What would it look like if we chose to unleash our faith?
Join us for the 2009 Passion Awards, one of the largest Christian ministry awards celebrations in the country!
Monday, November 9, 2009
6:00 p.m. to 9:00 p.m.
Pre-event and Registration begins at 5:30 p.m.
Overland Park Convention Center
6000 College Boulevard
Overland Park, Kansas
Early Bird Special
Register by October 15th for $650/table of 10 or $65/individual.
$750/table of 10 or $75/individual after October 15th.
One of the recent trends in giving is the rise of “Giving Circles” —individuals who come together to pool their assets to make a difference with their giving.
Setting up a Giving Circle is easy, and you may be surprised how meaningful it is to give among friends. Here are six basic steps to help you get started:
Step 1 – Set Goals and Structure
Identify a group of your peers, colleagues, or family members who may share a common interest and invite them to get together. Your first meetings will focus on setting up the Circle’s structure such as giving guidelines, meeting schedule, and deciding a name.
It is up to your group to determine the contribution amount that each member should make. There are circles that require $500, $5,000, or more in annual commitments. It is important for the group to have complete consensus on the final amount.
Step 2 – Establish Your Mission
Your group needs to decide which charities you would like to focus on. You may also wish to simply designate a general category, such as evangelism, inner city, youth, or poor and needy.
Step 3 – Open a Giving Fund
Your group can open a Fund at SCCF by making a suggested tax-deductable contribution of $2,500 or more.
Step 4 – Create Work Groups
Once your focus is established, having members volunteer for particular tasks will build personal commitment in your Circle. For example, one work group could organize meetings and Circle events, another could manage the Fund online (recommend grants, review Fund balances, etc.), while another might research new giving opportunities.
Step 5 – Develop Partnerships
Determine how you want to be involved with the organizations that you fund. Will you also volunteer for
an organization that you have funded? Web development, program planning, and mentoring are some examples of ways your members might get involved.
Step 6 – Evaluate Your Impact
Take time to examine your short-term and long-term goals on a regular basis. This will help develop a sense of satisfaction and show how your contributions are making a difference.
Candid feedback from the organizations you have funded and partnered with will always be an important ingredient of this process.
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Original article by Pam Pugh, Copyright © 2008, The National Christian Foundation
This week Thine Eyes – A Witness to the March for Life is showing their documentary on their website, www.thineeyes.org, for free. Thine Eyes raised support through a donor-advised fund at SCCF, and has produced the movie to raise awareness for this annual pro-life event as well as the media’s intentional failure to publicize it.
Steve Sanborn, the executive producer for the film, posted the video online in response to Pro-life terrorism accusations resulting from the Tiller shooting. He says, “The murder of abortionist George Tiller cannot be condoned. Neither can accusations of Pro-life ‘terrorism’ be condoned. The crime of one unaffiliated man does not speak for the Pro-life Movement. But this documentary does…”
Additional info can be found on Thine Eyes website.
Since President Obama released his controversial budget, advisors all over the country have been overwhelmed with calls about the proposed changes to upper-income taxes, charitable deductions, and estate taxes.
While it is not yet clear if Congress will vote these proposals into law, current economic challenges along with unprecedented government spending will undoubtedly feed an insatiable governmental appetite for more revenue. So we can be sure that big tax changes are on the horizon.
Let’s take a look at the three primary areas of proposed changes, as well as a fourth proposal regarding private foundations, and what it all means for you and your clients:
The proposal includes a tax hike, increasing the highest marginal tax rate from 35% in 2010 to rates as high as 39.6% in 2011. Increased taxes on capital gain income could grow from 15% to 39.6% as well.
Gifts of appreciated assets prior to the sale would become even more attractive, allowing your clients to avoid more capital gains tax. Charitable remainder trusts and charitable gift annuities would become more prevalent as these vehicles are used to avoid capital gains tax upon the sale of an appreciated asset, while providing a continuing income stream to the giver.
It’s proposed that the benefit for taxpayers who make $250,000 or more be limited to 28%, beginning in 2011. So if one of your wealthy clients gets an extra $100 of income and donates it to charity in 2011, the extra $100 would be subject to a nearly 40% federal tax rate. But their charitable gift would only produce a $28 deduction. So they must spend nearly $12 in taxes to make the gift. Therefore, the “cost” of giving would go up.
There is strong bipartisan opposition to this proposal, and many observers do not believe it will pass. The bottom-line is you should look for opportunities to help your clients give income-producing assets so that income is removed from their individual tax returns and passed directly to charity.
In 2009, President Obama hopes to pass legislation that would freeze the estate tax exemption at its current level of $3.5 million and at its current rate of 45%, with no repeal of the estate tax which was scheduled to go away in 2010. Wiser estate planning with options for transferring wealth while still living will be essential for those with estate values beyond this exemption.
