aaacf Donor Advised Funds Ann Arbor Area Community Foundation An effective and flexible vehicle for charitable giving

Transcription

1 Donor Advised Funds An effective and flexible vehicle for charitable giving aaacf Ann Arbor Area Community Foundation If you want to make a difference, we can help.

2 Making a Difference If giving is one of the values you believe in, the Ann Arbor Area Community Foundation can help you. As a vehicle for personal philanthropy, we have helped hundreds of people fulfill their charitable goals. A donor advised fund at the Community Foundation, or with one of our geographic affiliate funds, can represent the hard work and values that define your life. If you wish, your fund can be a tool to engage your family in philanthropy and teach young people about financial and community responsibility. A donor advised fund at AAACF helps connect people who care about our local communities through a shared sense of purpose and can increase the impact of your philanthropy.... For good.for ever. Donor advised funds at AAACF have provided generous support to local health clinics - Packard Health, Corner Health Center, Hope Medical Clinic, and the University of Michigan Depression Center.

3 aaacf Ann Arbor Area Community Foundation Established in 1963, the Ann Arbor Area Community Foundation manages a permanent and growing endowment built by gifts from thousands of individuals and organizations who all share a commitment to our local communities and believe deeply in the power of private philanthropy to make a difference. When you open a donor advised fund at AAACF or with one of our geographic affiliate funds - the Ypsilanti Area Community Fund and the Community Foundation of Plymouth - you have chosen a simple, flexible, and effective way to support the charitable causes you care about. We invite you to learn more about the Ann Arbor Area Community Foundation and our affiliates, and how we help donors fulfill their charitable goals in ways that promise meaningful and lasting impact. Giving has never been easier. Donor advised funds, leveraged with Community Foundation grants, support local arts and culture - from the Ann Arbor Summer Festival, University Musical Society, the Ann Arbor Art Center, Ypsilanti s Riverside Art Center to the Plymouth Historical Society. (Photo courtesy of Myra Klarman) 1

4 The Benefits A donor advised fund at AAACF offers you many advantages and a wealth of benefits: Supporting Donors Goals As Managing Partner of Deloitte s Ann Arbor tax practice, George Borel provides financial advice to many local community leaders. He has practiced for more than 38 years at a firm that has been part of our community for more than 80 years. George understands first-hand the value of working with AAACF to support his clients charitable giving goals. He volunteers his time and professional perspective to AAACF s Investment & Finance Committee and our Professional Advisor Committee. When asked if he recommends clients explore the notion of giving through the Community Foundation, George answers unequivocally Yes, absolutely. The Community Foundation is a very professional organization, and takes its stewardship role and responsibilities very seriously with first-class investment management to ensure its charitable funds will continue to grow and will be there in perpetuity. George believes that in many cases establishing a donor advised fund at AAACF provides a better alternative to a private family foundation or charitable gift fund at a national investment firm. AAACF assumes the entire administrative burden and will always be there to provide the oversight necessary to ensure the fund s mission and original intent is sustained over the long-term. Most importantly, the Community Foundation s focus is on our local community. AAACF has the capacity to provide an advisory role in helping donors understand where their gifts can have the greatest community impact. 2 Flexibility to make grant recommendations to the public charities of your choice - at home and around the country. Professional investment management to ensure your charitable fund will continue to grow. Quarterly fund statements and online access to the details of your fund - current balance, investment performance, available spending, and recent grant distributions - and online access to grant opportunities. The opportunity to involve your family in your philanthropy. The opportunity to name a successor advisor - your child, a family member, trusted advisor, or friend - to continue your legacy and advise your fund upon your death or if you become unable to direct your fund. An immediate charitable income-tax deduction for gifts to your fund. No capital gains taxes on gifts of appreciated, long-term assets. Recognition or anonymity - whichever you choose. Access to AAACF s philanthropic expertise and the assurance that your charitable intentions will be sustained over the long-term. Access to AAACF s professional grantmaking staff, our in-depth knowledge of our community s needs, and the many relationships we maintain throughout the private, public, and nonprofit sectors. The opportunity to leverage your grant distributions with AAACF or other donors grants to maximize the impact of your philanthropy. Tax advantages that you won t receive with a private foundation. Freedom from the administrative burdens and expenses of maintaining a private foundation. The Community Foundation handles all the paperwork, tax reporting and record keeping.

