so much (from closely held business interests to real estate and more), the process for each asset gift differs. This is where our team can help. Please let us know if you would like to discuss any upcoming liquidity events or complex asset gift scenarios. You can also visit the Generosity Calculator on The Signatry’s website to explore the variables between traditionally selling a complex asset or gifting the non-cash asset to charity.

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Choosing Charities: Six Questions Before You Give

10 months ago By The Signatry

As a donor, you want your generosity to have an impact. You may have a special cause that you are passionate about or see a unique need and an opportunity to make a difference in the moment. When it comes to giving your time, talents, or treasures, you want to know you are supporting an organization or movement that is effective, efficient, and eternal-minded. In this article, we will cover some of the technical requirements that donors should consider when choosing a charity, as well as key questions to ask when vetting an organization’s capability to achieve its mission with your support.

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Warren Buffett’s Missed Opportunity

3 years ago By Evan Lange

When it comes to charitable giving, it often seems like the world’s wealthiest individuals have it figured out. With so many assets to manage, these donors know how to support charitable causes while capitalizing on the tax benefits of the giving process, right? Unfortunately, not all get it right. In July, an article in Forbes announced that Warren Buffett is donating $3.6 billion of his Berkshire Hathaway stock to charity. It also offered advice on how other donors could maximize their giving by following in Buffett’s footsteps. The problem? Buffett is primarily giving the stock to private foundations. Consequently, he is missing out on significant tax benefits he could receive if he utilized a donor advised fund (DAF) instead. There are important differences, when it comes to tax benefits, that all donors and advisors should consider.

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The Uncertain Future of Giving

4 years ago By Bill High

What do you think of the future of charitable giving? The July 2018 Chronicle of Philanthropy reported on the Giving USA annual report for 2017. There, they noted the rise to $410 billion of charitable giving. But their headline speaks of the doubt behind those numbers: Giving Grows for the Fourth Straight Year, but is the Future of Philanthropy Bright? While there is much to celebrate, the Chronicle notes: “…the data reveals some worrying trends.” The article itself didn’t go out of its way to point out those trends in a dramatic way. But here’s the point. Giving by individuals grew modestly. Giving by individuals grew just 3% and bequests by only 1%. To draw out the point, the decline in giving by the War Generations is a reality. At one point, those generations were the backbone of giving, and while the Boomer Generation appears to be following with a similar giving pattern, subsequent generations don’t seem to hold the same promise. The Millennials, for instance, are the least churched generation our country has had. Typically, church attendance is the biggest single predictor of giving. Many of these points were drawn out in Charity Shock: Ten Critical Trends Revolutionizing the Fundraising Industry (2018). Layer on tax law changes, economic and market uncertainty and global trade wars and the situation is ripe for a significant giving downturn. The Chronicle aptly notes: “Pursuing wealthy donors is a matter of survival in a time when fewer people are giving. And big donations seem to be driving growth at many nonprofits…” Additionally, the Chronicle notes “Charities should get serious about seeking planned gifts, given that a huge transfer of wealth is projected over the next decade.” Stated differently, I believe we’ll see a decline of the middle market giver. The middle market giver has often made up the backbone of the budget for many nonprofits. On the other hand, there will be an increasing reliance on the major donor and upon planned gifts. For those ministries who don’t play well in those spaces, they may well face serious declines.

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Having the Conversation on Asset Giving

4 years ago By Evan Lange

Many advisors find that being involved with their client’s giving is one of the most meaningful aspects of their work. Philanthropy is an easy way to build deeper relationships with clients. It not only paves the way for a lasting relationship but offers inroads into the next generation of clients and future givers. When your client is ready for the conversation on giving, discussing their assets will play a vital role in the discussion. The following three points offer an outline that will aid in the conversation. Identify which assets to contribute Whether your client is motivated by philanthropic or tax advantage goals, determining what types of assets they can gift is a crucial first step. The common types of assets that are generally gifted are cash, securities, real estate, or closely held business interest. All of these can be given through a donor advised fund. Timing of gift A recent article in Forbes states, “donating property that has appreciated in value, like stock, can result in a double benefit…not only can you deduct the fair market value of the property (so long as you’ve owned it for at least one year), you will avoid paying capital gains tax” Gift valuation guidelines are established in the current tax regulations. In general, the value of the gift is based on the type of asset and the date of contribution, which is typically the date the asset is delivered to the receiving organization. Gifting a complex asset can be a lengthy process. It is important to evaluate the timing of the gift to ensure it will benefit your client within the current tax year. Selecting a charity Deciding what organizations to support, is usually the most exciting part of the process for your client. For many donors, the organizations they choose often have personal meaning and speak to their experiences. By giving complex assets through The Signatry, donors can make grants to smaller nonprofits that would otherwise be unable to accept complex gifts.

