One of the advantages of a community foundation is flexibility. There are a variety of tax-effective ways to give, and donors can choose how their gifts will be used. Each method of giving benefits from the most favorable tax treatment the law allows.
Gifts of cash are the simplest and most convenient way to give. They are deductible up to 50% of the client’s AGI (adjustable gross income). Amounts in excess of this can be carried forward and deducted for up to five additional years.
Giving appreciated securities owned for over one year is deductible up to 30% of your client’s AGI. Amounts in excess of this can be carried forward and deducted for up to five additional years. As a general rule, gifts of publicly traded securities will be sold as soon as possible, and the fund the client established will be credited with the proceeds from the sale, after the commissions and expenses, if any.
Gifts of real estate, such as a home, farm or vacation property, are considered equal to their appraised value and are deductible up to 30% of your client’s AGI. Amounts is excess can be carried forward and deducted for up to five additional years. Donated real estate will be sold by the Foundation, or donors have the option of living in their home through a Life Estate arrangement.
Transfer of an Existing Private Foundation
Administering a private foundation under IRS rules can be burdensome and expensive. Transferring private foundation assets to a Donor Advised fund at the Foundation may simplify administration and lower costs while preserving donor direction of contributions.