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DETERMINING HOW TO GIVE
Alternatives to Foundations
Each year, thousands of new foundations are incorporated, many of them with assets under $1 million. Private foundations, which include family foundations, must follow a strict set of IRS rules, such as filing an annual tax return (990-PF), paying excise tax of 1 or 2 percent, and distributing at least 5 percent of net asset value each year. In addition, board members and grants made by the foundation are listed on the annual 990-PF and are therefore available for public review.
Private foundations are a powerful tool and a uniquely American institution, but for many charitable individuals, donor advised funds or supporting organizations are an attractive alternative with more flexibility, more anonymity, and reduced taxes and expenses. In particular, most small foundations will find these options attractive.
Neithercut Philanthropy Advisors has 20 years of experience with donor advised funds, and 10 years of experience managing the grantmaking functions of a number of supporting organizations. Call NPA to discuss the benefits of these various options.
Introducing a Client to Charitable Giving
Lawyers and financial advisors are often hesitant to discuss charitable giving with their clients. Unless the client raises the issue, an advisor often feels it is inappropriate for him/her to do so. Yet, advisors have many good reasons to discuss these issues with their clients.
First, an advisor provides a higher level of service to the client when discussing charitable giving. Charitable gift planning provides many opportunities for an individual to provide additional financial benefits for his/her family while at the same time reducing taxes and providing support for organizations or issues of interest. To not discuss these opportunities with a client is to deny the client valuable estate planning tools, as well as rewarding opportunties.
Second, an advisor who discusses charitable giving with a client is offering the client additional services that can be provided by the firm. All of the large financial service companies provide philanthropic advisor services. If an advisor does not offer this service, the client will often find this help elsewhere. Finally, charitable gift plans often include the next generation, such as in the management of a family foundation. Therefore, discussing issues of philanthropy with a client can also result in involving the client’s children with the firm. Thus, it is good business to discuss charitable giving with your clients.
While we do not provide legal or finanical advice, NPA can support an advisor's charitable giving discussions with a client. NPA staff has more than a decade of experience with planned gifts and can help ensure that assets allocated for charity achieve maximum impact. We have worked with hundreds of families on charitable giving issues, and we can work as value-added member of your team.
For more information on the benefits of planned giving and how to talk to clients about these benefits see the Community Foundation for Southeast Michigan’s The Charitable Giving Guide (pdf) which was conceived, edited and partly written by NPA Principal Mark Neithercut. Neithercut also conceived and managed the very successful Touch the Future program at CFSEM that helped hundreds of nonprofits in southeast Michigan raise more than $250 million in planned gifts.
Confidential Inquiry
Charitable individuals and small foundations often have an interest in supporting a specific charity or issue, but wish to know more before making a commitment. The staff of Neithercut Philanthropy Advisors has more than 20 years of experience assessing the strengths and weaknesses of nonprofit organizations and charitable issues. NPA staff can conduct confidential inquiries on your behalf so that you can make an informed assessment before revealing your identity.