5 How It Works Establish and name your donor advised fund. Donor advised funds can be established during your lifetime or through your will or other planned giving instrument. Make an initial minimum gift of $20,000. There are a number of flexible giving options. A donor advised fund can be created with a gift of cash, publicly traded or closely held stocks, bonds, real estate or other assets. Your initial gift to establish your fund may be pledged over time. Once your fund is established, you have the opportunity to: Recommend grant distributions from the fund at any time. Grants need to be a minimum of $250 and directed to a 501(c)(3) public charity located in the United States. Review your fund s performance and grant distributions online. Review grant opportunities online. Make additional tax-deductible contributions to your fund. Consult AAACF s professional grantmaking staff for timely and reliable guidance whether you are... - looking for an organization that supports your favorite cause, - exploring new areas of interest, or - wanting to learn more about our community s needs and where there are opportunities to make a difference. Leverage your gifts with AAACF grants in ways that will expand the impact of your philanthropy. Your Choice: Endowed or Nonendowed An endowed donor advised fund is a permanent endowment that allows you to make grant recommendations in accordance with AAACF s spending policy. The principal balance is invested in a highly diversified portfolio focused on long-term growth. An endowed fund at AAACF: Creates a permanent legacy of your generosity that grows over time and will benefit future generations. Ensures that your gift s principal remains, preventing the possibility of terminating your legacy with unlimited grants. Provides continued oversight to ensure your charitable intentions and original intent will be sustained over the long-term. A nonendowed donor advised fund permits you to make grant recommendations that could result in distributing a portion of or all of the fund s balance. If nonendowed, your fund will be invested in a short-term portfolio focused on protection of principal. Supporting Local Communities Gerry and Lizann Anderson established a donor advised fund at AAACF to involve their family in philanthropic decisions - and out of concern for how Michigan s economic challenges might affect local communities. Gerry, President and Chief Executive Officer of DTE Energy, found himself wondering how their family could help: Philanthropy is only one part of a much larger equation, but community foundations have a significant role to play. The Andersons understand and appreciate the valuable role community foundations play in strengthening local communities. Lizann s interest in supporting AAACF comes from personal experience: My interest goes back twenty years when I wrote an article for the MacArthur Foundation about a grant to build capacity for a group of emerging community foundations. I came away a true believer in community foundations and their ability to be the glue that binds diverse groups in a community to make real change. When establishing their fund, the Andersons shared one last appreciation, We feel so fortunate to call Ann Arbor home and to have such a vital community foundation to help maintain the character of this remarkable community. 3

6 Ensuring Your Gifts Have Impact Giving as a Family Local business entrepreneurs Aaron and Michelle Crumm established a donor advised fund for their family at AAACF to give back to a community that has given so much to us. The Crumms have received numerous recognitions for their innovative business leadership. In 1999, they launched start-up, Adaptive Materials, Inc. - a manufacturer of solid oxide fuel cells that was acquired in 2010 by defense industry giant Ultra Electronics. As engaged community leaders, the Crumms are very generous with their time and serve on a number of community boards. Michelle Crumm currently serves on AAACF s Board of Trustees and shares: As a Trustee, I have a more in-depth understanding and deeper appreciation of our community s generosity. AAACF provides amazing networking support for donors and nonprofits. In explaining their motivations for establishing their fund, the Crumms explain: We chose AAACF as a vehicle for our philanthropy because we want to stay connected to the needs of the community in order to donate responsibly. We decided as a family to look at our core values to give us direction. We strongly believe in economic empowerment and growth through education. With those values and AAACF s guidance, we anticipate supporting many nonprofits within Washtenaw County. The Crumms also value the opportunity to include their children in philanthropy: We are excited to share the responsibility of making decisions for our fund with our three children. We want them to understand the importance of giving. What causes you choose to support with your donor advised fund are up to you - and can change over time. While AAACF s focus is local, you have the opportunity to support any nonprofit organization that is recognized by the IRS and is serving a bonafide charitable purpose. These include local nonprofits, most well-known national organizations and global organizations that have a presence in the U.S. It also includes most churches and faith-based organizations. For each grant you recommend, our staff ensures the recipient organization is a valid 501(c)(3) public charity. If you are interested in supporting a local nonprofit organization, specific area of interest, or are considering a local organization that is new to you, our grantmaking staff can provide great insight and knowledge. Our staff and Board of Trustees have a deep understanding of our community s needs and priorities, what organizations have the capacity to create change, and where there are opportunities for innovative solutions. We can share with you giving opportunities you may not have otherwise considered, and can help you make the best recommendation based on your charitable interests. A Donor Advised Fund for Your Business Establishing a donor advised fund is an excellent alternative to creating a corporate charitable foundation. Whether a corporation, partnership, limited liability company or sole proprietorship, your business can establish a donor advised fund at the Community Foundation to: Establish or continue a charitable-giving program and communicate your organization s commitment to supporting our community s well-being. Provide a source for future charitable giving in years when revenues might not otherwise warrant charitable gifts. 4

