red ornaments Endow Iowa Tax Credit

 Thank you for reading the 25 Days of Giving series! In the spirit of the holiday season I’m covering different aspects of charitable giving…perfect to get you thinking about your end-of-year giving.

There are many, many reasons Iowa is great place to live and work. One reason is the Endow Iowa Tax Credit Program—a smart way to stretch your charitable dollars. Iowa community foundations provide exclusive access to the Endow Iowa Tax Credit program. Giving through the Endow Iowa program allows Iowa taxpayers to receive a 25% Iowa tax credit, in addition to the federal charitable income tax deduction, for qualifying charitable gifts.

The Endow Iowa Tax Credit Program provides unique opportunities to meet philanthropic goals while receiving maximum tax benefits. Highlights of this program include:

  • A variety of gifts qualify for Endow Iowa Tax Credits including cash, real estate, grain, appreciated securities, and outright gifts of retirement assets. In fact, appreciated assets, like stocks or real estate, can provide even better value because the donor may avoid capital gains taxes.
  • To be eligible, gifts must benefit an Iowa charity.
  • Tax credits of 25% of the gifted amount are limited to $300,000 in tax credits per individual for a gift of $1.2 million, or $600,000 in tax credits per couple for a gift of $2.4 million, assuming both are Iowa taxpayers.
  • Eligible gifts will qualify for credits on a first-come/first-serve basis until the yearly appropriated limit is reached. If the current available Endow Iowa Tax Credits have been awarded, qualified donors will be eligible for the next year’s Endow Iowa Tax Credits. Donors should be encouraged to to act as early in the year as possible to ensure receipt of credits as soon as possible.
  • All qualified donors can carry forward the tax credit for up to five years after the year the donation was made.

There is one “catch.” Funds can only be granted at a spend rate of 5% per year. It should also be noted that the Endow Iowa Tax Credits are capped. The Iowa Legislature sets aside a pool of money for Endow Iowa, and it’s available on a first-come, first-serve basis. Submitting an application at the beginning of the tax year is advised, as tax credits often run out toward year’s end. In fact, this year approximately $6 million in tax credits were awarded and there are no more available credits to be granted. However, you can submit your application to be placed on the wait list for 2019 tax credits.

In exchange for 25% Iowa tax credit and the opportunity to have an even greater impact on their philanthropic interests in the state of Iowa, now and into the future, the Endow Iowa Tax Credit Program should be seriously considered by all. The impact is immense: in 2016, donors received tax credits for more than 4,030 separate donations to at least 120 different community foundations and affiliate organizations through Endow Iowa. And, since 2003, more than $215 million has been invested through the program to improve residents’ lives.

Any questions or thoughts on how the Endow Iowa Tax Credit Program could mean big benefits for your finances and your state? Don’t hesitate to contact me.

For better or worse, for most nonprofits in the U.S., end-of-year giving comprises a significant portion of the charitable donation pie. In fact, between October and December nonprofits receive half of all annual donations! Yes, you read that right.

The last quarter of the year accounts for donations equal to those raised the other nine months out of the year. Even more intriguing? 33 percent of donations made in December occur on the 31st of the month and 12 percent of all giving happens in the last three days of the year….talk about last-minute donors!

snow-globe-christmas

Why is this the case? There are multiple reasons. First, time is of the essence for donors to make a tax-deductible charitable gift before January 1 of the new year. Nonprofits are also racing to meet annual fundraising goals and typically spend a significant portion of resources in order to exceed fundraising levels of the previous year. Additionally, the holiday season is synonymous with the actions of gifting, love, peace, joy, and a time to be generous. This means donors can be extra receptive to a charity’s marketing campaign that extolls these feelings that now is the best time for giving.

This is all to say, last-minute fundraising efforts can and should be used to target prospective last-minute donors. It’s a busy time of year for all, but the return for a strong end of year fundraising push can be well worth the time and energy. Consider these quick tips:

What are you Doing New Year’s Eve?

new year sparkler

Because New Year’s Eve day is such an important day for charitable donations, do not hesitate to keep fundraising through the very end of the year. Make those calls and get out the digital media campaigns. Reinforce to donors that December 31 is not too late and they’ll qualify for the charitable deduction federal income tax benefits on 2017 taxes.