Efforts are underway by several groups to impose radical restrictions that could have a major impact on your clients who operate private foundations. The Greenlining Institute is lobbying for proposals that would require private foundations to make mandatory grants to certain “disadvantaged” groups, and require diversity in the sexual orientation of the foundation’s management and grant recipients.
The Alliance for Charitable Reform was established in 2005 to provide an emergency response to the greenlining effort (visit www.acreform.com to learn more). But overall, the result is that many private foundations are terminating in light of this new threat to philanthropic freedom.
So the real question is, what should you do? To help you plan in this challenging environment, read our post “Planning Checklist for Challenging Times“.
In today’s fluctuating tax environment, it can be difficult for a financial advisor to keep up with all the best strategies for managing taxes through charitable giving. To help advisors, we’ve created this checklist of strategies we have found to be quite effective:
Recommend a Giving Fund (donor-advised fund) – Now is the time to help your clients establish a donor-advised fund like a Giving Fund at NCF, if they don’t have one already.
If they are able to pre-fund their giving, they can get tax savings at a 35% rate for their contributions to the fund before 2011, and then recommend grants in later years when their charitable gifts would have only produced a 28% rate tax savings.
Suggest a Charitable Lead Trust (CLT) – A CLT is an ideal option now for transferring wealth to both family and charity because the “hurdle rate” – the rate that the IRS uses for CLT calculations – is at an all-time low (under 3%).
Offer a Charitable Gift Annuity (CGA) – CGAs are good for individuals that need a higher, more stable annual income. CGAs are particularly attractive today due to the volatility in the stock market (primarily spiraling downward), and the very low interest rates on most fixed income investments such as CDs, money markets, and government bonds. Flexible and deferred CGA options offer additional attractive planning strategies.
Use the “Give & Hold” strategy – Many business owners have a heart to give but are hindered by their limited cash flow and the high taxation of their business. But there is a way to help private business owners maximize their giving and tax savings, as well as increase their cash flow.
Through the Give and Hold strategy, your client can donate a non-voting interest in their business to a Giving Fund. Because the Giving Fund (donor-advised fund) is a public charity, they receive a fair market value tax deduction for the gifted interest. Due to the tax savings from their deduction, their cash flow is increased. If their business is growing, they can utilize this strategy every year and only give a portion of the annual appreciation in the business. And because it is a non-voting interest, they maintain control.
Maximize deductions with non-liquid gifts – Tax rules allow donors to deduct up to 50% of their adjusted gross income (AGI) for cash contributions. But an often neglected provision of the law allows for 30% of this total 50% AGI to be given in the form of non-cash assets.
These rules can be leveraged to remarkable effect. For their non-liquid gift portion, they not only get a tax deduction now, they also avoid capital gains tax when the appreciated asset is eventually sold.
Take advantage of the Charitable IRA Rollover – If it is extended, the Charitable IRA Rollover will be especially attractive in 2011 and later years (if deduction benefits are reduced to 28%). A gift of the IRA does not require income to be reported on the giver’s individual income tax return. This will allow your client to keep their taxable IRA distributions out of their income, and could effectively save them 12% on each gift.
Although this opportunity is currently set to expire on January 1, 2011, there is strong support to extend it. There is also pending legislation that would enhance the current rules allowing more taxpayers to benefit, and allowing greater overall flexibility in planning with this asset (including the use of CRTs and CGAs).
Offer solutions for private foundations – Clients who have a private foundation need to know about “greenlining” (see above), and how to avoid its potential negative effects. For those who maintain a balance under $1 million and have no employees, their best alternative might be to close their foundation and use a Giving Fund to accomplish their giving.
They can grant anonymously and avoid public scrutiny, as well as many other administrative hassles and IRS restrictions. Another option is to move the majority of the foundation’s assets to a donor-advised fund and keep a small amount in the foundation, adequate enough to fully distribute each year and qualify as a conduit private foundation (under Internal Revenue Code 170(B)(1)(F).
Whatever you do, it’s wise to engage clients now. Help them plan today in order to preserve tax benefits for gifts made prior to these anticipated tax law changes, and they will be grateful for years to come.
Servant Christian Community Foundation can help you put these strategies to work in your practice. For more information, please contact Brent at (913) 538-7844 or bkellenberger@servantchristian.com.
You might get a kick out of these. Below is a list of real foundation and organization names our Christian Foundation Grants researchers have encountered in their research. If you know one of the foundations or organizations, send us an email- we’d love to know the stories behind these names.
The List
- Jessica High and Ashley High are Research Assistants at Christian Foundation Grants, a subscription database of foundations that provide grants to faith based organizations.