7 Professional Investment Managment The Ann Arbor Area Community Foundation provides wise, thoughtful and professional stewardship of the philanthropic assets entrusted to us. The Community Foundation s Board of Trustees and our Investment & Finance Committee are charged with overseeing AAACF s investment portfolio. The Investment & Finance Committee - a highly qualified group of local finance professionals - meet regularly with our finance staff and our professional investment consultant to review AAACF s investment strategy, asset allocations and investment performance, and to evaluate and recommend investment managers. AAACF employs a diversified asset allocation that supports a long-term investment strategy to ensure that the value of your fund, if endowed, will continue to grow over the long-term - at a rate of return that covers inflation and provides sufficient funding to meet administrative fees and support future grant distributions. Multiple Tax Advantages Contributions to your donor advised fund are tax deductible in the year that they are made. Any unused deductions can be carried forward for up to five years. In addition, because your fund is part of a public charity, your gifts to your fund at AAACF receive the most favorable tax treatment under the Internal Revenue Code. Giving long-term appreciated securities, privately held business interests, or other long-term appreciated assets may enhance your tax benefits. You may avoid capital gains tax on these gifts and may receive a tax deduction equal to the full fair market value of the gifted property, up to 30-50% of your adjusted gross income. (See table on page 6.) We encourage you to consult with your tax attorney or professional advisor to determine the tax deductions associated with your gifts. Tax-Effective Giving Gregory and Martha Giles established a donor advised fund at AAACF as a tax-effective way to give back and support the causes they believe in. Born and raised in Michigan, the Giles both hold degrees from the University of Michigan, and have a strong affection for the State of Michigan and their alma mater. Greg s career as an engineer, 14 years with Procter & Gamble and later with Michelin Tire, took them to various communities throughout the world. They moved back to Michigan so their two daughters could attend high school in the area and settled in Plymouth. With stock from Greg s career that had appreciated over the years, the Giles have worked closely with their professional advisor to understand their giving options and to find the best fit. They shared: This area has given our family so much and we now have the ability to give in a meaningful way. We were attracted to AAACF s local focus and believe they can help us provide the greatest impact with our charitable gifts. The Giles are particularly interested in supporting early childhood education. Having spent her career working in education, Martha Giles explained: We understand how important it is to be impactful in a child s life early on and the difference that impact will have in ensuring a healthy future. The Giles recognize that their philanthropic interests may change: We are new to this and will be learning as we go. We appreciate that a donor advised fund gives us the flexibility to be able to decide what organizations and programs to support and that it can change over time. 5

8 An Attractive Alternative A donor advised fund at the Ann Arbor Area Community Foundation offers many advantages and a wealth of benefits over a private foundation - without the burdens and costs associated with managing a private foundation. DONOR ADVISED FUND No set up fees. No minimum annual distribution required. No excise taxes. Greater Income Tax Deductions: Cash: Up to 50% of adjusted gross income. Appreciated publicly traded stock: Fair market value up to 30% of adjusted gross income. Long term real estate and other securities: Fair market value up to 30% of adjusted gross income. You may choose to make grants anonymously. You have access to a professional grantmaking staff, AAACF s knowledge of community needs and priorities, and the opportunity to leverage other donors gifts to maximize the impact of your philanthropy. Set up time: as fast as needed to meet your needs. Administrative costs are pooled. An annual fee is charged. PRIVATE FOUNDATION Set up costs include legal, accounting and filing fees. Annual distribution of 5% - based on average value held in Foundation is required by IRS. Excise taxes of 1% - 2% of net investment income. Income Tax Deductions: Cash: Up to 30% of adjusted gross income. Appreciated publicly traded stock: Fair market value up to 20% of adjusted gross income. Long term real estate and other securities: Deductible at cost basis. Grants are listed publicly through tax return. You are on your own to investigate and analyze potential grant opportunities and bear the expense of staffing the foundation. Set up time can take many months. Annual filing fees and accounting expenses. The Community Foundation handles all the paperwork, tax reporting, and record keeping. Annual tax return filing; Form 990-PF Transferring a Private Foundation In 1990, Dick and Norma Sarns transferred the assets of their personal foundation to establish the first donor advised fund at the Ann Arbor Area Community Foundation - the Sarns Ann Arbor Fund. The Sarns explain: We appreciated and understood the advantages of being part of the Community Foundation. We knew AAACF could offer effective investment management, significant cost savings and additional tax advantages. Most important, we were convinced that in working with the Community Foundation, we would be able to increase both the reach and impact of our philanthropy. Over the last twenty years, through our donor advised fund, we have been able to support a number of local organizations that provide valuable programs and services for our community. 6