Make Your Homepage Your Home Base

Your website should be the home base for year end giving. If you don’t have one yet, publish a dedicated page (or site) specifically for end-of-year giving information and brand it with your associated year end campaign. It doesn’t have to be complex, just consolidate the basics of who you are, what your mission is, and how donations help solve an issue or advance a cause on one campaign page.

homepage Mac fundraising

To that point, also take a review of your online donation page. If you can, brand it to fit with your end-of-year campaign…branded donation forms can mean up to seven times more than a non-branded, generic donation portal. Also, make sure the online donation portal is easily accessible no matter “where” the donor is coming from. Also, ensure all giving and donations portals are optimized for mobile access. (18 percent of all digital-made donations come from mobile devices.)

Ready, Set, Action

If you haven’t already, make a 60-second (or shorter) video explaining how donations to your charity can make an impact. A video can be an incredibly powerful tool for cutting through the end-of-year giving noise; videos can leave a lasting impact of imagery and tell an emotional story often better than just words or photographs can. According to a Google survey on online donation patterns, 57 percent of online donors make a charitable donations after watching a fundraising video that tells an inspiring story. This is exemplified through the ever-growing crowdfunding platforms; crowdfunding pages that have a video promo component raise four times as many donations as those that don’t. Just like your website and online donation pages need to be optimized for mobile, more than half of all videos happen on mobile.

video on iphone

Video content creation can sound scary at first if you don’t have a marketing team in place to facilitate, but it doesn’t have to be. Consider these tips, bust out your iPhone, acquire a tripod if possible, and use your laptop’s basic editing software. If you don’t have enough “last minute” time for that, shoot a video like you would for your own personal Instagram story or Facebook page.

Communicate, Communicate, Communicate

Remind your prospective donors what you stand for and what benefits they stand to gain with at least one weekly email each week before the end of year. Also, send out a special dedicated email early on both December 30 and December 31. As most year-end donors know they will in fact donate, they’re just undecided about how much they will actually give. Make it ridiculously easy for donors to “see” what their donation could do.

In terms of timing, for example, on December 31  send out follow-up emails to only those donors who didn’t open the first iteration of the communication. Stay on message with all social media postings and branded links back to your donation page.  

Celebrate!

After the year end fundraising push, don’t forget to reward your nonprofit’s hardworking staff and volunteers! Refresh, refocus, and get ready to tackle your next year’s fundraising goals.

Happy new year headband

What year-end fundraising tactics have worked well for your charity? Share in the comment section below. If you’d like to discuss any aspect of nonprofit fundraising, don’t hesitate to reach out via email (gordon@gordonfischerlawfirm.com) or phone (515-371-6077).

christmas words giving

Thanks for the reading the 25 Days of Giving series…almost as good as this whiskey advent calendar, am I right? Each day through Christmas, I’m covering different aspects of charitable giving for both donors and nonprofit leaders. Have a topic you want covered or question you want answered  regarding charitable giving? Contact me.

Sure, info on tax incentives is important and details on donating stock are interesting, but sometimes just a good quote has the power to spark giving. According to this study, 31% of ALL online charitable giving in the U.S. happens in the month of December! If you’re a nonprofit looking to increase end-of-year donations or even a donor seeking to inspire your friends and family to give charitably, these quotes could come in handy.

The true meaning of Christmas? Giving.

giving snowflake quote

Giving makes you happy.

Happiest giving quote

Not giving is not an option for the causes you care about.

Doing nothing giving quote

Giving while you’re living means making a difference in the future.

Real generosity

Giving can be complex, but it doesn’t have to be. Enlist an expert to help you meet your giving goals.

Aristotle giving quoteGiving is a privilege

Rockfeller giving quote

Giving “costs nothing.”

giving quote free

What you give is what you get.

get out of this world giving

Giving means a lasting legacy.giving immortal quote

If you want to share one of these quotes, don’t hesitate to tag Gordon Fischer Law Firm on Facebook, Twitter, and Instagram.

heart in pages of book

Welcome to the newest post in the 25 Days of Giving series. Have questions or a topic  related to charitable giving you want covered as a part of the series? Contact us!

You want your favorite charity to be wildly successful. Whether you’re working for the nonprofit as staff, serving on the board of directors, or assisting as a donor or volunteer, you want your nonprofit to have every chance to reach its goals and objectives. 