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Abdiel עבדיאל

4 years ago By Dale Brantner

I absolutely love the story of Joseph in the Hebrew Bible.  This cycle of well-crafted stories, found in Genesis 37-50, close out the tales of legacy that is the heartbeat of Genesis.  The account of Joseph and his family frame how the children of Israel came to be residents of Egypt and sets up the story of their miraculous exodus which is at the center of Jewish legacy to this day. At the core of our culture, at The Signatry, is a commitment to listen to a person’s story, and then serve them within their story.  When we serve others within their story, we are actually serving them within the much larger redemptive story of God and the role He calls them to play.  This is exactly what we see played out through the life of Joseph. The story begins with some dysfunctional family dynamics, including the lack of parity by Jacob towards his sons. We soon find Joseph in Egypt where he is sold to Potiphar, the captain of Pharaoh’s guard. It was within Potiphar’s story that Joseph would serve. God blesses him with great success, and Potiphar eventually entrusts Joseph with his entire household, all of his possessions and agricultural ventures.  Everything went extremely well for Joseph as he served Potiphar right up until he was framed and thrown into prison.  While in prison, Joseph would find himself serving Pharaoh’s cupbearer and chief baker within their own stories, this would, in turn, bring Joseph into the direct service of Pharaoh. Joseph was given the opportunity to listen to the dreams and concerns of Pharaoh and serve within Pharaoh’s story. Pharaoh would make this foreign Hebrew slave and ex-convict the “vizier” of Egypt. Pharaoh said to Joseph, “I hereby put you in charge of the entire land of Egypt.” Then Pharaoh removed his signet ring from his hand and placed it on Joseph’s finger. He dressed him in fine linen clothing and hung a gold chain around his neck. Genesis 41:41-42 God used Joseph’s ability to listen and serve within the stories of others, to position him next to the most powerful man of his day. This platform would later prove to be the salvation of his father Jacob’s legacy … his descendants.  

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Starting the Generosity Conversation

4 years ago By The Signatry

It is no secret that charitable giving benefits your client and your community. Now more than ever, clients are open to discussing philanthropy and rely on the expert advice of their advisor.  Engaging in conversation and sharing your knowledge of philanthropy furthers relationships and adds value to your practice. This is an excellent opportunity to discuss tax solutions that can also accomplish meaningful work. According to the 2018 U.S. Trust study of high net-worth philanthropy, most high-net-worth individuals are already giving, but only 49% of donors have a strategy for their giving. There is a significant opportunity here for advisors to grow their practices. By participating in the generosity conversations, you can further the relationships with your clients as you help them achieve the greatest impact towards the charities most important to them. Understanding your client’s passions allows you to tailor your expertise to their unique interests and pinpoint how they imagine their lasting legacy. Year-end meetings are an excellent opportunity to share the advantages of charitable giving. A good way to start the conversation is to ask engaging questions about charity. Here are some examples: Are there any charitable interests or community needs you would like to address? What issues are you passionate about? Have you considered donating public stock as a way to use all your resources for giving? Giving stock gifts not only helps you save on taxes but also supports the causes you love. Are you currently making gifts to any charitable organizations? If so, which ones? What causes and values do you want to pass on? Initiating this conversation will benefit everyone involved. This opens the door to discuss year-end tax strategies with your clients and will invite them to create a lasting legacy of generosity. It will also strengthen your relationships and credibility with clients and their family. The long-term effects of their generosity will reach beyond your office; impacting your client, their family, and the community.   Sources:  

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