9 Benefits of Giving Through the Ann Arbor Area Community Foundation or one of our geographic affiliate funds We provide highly personalized and flexible service to support our donors varied philanthropic interests. We manage more than 425 charitable named funds. Our philanthropic expertise has helped connect our donors to the causes they care about. We provide wise thoughtful stewardship for individuals, families, businesses, and organizations that entrust their charitable assets to our care. A donor advised fund at the Community Foundation offers maximum tax advantage under state and federal law. Our focus is local. We know our community well, and can help identify grant opportunities that fit donors philanthropic interests. Donors have the opportunity to multiply the community impact of their giving by pooling their grant distributions with other resources and grants. We give those who care about our community flexible and meaningful ways to fulfill their charitable objectives. Investing in the Quality of Life in Our Community Bhushan and Swatee Kulkarni established a donor advised fund at AAACF to do their fair share. The Kulkarnis are very generous in the time, expertise and gifts they extend to support our community. They explain, We came to this country with nothing so we understand the struggles many families go through, and want to help those who may not have a place to go. Originally from Mumbai, India, the Kulkarnis came to the U.S. to pursue graduate studies in engineering, and have lived in the Ann Arbor area for more than 20 years. A successful entrepreneur, Bhushan is currently the Chairman of GDI Infotech and is a member of AAACF s Board of Trustees. Bhushan shares: It s very important for us to be able to give back to the community that has extended such extraordinary opportunities, both educational and professional, to our family. When you visit other countries, you realize that what our community has here is really amazing. It s important to be able to participate to support the critical role AAACF plays in supporting the quality of life in our community. 7

10 Things to Remember... You may make a grant at any time and are not tied to a December 31st deadline. You may support any 501(c)3 organization - local or national. You can support your place of worship, faith-based schools and nonprofits. If you have any questions about an organization, our grantmaking staff can help. Completing a legally binding pledge through a donor advised fund is prohibited. Current tax laws prohibit donor advised funds from making grants to: - Pay for tickets, or any portion of tickets, to fundraisers or benefits that include a material benefit such as a meal, a seat at an event, to purchase or fulfill memberships having any tangible economic benefit, or other goods and services for the donor, advisor or any related party, - Support an individual, - Fulfill a legally enforceable pledge a donor, advisor, or a related party has already made, and - Support political campaigns, or for lobbying purposes. Tax law also prohibits donors, advisors, or related parties from receiving grants, loans, compensation, or similar payments from donor advised funds. You do not have to make grant distributions from your donor advised fund each year. Some donors opt to skip a year to allow for a larger grant in the future. AAACF will send you an acknowledgment after grants are disbursed from your fund. By establishing a donor advised fund at the Ann Arbor Area Community Foundation, you are reliquishing the investment and direct management of your fund(s) to AAACF. The Community Foundation s investment policies are subject to approval by AAACF s Board of Trustees, as are the grant distributions made from your fund.o The information in this piece is intended to provide you with an overview of the benefits and possibilities associated with a donor advised fund at the Community Foundation. Administrative and tax rules regarding donor advised funds are subject to change. When any changes are made, most often because of state and federal tax and/or legal compliance purposes, we will inform you as quickly as possible. earn how to recommend grants, access your fund information, and Getting Started Call, , and/or meet with AAACF s development staff. The Community Foundation will prepare an agreement for your review. Make an initial contribution to establish your fund. Set an apppointment with a Community Foundation staff member to learn how to recommend grants, access your fund information, and leverage AAACF s knowledge of community needs and grantmaking expertise.

11 For good.for ever.

12 mission values The Ann Arbor Area Community Foundation enriches the quality of life in our region through its knowledgeable leadership, engaged grantmaking, and creative partnerships with donors to make philanthropic investments and build endowment. Integrity: We are committed to being honest, ethical, and trustworthy. Accountability: We are committed to managing our entrusted resources in a diligent and prudent manner. Leadership: We are committed to an inclusive approach in convening and shaping partnerships and relationships that address the current and future needs of our community. community foundation Plymouth TM For good. For ever. Ypsilanti Area community fund For good. For ever. TM 301 North Main Street, Suite 300 Ann Arbor, Michigan Phone: (734) Fax (734) Confirmed in compliance with National Standards for U.S. Community Foundations.