The Internal Revenue Service (IRS) strongly encourages nonprofits to adopt specific governance policies to limit potential abuse, protect against vulnerabilities, and prevent activities that would go beyond permitted nonprofit activities. The IRS also audits nonprofits, just as it audits companies and individuals, and having these policies in place can only help you should you be audited. Finally, and perhaps most importantly, having solid policies and procedures in place will provide foundation for soliciting, accepting, and facilitating charitable donations. 

Each nonprofit is unique, and accordingly policies and procedures needed will vary for each. For instance, a non-operating private foundation will likely need a different set of documents than a public charity. However, most nonprofits will want, at the very least, to consider having the following policies in place. 

Articles of Incorporation

Articles of incorporation are necessary to even form a nonprofit corporation; the document is filed with the state and accompanied by a filing fee. This policy can be known by other monikers as “certificate of incorporation,” “articles of organization,” or “charter document.” Think of this as the constitution of the organization. While it can be fairly short, there are some necessary elements in the articles that are required for federal tax-exempt status. Those elements include a statement of purpose, legal address, emphasis on not-for-profit activities, duration, names and address of director(s), and a dissolution clause, among others. You may want to check out the IRS’ sample charter.

Board Roles and Responsibilities

Nonprofit board members are generally tasked with two major responsibilities of support and governance. A board’s rules and responsibilities document should outline the requirements and responsibilities of board members. Some examples of basic components include fundraising participation, determining the organization’s mission and direction, selecting and regularly evaluating the nonprofit director/CEO, and protection of public interest. A policy regarding board roles and responsibilities should encourage nothing short of ethical and legal integrity within board members.

boardroom chairs

Bylaws

If you’ve ever been part of any board or committee, you’ve definitely heard reference to the bylaws and received a copy upon joining the organization. Nonprofit bylaws serve as the internal operating methods and rules that specify things like the election process of directors, employee roles within the nonprofit, and operational manners of meetings. Specific language in the bylaws is not required by federal tax law, but some states may require nonprofits to have written bylaws to be considered tax exempt. This document can most often be used to resolve uncertainty between board members and takes the guesswork out of operations.

Code of Ethics

Just as it sounds, a code of ethics document puts in place a set of guiding principles for behavior, decisions making, and activities of those involved in the nonprofit, including board members, employees, and volunteers. While principles innate to your organization such as honesty, equity, integrity, and transparency may be understood by all involved, this formal adoption allows those involved to make a formal commitment to ethical actions and decisions. Sometimes this document is known as a “statement of values,” or “code of conduct.” Many organizations post their code on their website to demonstrate accountability and transparency.

Compensation Policy

Competitive compensation is just as important for employees of nonprofits as it is for for-profit employees. Having a set policy in place that objectively establishes salary ranges for positions, updated job descriptions, relevant salary administration, and performance management is used to establish equality and equity in compensation practices. A statement of compensation philosophy and strategy which explains to current and potential employees and board members how compensation supports the organization’s mission can be included in the compensation policy.

Confidentiality

A nonprofit’s board members have a duty of confidentiality due to their fiduciary obligation to the organization. This duty is there regardless of any written policy or not, but it’s certainly a best practice to clarify and explain why and how confidentiality is important to the specific organization. A confidentiality policy can include elements such as the following:

  • definitions of what matters are considered confidential
  • determination to whom the policy applies
  • statement that board members do not make any public statements to the press without authorization
  • a process by which confidential material may be authorized for disclosure

secret mouth

Conflict of Interest

This is arguably one of the more essential policies a nonprofit board should adopt. A conflict of interest policy should do two important things:

  • require board members with a conflict (or a potential conflict) to disclose it, and
  • exclude individual board members from voting on matters in which there is a conflict.

Note the IRS Form 990 asks whether the nonprofit has such a policy as well as how the organization manages and determines board members who have a conflict of interest. This policy is all too important as conflicts of interest that are not successfully and ethically managed can result in “intermediate sanctions” against both the organization and the individual with the conflicts.