Our national affiliate, National Christian Foundation, was mentioned in a recent article on www.philanthropy.com, website of The Chronicle of Philanthropy. The article, which focuses on the mixed signals coming from the non profit sector, mentions that NCF projects they will distribute $100 million more in 2008 than 2007. This number references all affiliates, including SCCF.
This is exciting because it is directly opposite of how many in the community foundation world view the donor-advised fund. For many institutions, the DAF is a tool that allows philanthropists to give assets away, while maintaining long term control over those assets. Here at SCCF, however, many view their DAF as a storehouse, used to set aside charitable funds when income is strong. Just as Joseph wisely set aside wealth to distribute in years of difficulty, these are now able to distribute to needy ministries suffering because of the economic downturn.
You can read the entire text of the article by reading the rest of this entry.
By William High
The market has been up and down, the economy is clearly down, and many try to predict the impact of the downturn upon giving. Certainly, in circles where giving is motivated by tax deductions, we’ll see giving drastically decline. But one thing we know: even in times of recession, giving often remains steady in the church.
God’s people often remain faithful even in the downturns. Giving of this kind is not motivated just by virtue of a tax deduction. Giving has its own virtue—the advance of the Gospel of Jesus Christ around the world, the support of the poor, the orphan, the widow, the needy.
But a recent Barna study out last week has revealed that the recession has impacted even Christian circles harder than expected. The results of the study, which looked at giving to churches over the last three months, can be summarized thus:
1) One out of every five households (20 percent) has decreased their giving to churches or other religious centers.
2) Among those who reduced their donations to churches, 19 percent dropped their giving by as much as 20 percent; five percent decreased their funding by 21 to 49 percent; 17 percent reduced their gift by half, and 11 percent cut their support by more than half.
3) A surprisingly large proportion, 22 percent, stopped their offering to churches altogether.
4) Upscale households were most likely to reduce their giving.
5) Barna projects $3 – $5 billion less for churches in 4th quarter.
6) Thirty-five percent of respondents said their church had offered a special talk about the financial hardship and ways to respond to it.
Fortunately in SCCF circles, we’ve seen giving rise nearly 60%. We’ve seen distributions rise at an even greater pace. It is an exciting time. I tell people that I envision the day when we might well deliver the final check for the completion of the Great Commission. What a privilege it would be to hand over the final check as some mission organization makes its way into some forgotten jungle tribe. These are indeed great times, and I believe the saints who’ve gone before us will run to greet us upon those streets of gold to hear our tales of great adventure of the incredible advance of the gospel.
You can decide which statistic you join – we invite you to come with us on our journey, trusting God to provide for His children.
William High is the President of the Servant Christian Community Foundation. You may contact him at whigh@servantchristian.com.
By William High
To demystify year end tax planning we offer the following suggestions:
1. Figure our your income and deductions.
This is one of the most fundamental and basic steps in year end tax planning. By determining how much income and deductions you have, you can consider the next basic steps.
2. Postpone or defer income.
If your income is projected to be high, then consider postponing a bonus or deferring income into the next tax year.
3. Pay deductible expenses at year end.
Pay any state or real estate taxes at year end because those are deductible expenses. Make an extra mortgage payment because the interest is deductible.
4. Give to charity.
Keep in mind that charity typically represents your biggest opportunity for deduction. Under IRS rules, you are allowed to deduct up to 50% of your adjusted gross income (AGI), which means if you make $200,000, you can deduct up to $100,000 of charitable gifts.
5. Give to charity with capital assets.
When giving to charity at year end, consider using capital assets such as publicly traded stock, real estate, business interests (LLC, LLP, C corp, even S corp). By using these kinds of assets, you avoid capital gains tax and you are not pulling cash out of your pocket. Under IRS rules, you are allowed to deduct up to 30% of AGI using capital assets.
6. Give to charity with non-cash assets.
One of the overlooked charitable deduction opportunities is through non cash assets. This may mean donating vehicles, boats, RVs, gold, silver, jewelry, collectibles, stamp collections, classic photograph collections, timeshares, memorabilia collections.
7. Use donor-advised funds.
Donor advised funds are a common year end planning tool. The beauty behind them is that you can make the gift now, take the deduction now, but not distribute the proceeds until later. They can be opened quickly — ten minutes or less — and online. It’s a great option for those who need year end deduction but don’t necessarily know where they want to distribute. Open your donor advised fund now at www.servantchristian.com.
8. Consult advice (and do it now).
Seek advice. Don’t be bashful. Many leave year end tax dollars on the table because they don’t seek the advice of those with proper expertise. And don’t delay in seeking that advice. You may contact us at info@servantchristian.com.
William High is the President of the Servant Christian Community Foundation. You may contact him at whigh@servantchristian.com.
