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If This, Then That: Your Charitable Planning Cheat Sheet

Advisors frequently navigate complex financial scenarios with their clients, and charitable giving often presents unique opportunities for maximizing both impact and tax benefits. At the Athens Area Community Foundation, we’ve heard from many attorneys, CPAs, and financial advisors requesting a “cheat sheet” for aligning charitable planning tools with specific client situations. We’re thrilled by the idea and always ready to assist in exploring the best philanthropic strategies for your clients.

To help get you started, here are three common scenarios we’ve encountered recently and the charitable planning tools that best suit them.

1. Streamlining and Tax-Optimizing Charitable Giving

If: Your client supports multiple charities every year.

Then: A donor-advised fund (DAF) at the community foundation is a perfect solution.

A donor-advised fund allows your client to organize their giving while enjoying significant tax advantages. For clients supporting local organizations, places of worship, and perhaps an alma mater out of state, a DAF simplifies the process by consolidating all donations into one easily managed account.

Clients can contribute appreciated assets like stocks to their donor-advised fund, often avoiding capital gains tax in the process. These contributions are tax-deductible, and the community foundation’s streamlined system tracks all donations, making it simple for clients to provide accurate records to their accountants during tax season. It’s an efficient way for clients to support their favorite causes while keeping their charitable giving organized.

2. Supporting a Specific Charity While Minimizing Risk

If: Your client has a longstanding relationship with a particular charity and wants to ensure their continued support is well-managed.

Then: A designated fund at the community foundation can secure the future of their giving.

With a designated fund, clients can make tax-deductible gifts during their lifetime or through their estate plans, earmarked exclusively for a specific organization. The community foundation administers the fund according to the client’s instructions, ensuring that the charity benefits from consistent, reliable support.

One key advantage of a designated fund is the added protection it offers. Should the designated charity face financial challenges or creditors, the assets in the fund remain secure, ensuring the client’s contributions are used as intended.

For clients aged 70½ or older, there’s an additional benefit: they can fund a designated account using Qualified Charitable Distributions (QCDs) directly from their IRAs. In 2024, the QCD limit is $105,000 per year (rising to $108,000 in 2025). This approach reduces taxable income while supporting a beloved organization.

3. Leaving a Charitable Bequest with Significant Tax Benefits

If: Your client plans to include charitable giving in their estate and owns a qualified retirement plan.

Then: Naming a fund at the community foundation as the beneficiary of their retirement plan offers unmatched tax efficiency.

Retirement assets left to heirs can be subject to steep income tax. However, designating a charitable fund as the beneficiary of these assets eliminates both estate tax and income tax on the transfer. This makes it one of the most tax-efficient ways to include philanthropy in an estate plan while ensuring maximum impact for the charities the client supports.

By directing retirement proceeds to a fund at the community foundation, clients can create a lasting legacy while simultaneously easing the tax burden on their estates.

The Bottom Line

If you encounter any client scenario where charitable giving might be involved…

Then reach out to us!