Document Retention

A document retention policy doesn’t mean that EVERY piece of paper and digital report should be kept for a specific duration. But, consider if a document is unknowingly tossed by a nonprofit employee and is later needed in a legal matter. That can cause irrevocable damage. So, ensure all board members, staffers, and volunteers are trained and have a copy of the document retention policy, which should clarify what types of documents should be retained, how they should be filed, and for what duration. This policy should also outline proper deletion/destruction techniques.

Employee Handbook

An employee handbook is another one of the more common nonprofit documents. A quality handbook should clearly communicate employment policies and enforce at-will provisions to all employees. Employment laws are complicated and complex. An employee handbook written/reviewed by a licensed attorney is a good legal step toward avoiding employment disputes. (Yes, just as you need a lawyer to write your estate plan, you’ll need a lawyer to craft/review your employee handbook.) Review your employee handbook regularly, as an out-of-date or poorly written handbook can leave the organization open to employment ambiguity and conflicts.

Financial Policies and Procedures

This document specifically addresses guidelines for making financial decisions, reporting financial status of the organization, managing funds, and developing financial goals. The financial management policies and procedures should also outline the budgeting process, investments reporting, what accounts may be maintained by the nonprofit, and when scheduled auditing will take place.

Endowment

This resolution concerns funds (and the interest from these funds) that are kept long term. It  generally aids the organization’s overall operations. An endowment policy should consider the purpose of the endowment, how the endowment will benefit the mission of the nonprofit, management practices of the endowment, disbursement policies, and investment strategy. (This blog post from GuideStar offers five steps to starting an endowment.)

Gift Acceptance

Gift acceptance is yet another policy the IRS considers to be a best practice for any tax-exempt nonprofit, and the gift acceptance policy can help set acceptance policies for both donors and the board/staffers. There is no federal legal requirement, but this policy does allow you to check “Yes” on Form 990. If well-written and applied across the organization, the policy can help the organization to kindly reject a non-cash gift that can carry extraneous liabilities and obligations the organization is not readily able to manage.

Outstretched hand

Investments

One way a Board of Directors can fulfill their fiduciary responsibility to the organization is through investing assets to further the nonprofit’s goals. But, before investment vehicles are invested in, the organization should have an investment policy in place to define who is accountable for the investment decisions. The policy should also offer guidance on activities of growing/protecting the investments, earning interest, and maintaining access to cash if necessary. Many organizations hire a professional financial advisor or investment manager to implement investments and offer advice. This person’s role can be accounted for in the investment policy.

Whistleblower

Nonprofits, along with all corporations, are prohibited from retaliating against employees who call out, draw attention to, or “blow the whistle” against employer practices. A whistleblower policy should set a process for complaints to be addressed and include protection for whistleblowers. Ultimately this policy can help insulate your organization from the risk of state and federal law violation and encourage sound, swift responses of investigation and solutions to complaints. Don’t just take it from me, the IRS also considers this an incredibly helpful policy:

“A whistleblower policy encourages staff and volunteers to come forward with credible information on illegal practices or violations of adopted policies of the organization, specifies that the organization will protect the individual from retaliation, and identifies those staff or board members or outside parties to whom such information can be reported. (Instructions to Form 990)

Policies = Powerful

While these documents may sound like a lot of work, the time and energy you place into ensuring your nonprofit is set up for success will pay off in the long run by saving you legal and IRS fees, internal conflict, violations, and compliance issues. Plus, you can enlist a qualified nonprofit attorney to do the leg work for you! 

You may say, “My organization already has a great set of policies in place!” Which is great. But, you should continuously update them as needed/wanted. A policy from 2002 may have been perfect at the time, but could be in dire need of updates.

I’d advise making policies the main subject of a board meeting to review what policies have been adopted, which policies need revisions, and which policies you’re missing altogether. If you’re not sure where to start, or how policies should be drafted, read, or enacted, I would be happy to offer you a free one-hour consultation. You can also take me up on my 10 for 990 policy special.

I’m here to assist in drafting or revising your set of nonprofit policies, so don’t hesitate to contact me via email or phone (515-371-6077). We’ll schedule your free one-hour consultation and make a plan to set your organization up for success!

(Note this article is provided for general information only and not intended as legal advice for your specific nonprofit organization. Again, please contact me to discuss your organization’s unique needs.)

