Estate Planning Considerations: Requisite Formalities

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Fancy estate planning pen on notebook

Estate planning documents express your wishes in the event of your disability or death. However, estate planning documents must follow certain formalities to be legally enforceable. If your estate planning documents lack these formalities, they may not be enforceable, which could be disastrous for your loved ones and beneficiaries.

Iowa Requirements

Keep in mind estate planning requirements vary state by state. Let’s look at a Last Will and Testament, just one of six “must have” estate planning documents every Iowan needs. For a will to be valid in Iowa, it must comply with these requirements:

  • Maker (testator) must be at least 18 years of age or married;
  • Maker must be of “sound mind”;
  • Will must be written;
  • Will must be signed by maker in presence of at least two competent witnesses, at least 16 years of age, who also sign in presence of maker and each other; and,
  • Maker must tell the witnesses it is his or her will.

Formalities Matter

It is important to have a reputable legal professional handle your estate planning. If you don’t, you risk missing one or more legal formalities, which might make your entire estate plan worthless. For this reason, avoid creating a will, or for that matter any estate planning documents, through an online service.

Starting an estate plan may seem like a daunting chore, but it doesn’t have to be. The easiest place to start is with my free, no-obligation Estate Plan Questionnaire. Of course, you may always reach out to me at any time with any questions or concerns.

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Employee Appreciation Day: How to Show Your Nonprofit Staffers You Care

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national employee appreciation day

If you manage a nonprofit undoubtedly you recognize that the mission couldn’t be driven forward without the hard work by talented staffers. Indeed, human capital is typically a nonprofit’s greatest asset! Today is National Employee Appreciation Day and the perfect chance to remind your employees that they make a difference. This is also an optimal chance to invest in employee retention; when you find the right people that work well as a team, believe in the mission, and have an admirable work ethic, it is important to keep them happy and engaged.

The nonprofit employee turnover rate is equal to other industries at about 19%. But, unlike other industries, the good news is that 93% of nonprofit employees say they are engaged at work which is three times that of other industries. More good news? 85% of employees who made the switch from a for-profit company to a nonprofit said they planned to continue working in the nonprofit sector long term.

Build an Even Better Nonprofit in Iowa

When it comes to nonprofit employment law best practices like an updated employee handbook and quality contracts are essential. But, taking care of your business beyond legal documents is also incredibly important. Here are a few easy ways to invest in your staffers on Employee Appreciation Day and every day:

Break out the Suggestion Box

Sure it’s kind of old school and basic, but a suggestion box can still give employees a chance to share their opinions to make the workplace better. Staffers appreciate the opportunity for another avenue of communication, and acknowledging legit concerns and ideas can only help the organization improve!

employees talking

Build a Better Break Room

Everyone needs a place to take a breather throughout the workday. Whether it’s swapping stories over lunch or sharing posters for upcoming community events, the break room should be inviting, clean, and comfortable. Take a hard look at the status of the break room and determine if furniture should be replaced, decor redone, or appliances upgraded. Even fresh flowers or an improvement in the type of coffee/tea provided can give morale a boost.

When is an Employee Handbook not an Employee Handbook?

A Little Recognition Goes a Long Way

We all loved to be recognized for our achievements, big and small, so do the bragging for your team. Without a doubt, your employees are doing wonderful things outside of the office from starring in the community theater production to coaching their kid’s sports team. Whether it’s a fun, quarterly recognition “party” or a “star wall” where you post compliments/accolades, find what fits with your organization’s culture. This also shows your team you care about them as people, not just as employees.

Thanks a Million!

It may seem obvious, but a simple thank you note can go a long way. Make it handwritten on a nice friendly actual card and it will speak volumes compared to the slog of usual emails.

Smart Employment Policies for Nonprofits

Fun & Career-Based Rewards

Little rewards for a job well done like a gift card to the movie theater or providing free pizza in the break room just because. Who doesn’t love an unexpected surprise treat? You can also consider career-related rewards, like paying for an employee’s online class of choice or sending them to an industry conference/event. This illustrates your commitment to investing in their continued education and benefits the nonprofit as well!

Any questions related to smart employment practices at your nonprofit? What are your best ideas to celebrate National Employee Appreciation Day? Don’t hesitate to contact me at gordon@gordonfischerlawfirm.com or by phone at 515-371-6077.

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Celebrating Women’s History Month: Inspiring American Philanthropists

women talking about philanthropy

March is Women’s History Month and to celebrate, I’d like to highlight just a few of the many women who have made their mark on history by practicing smart, impactful charitable giving. Undoubtedly these women believe in advancing philanthropy through “walking the walk” and moving the needle forward on what the modern philanthropy looks like. No longer is philanthropy limited to signing a big check, today’s do-gooders are creative, dedicated, and using social entrepreneurship to draw attention to pressing concerns of the world.