Candles and christmas tree for charity auction

Thanks for reading the 25 Days of Giving series! Share with friends, family, & colleagues. Knowledge is indeed a “gift” when it comes to encouraging and maximizing smart charitable giving

Headed to a holiday party this season? If it’s to celebrate/fundraise for your favorite charity, you might experience an auction (silent or otherwise). Charity auctions can be great fun and it feels like you’re giving back while also gaining a great gift to tuck under the Christmas tree!

Sometimes charity auction participants mistakenly believe their successful bids are completely deductible. However, since the individual receives the auction property, there is usually no federal income tax charitable deduction. But, if the bid can be shown to be in excess of the fair market value of the item, the amount in excess can be deducted as a charitable contribution.

The charity may make a “good faith estimate” of the fair value of the auction item before bidding commences.

Noel at charity auction

Let’s look at a few easy examples:

Example 1. A $50 gift certificate to a retail store is purchased at charity auction for $40. No deduction.

Example 2. A different $50 gift certificate to the spa is purchased at the charity auction for $70. This generates a $20 charitable deduction.

Example 3. You bid on and win a fruit basket for $30 at an auction supporting a local high school basketball program. The equivalent fruit basket at a local grocery store would cost $15, so you may receive a $15 tax deduction.

Unsure if your actions at a charity auction mean a charitable deduction? It’s always a good idea to get a second opinion. Also, if you’re a nonprofit leader planning on hosting a charity auction it’s advantageous to be briefed on all the tax and legal rules surrounding the event in case donors ask. I’m always happy to help and offer a free one-hour consultation. Reach me by phone at 515-371-6077 or by email at gordon@gordonfischerlawfirm.com.

Girl hanging ornaments on tree

Happy 25 Days of Giving Series! If you’ve been reading along throughout December so far, thank you. If you’ve happened upon the GoFisch blog just now, welcome. I hope to see you back here often.

Celebrating the holidays with children, be it family or friends’ children, can be a wonderful opportunity to “see” the magic and delight of the season through their experiences. The season of giving is also an opportune time to teach and reinforce the importance of a different kind of giving beyond the wish lists for Santa and filled stockings. Consider these few tips when teaching the future generation of philanthropists about why charitable giving is important, and how to practice charity during December…and all year round.

Think Tradition

holiday themed cupcakes

Just like decorating cookies, trimming the tree, singing carols, or any other one of your family traditions, charitable giving can be made into an annual family affair. Incorporate this in a way that works for you and your family. One idea is instead of the traditional advent calendar in which children would usually get a small toy or candy each day give some loose change or “gift” a charitable activity you can do together. For the money, the child can collect and then then at the end of the advent period have then donate their money to a cause they care about.

Talk About It Together

Similarly to how I counsel my estate planning clients on the importance of speaking with family members about decisions for their estate, it’s important to actually talk about charitable giving as a family. Indiana University Lilly Family School of Philanthropy conducted a study and found that children whose parents talk with them about donating are 20% more likely to give to charity than kids who do not have those conversations with their parents.

snowmen figurines

Visit local charitable organizations together. (Or, if that’s not accessible at least go online to the charities’ websites.) Introduce your child to what the charity does and why it’s important. Organizations whose missions align with your child’s interests are a good place to start. For instance, the kid who loves animals may be interested to know that the local animal rescue helps animals when they get lost or hurt.

Practice What You Preach: Volunteer Time

Charitable giving doesn’t just have to be monetary. When possible set up volunteer activities you can do together. However, volunteer opportunities for children can be limited, so don’t be afraid to get creative. If your kiddo loves riding her bike around the park, plan a day where you pick up trash around the park. If your son loves to help you plant flowers, see if he can help out at the community garden. Of course, youth organizations like scouting programs (for example), can be a great opportunity for your child to put charitable work into action. Kids, just like most of us, will better be able to “see” the impact of charitable giving when they experience it firsthand. (Note: volunteer time is not tax deductible, but out-of-pocket expenses associated with volunteer work are!)

child in front of stocking

Shared Generosity

From your year-end giving charitable dollars, set aside a portion specifically for the kids to decide how to allocate. Have them brainstorm on with you and provide them with any suggestions/charities to match the causes they care about. You could also try out a matching program. Explain to them that every dollar they save throughout the year and want to donate to charity, you’ll match. If you need a colorful visual explain with Monopoly money.

 How do you involve your entire family with charitable giving? I would love to hear your ideas. Remember, this doesn’t have to be your own children. If you’re a teacher or simply an involved aunt/uncle or grandparent you can still instill in children the important philosophy of why giving can be the best gift of all.
Questions about your own year-end charitable giving? Contact me by email or phone (515-371-6077) at any time. 
woman holding ornament

Thanks for the reading the 25 Days of Giving series. Each day through December 25, I’m covering different aspects of charitable giving for both donors and nonprofit leaders. Have a topic you want covered or question you want answered regarding charitable giving? Contact me.

I’ve covered the term quid pro quo in a previous legal word-of-the-day blog post and much of that applies to understanding quid pro quo donations. In short, quid pro quo (now you know Latin!) translates to “something for something” and means an exchange of goods or services, where one transfer is contingent upon the other. In the case of nonprofit organizations, sometimes a good or service is offered in exchange for a donation. When the donor makes a charitable donation more than $75 and the nonprofit offers a good or service in exchange for said donation, the tax-exempt charity must provide a written statement to the donor disclosing the following:

  • Statement of the good(s) or service(s) received in exchange for donation
  • A fair market value (FMV) of the good(s) or service(s) received.
  • Information for the donor that only a portion of the total contribution (the portion that exceeds the FMV) is eligible for a federal income tax charitable contribution deduction.

What Nonprofits Need to Know

merry christmas event menu

As a nonprofit organization offering a quid pro quo donation situation, there’s a penalty for not making the required disclosure of contributions great than $75. The penalty is $10 per contribution up to $5,000 per fundraising mailer or event. If your nonprofit fails to disclose, but can prove the failure was due to a reasonable cause, the penalty may be avoided.

Offering a good or service as an incentive for a donation can be a great way to spark donor interest, but you’ll definitely want to determine the FMV and have a reasonable method, applied in good faith, for doing so. This can be easier said than done for goods and services that are not generally or commercially available. If that’s the case it’s recommended to estimate the FMV off of similar/comparable products and services that are available. Let’s consider a couple examples:

Example 1. For a contribution of $20,000 a history museum allows a donor to hold a private event in a ballroom of the museum. The museum doesn’t typically rent out this room, so how can a FMV be determined if there’s no standard rate? Looking at other similarly sized and quality ballrooms in the surrounding, general area cost $3,000 a night to rent. So, even though the museum’s ballroom has unique artifacts, a good faith estimate of the FMV of the museum’s ballroom is $3,000. The donor would then have a charitable contribution deduction total of $17,000.

Example 2. Your charity offers a one-hour golf lesson with a golf pro at the local country club to anyone who donates $500 or more. Usually the golf pro can be hired for a one-hour lesson for $100. An estimate made in good faith of the lessons’s FMV is $100.

Example 3. What if the service offered is unique, but is typically free? A state park foundation fundraiser advertises that a donation of $200 or more entitles you a spot on one of four different guided nature hikes with a volunteer park ranger. Typically the foundation doesn’t offer guided hikes to the general public, but hiking in the state parks is otherwise free. So, the FMV made in good faith for the hike is $0 and the charitable contribution eligible for deductions would be the full amount.

The only time you wouldn’t need to disclose the quid pro quo donation is when the good(s) or service(s) are of insubstantial value. The IRS also says disclosure is not required when the donor makes a payment of $75 or less (per year) and the exchange is only membership benefits that equate to, “Any rights or privileges (other than the right to purchase tickets for college athletic events) that the taxpayer can exercise often during the membership period, such as free or discounted admissions or parking or preferred access to goods or services.” The contribution can also stay undisclosed if the good/service is, “Admission to events that are open only to members and the cost per person of which is within the limits for low-cost.”

Basics of What Donors Need to Know

woman in winter with scarf

As a donor, if you’re making a contribution to an organization and receive something in exchange, know that it’s almost like you’re paying for the good/service you receive, but then can deduct the rest of the contribution.

Let’s say you make a charitable contribution of $100 to a 501(c)(3) organization that helps mistreated farm animals. To celebrate their anniversary, the organization is offering donors that gift $80 or more a large coffee table book filled with stories, poems, and photographs of the animals the organization has helped over the years. The book’s fair market value is $30. This FMV is based on the price if you were to buy it outright from the organization’s online shop. In this situation you as a donor would need to receive a written disclosure detailing your contribution amount ($100), FMV of the good (the book) received ($30), and the portion that is considered a tax-deductible charitable contribution amount ($70).