Melinda Gates

Gates, who has received her MBA from Duke, co-founded the Bill & Melinda Gates Foundation in 2000 with her husband. The couple has donated more than $36 billion to different charitable initiatives! Gates has been integral in expanding the reach of the foundation to include areas of focus ranging from global education to developing preventive measures and treatments for life-threatening illnesses, like malaria, tuberculosis, and HIV/AIDS. At the helm of the Foundation, Gates has persistently worked to combat global poverty and has raised awareness about important issues that demand practical solutions like “time poverty.”

Oprah Winfrey

No surprises here! The benevolent media mogul has given hundreds of millions to educational causes (including establishing the Oprah Winfrey Leadership Academy for Girls), endowed her own charitable foundation, and has supported a wide range of other charities ranging in fields from environmental, to arts and culture, to humanitarian. Oprah also regularly uses her platform of fame to encourage her fans/viewers to support charities they care about.

Sara Blakely

Youngest self-made female billionaire and founder of Spanx, Blakely was an early signer of the Giving Pledge, a call to action by founders Bill Gates and Warren Buffett encouraging billionaires to donate at least half of their wealth to charity. Additionally, her company’s foundation supports programs designed to empower underserved women and girls through education, entrepreneurship, and the arts.

Dr. Marilyn Simmons

Simons is president of the Simons Foundation. With a Ph.D. in economics, Simmons was uniquely poised to grow the 1994-established private foundation into a leading funder for math and scientific research.

Dr. Priscilla Chan

As a pediatrician, Chan has incorporated her medical training into the charitable and 501(c)(4) arms of the Chan Zuckerberg Initiative, which operates with ambitious goals such as “to cure, prevent or manage all disease in the next generation’s lifetime.” Also, in 2016, Chan founded The Primary School, a private, nonprofit school in East Palo Alto, California that offers both a high-quality education and healthcare services.

Inspired yet to make your mark and leave a lasting legacy? Of course, this is just a short list. This blog post could go on for days if we let it, as so many women are power players when it comes to charitable collaboration and effective resource management.

Believe me, you don’t need to be wealthy to make a difference and maximize what you can/want to give to your favorite causes and nonprofit organizations. Contact me to discuss strategies that are unique/work for you.

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Turn up the Tunes: Women’s History Month

There are many fantastic ways to celebrate and honor Women’s History Month. To help add to the festivities throughout the month of March, I recommend turning up my latest Spotify playlist.

women's history month

Featuring a collection of empowering, inspiring songs sung by rockstar women. Feel free to crank up the tunes when you: need a positive boost, want to dance it out, or even when you’re brainstorming about how to support gender parity through charitable donations or dedicated nonprofit programs.

Who are your favorite female artists you love to jam out to? I’d love to hear from you on Facebook or Twitter. And if this playlist inspires thoughts about forming a female-focused nonprofit, or building a more representative board, or enhancing programming centered on women’s rights or women’s history? Don’t hesitate to contact me via email or phone (515-371-6077).

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Tax Talk: Private Foundations and Excise Taxes

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private foundation board meeting

When you first read the headline to this blog post you might have been (rightfully) confused. A private foundation is a type of 501(c)(3), so isn’t this type of nonprofit tax-exempt from federal income tax? This is just one of the nuances of private foundations that can make forming and managing them complicated. Previously I’ve covered other aspects about the private foundation that are important for foundation leaders to understand including avoiding jeopardizing investments, prohibited grants, self-dealing, and payout requirements. Today let’s shine the learning spotlight on excise taxes.

Tax Exempt, But…

Even though private foundations are exempt from income tax, they are subject to an annual 2% excise tax on the income they earn on their net investment income. (This is often referred to as the private foundation excise tax.) The purpose of collecting this revenue is to fund IRS oversight of the nonprofit sector.

Can you Reduce the Tax?

In certain circumstances, the excise tax can be reduced to 1%. The tax is reduced in situations where a foundation’s distributions (measured as a percentage of assets) in a given tax year exceed the average payout rate of the foundation over the preceding five years, by an amount at least as much as the 1% tax savings the foundation will obtain. This is called the “maintenance of effort test” and was implemented to make certain that tax savings are being used for added charitable expenditures as opposed to being “pocketed” by the foundation.

What’s the Difference Between Public Charity & Private Foundation

Managing & Administering

Managing and administering the private foundation excise tax can be difficult and complicated, particularly because of the two-tier tax structure. This can also be challenging in decision-making because it somewhat discourages foundations to consider increasing gift for unanticipated grants, such as in the case of a natural disaster or other relief efforts. To comply with the private foundation excise tax requires staff to constantly monitor and adjust spending and savings in order to calculate the correct tax rate.

Payout Requirements for Private Foundations

How to Prepare Your Private Foundation

I highly recommend enlisting an attorney well-versed in private foundation operations in order to stay on top all requirement and avoid detrimental missteps. You may also want to consider implementing training for foundation board members. It’s also a good idea to implement sound policies and procedures and update them when necessary as the foundation evolves and circumstances change.

Nonprofit Policy Special: 10 for Form 990

Questions? Want to learn more about how to make certain your private foundation is set up for success from the start? Don’t hesitate to contact me for a free consultation. You can also download my free, no-obligation nonprofit formation guide!

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