Even though the tax-deductible charitable contribution amount is $70 (less than the $75 threshold), the total donation was $100, so the charity is still required to provide a written disclosure.

Whether you’re a donor or a nonprofit leader, I’m here to help promote and maximize charitable giving in Iowa. Questions about written disclosure compliance or FMV calculation? Don’t hesitate to contact me.

We’re now well into the 25 Days of Giving Series and it’s my intent to provide different aspects and strategies of charitable giving. Given that it’s the season of joy, sharing, and love it’s a great time to be thinking about smart giving (the kind that doesn’t involve gift wrappings, stockings, or bows). Read on to learn how the charitable remainder trust could be a valuable giving tool. 

Charitable Remainder Trust, defined

A charitable remainder trust (CRT) is a split interest trust that pays out income to one or more non-charitable beneficiaries for life (or lives) or a term of years not to exceed twenty. The selected payout rate may not be less than 5%, and no more than 50%, of fair market value (FMV) of assets originally placed in trust. At the end of the trust term, the remaining trust assets (the remainder interest) is distributed to charity selected by the donor; the actuarial value of the charity’s remainder interest must be at least 10% at the time of the trust’s creation.

Benefits of a CRT

  1. Note that a useful attribute of a CRT is flexibility. Although Donor’s transfer of property to the trust is irrevocable, a CRT provides for Donor the right to change charitable beneficiaries.
  2. Note also the tax benefits of a CRT. Donor may receive a federal income tax charitable deduction for the value of the remainder interest in the year of the transfer, Donor may transfer assets without recognition of capital gain tax, and there is no estate tax on the property passing to Charity.

Two forms: CRAT and CRUT

CRTs take one of two forms: a charitable remainder annuity trust (CRAT) or a charitable remainder unitrust (CRUT). There are important differences:

A CRAT pays an annuity to the income beneficiary at a selected payout rate that is a percentage of the assets valued at the time of the trust creation. Additional contributions to the trust are not permitted.

A CRUT pays a percentage of the annual value of the trust assets, a unitrust amount, to the income beneficiary. Additional contributions to the trust are permitted.

Variations of CRUTs

Several variations of the CRUT are permitted under the Internal Revenue Code:

  1. A Net-Income CRUT (NICRUT) permits the trustee to distribute an annual payment that is the lesser of the specified percentage of value in that year, or the net income actually earned by the trust in that year.
  2. A NIMCRUT is a CRUT with a net-income limitation subject to a make-up provision. Like a NICRUT, the terms of a NIMCRUT direct the Trustee to pay the lesser of the specified percentage of the value of the trust assets in that year or the net income actually earned by the trust in that year. However, if the payout is less than the specified percentage is paid out in one or more years, the accumulated “income deficits” will be made up in a subsequent year from the excess income above what is the specified percentage of the value of the trust assets in that year.
  3. A Flip CRUT permits the trust to begin its existence as a NICRUT or NIMCRUT, then “flip” into a standard CRUT on the occurrence of a specific triggering event, as provided in the trust document. The flip option is attractive when Donor wishes to donate to the CRUT illiquid or hard-to-market assets, such as real estate or closely held stock.

 

butterfly on finger

​Knowing if the CRT is a best choice for your charitable giving can be difficult, so I advise speaking with your trusted professional advisors to evaluate your situation. This concept can be confusing, so don’t hesitate to reach out for more information and explore how a charitable remainder trust could be beneficial to you. Feel free to contact me at any time at Gordon@gordonfischerlawfirm.com or by phone at 515-371-6077.

#GivingTuesday world

The mission of Gordon Fischer Law Firm is to maximize charitable giving in Iowa. To that end we work with nonprofits on legal compliance and training for accepting gifts (especially complex ones) as well was the donors who want to give to their favorite organizations and causes. Small Business Saturday is great for the community and Cyber Monday is fun, but the post-Thanksgiving “day” we look forward to the most is #GivingTuesday.

Created by the Belfer Center for Innovation & Social Impact at the 92nd Street Y in New York, along with the United Nations Foundation, in 2012, #GivingTuesday is a celebration for support of philanthropy and giving. Social media has helped grow the event into a global occasion, connecting countries, organizations, and donors around the world.

#GivingTuesday marks the middle of the seasonal giving system—33% of charitable donations consumers occurs year-round. Whether you’re prepping your nonprofit’s activities, messaging, and events for #GivingTuesday or are a donor preparing to give (and encourage others to do the same) let’s take a look at some stats from last year (2017) that show the enormous impact #GivingTuesday has.

All year, not just on #GivingTuesday, GFLF is thrilled to work with nonprofit organizations on elements of operations including, but certainly not limited to;

  • Training of nonprofit boards and staff and educating on charitable giving tools and techniques;
  • Employment law guidance for nonprofits including advice about hiring and firing, and drafting of policies and procedures;
  • Handling compliance issues, like forming a 501(c)3 and Form 990 reporting; and
  • Working with nonprofit and donors on complex gifts.

If your nonprofit is interested in any such services, I offer a free consultation!

#GivingTuesday is a reminder that, against the backdrop of the “busy” of the holiday season, the spirit of giving is thriving. Want to talk charitable giving? Reach out anytime by email or phone (515-371-6077)

2018-giving-tuesday

After the onslaught of Black Friday advertising and Cyber Monday announcements filling up your inbox, Giving Tuesday (November 27 this year) feels like a breath of fresh (wintery) air from the shopping rush. The “holiday,” often known by its social media tag of #GivingTuesday, is all about celebrating generosity and philanthropy. Giving charitably to your favorite organizations feels great and allows you to make a difference in your community, state, and the world. But, you also want to make sure your gift is legally compliant and beneficial, particularly for those who are “bunching” their donations to claim the charitable deduction on federal income taxes

Before you donate on #GivingTuesday (or any other day) consider these legal tips:

Make Sure the Charity is Qualified

A charitable deduction can result in significant tax savings, but for that to occur, the donation must be made to a qualified 501(c)(3). While that may sound basic, some initiatives may look like nonprofits but actually operate as a business, not a tax-exempt organization. A little bit of research can go a long way here. First, read up about the organization in question online and don’t hesitate to call to speak to a representative. You can also use the IRS’ Exempt Organizations Select Check; limit the search to organizations eligible for tax-deductible charitable contributions.

(If your favorite organization is in need of assistance for obtaining tax-deductible status, don’t hesitate to reach out.)

#GivingTuesday What Will You Give?

Sufficient Documentation

Proper documentation is required in order to take the charitable contribution deduction for contributions of $250 or more. This means you need written acknowledgement that expresses the required info of the donee (charity), date of donation, and monetary amount. It’s your legal obligation as the donor to ask for the written acknowledgement, not the charity’s obligation to offer it.

Here’s a simple breakdown of what’s needed for specific types of giving-

  • Gifts of less than $250 per donee — you need a cancelled check or receipt
  • $250 or more per donee — you need a timely written acknowledgement from the donee
  • Total deductions for all property exceeds $500 — you need to file IRS Form 8283
  • Deductions exceeding $5,000 per item — you need a qualified appraisal completed by a qualified appraiser

Need more info? I go into detail about appraisers in this blog post.

Restrict in Writing

If you feel strongly about a specific program, region of operation, or use within the nonprofit, you’ll want to restrict the charitable donation. The restriction must be made in writing, at the same time as the donation is made.

Going Global

#GivingTuesday has expanded greatly since its founding in NYC to become a global event. You may hold a foreign-based charitable organization near and dear to you heart and, of course, you may give to that organization, however your donation won’t qualify for a charitable tax deduction

Background Research

I work with my estate planning clients on defining their goals for their future and assets. The same baseline advice applies to charitable giving—what are your goals? Do the organizations you are donating to support your giving goals? Look at materials published by  One way to gauge this is by reviewing the nonprofit’s annual information on its Form 990, “Return of Organization Exempt From Income Tax.” This form is intended for the public and includes important financial info. The IRS publishes Form 990 and it’s easy to check out the details on Guidestar, a nonprofit database.


If you have any questions on how to give charitably and do so wisely, don’t hesitate to reach out. Maximizing charitable giving in Iowa is the mission of Gordon Fischer Law Firm and we want to help as many Iowans give confidently as we can!