December 2024 Donor/Fund Holder Newsletter

The tax road ahead, doing good in retirement, and life insurance as a charitable giving tool

Greetings from the community foundation! 

It is our honor to work with you to achieve your charitable giving goals. The team at the community foundation enjoys every minute of helping individuals, families, and businesses support the community causes that mean the most to you. If you’ve not yet established a fund at the community foundation but are considering doing so, we look forward to helping you explore the various options. 

As your home for charitable giving, the community foundation keeps you informed of the latest developments in philanthropy. Notably, three topics are emerging as particularly important to you and other donors and fund holders:

• It can be daunting to wrap your head around all of the potential changes (or lack of changes) that may occur in the Federal tax laws as we emerge from election season and into a new administration. The community foundation is here as a sounding board to help evaluate the planning techniques that might be most useful as you build your charitable strategy, including tools like the brand new Illinois Gives tax credit beginning January 1, 2025, charitable lead trusts, “bunching” your donations, and using your IRA for charitable giving. Read More

• As people approach retirement, they’re often wondering whether and how to get more involved in the community. The community foundation is happy to help you build a roadmap for your charitable giving, ranging from getting your family involved to deploying tax-savvy strategies. You might be amazed at how much “doing good” you can weave into your golden years! Read More

• Life insurance is a popular and important financial planning tool. In some cases, life insurance can even be an excellent tool to support your charitable giving. The community foundation is happy to work with you and your advisors to explore how you might use your life insurance policies to further your philanthropic goals. Read More

Thank you for the opportunity to work together! Wishing you all the best for the holidays.

With sincere gratitude…

Your Morton Community Foundation Staff
Scott Witzig, Executive Director
Darcy Roecker, Administrative Manager

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Charitable tax tips for the road ahead

No doubt you are reading plenty about potential tax planning strategies in an uncertain post-election environment. Now is a great time to lean on the team at the community foundation as you work with your attorney, CPA, and financial advisor to determine whether and how to update your estate and tax plan. Here are three examples of the wide range of charitable planning topics we’d be glad to discuss with you and your advisors as you look into the future:

The NEW Illinois Gives Act: Effective for tax years ending on or after December 31, 2025 (Donations beginning Jan 1, 2025), the Illinois Gives Tax Credit Act creates an income tax credit for taxpayers who make a qualified contribution to a permanent endowment fund during the taxable year. The endowment funds provide charitable grants exclusively for the benefit of residents of the State or charities and charitable projects located in the State. (35 ILCS 60/170)

Eligible endowment funds must be held by Qualified Community Foundations (QCFs like the Morton Community Foundation) who must be approved by the Illinois Department of Revenue (IDOR) before accepting contributions eligible for income tax credits or issuing Certificates of Receipts (CORs) to donors.

Time for a charitable lead trust? The team at the community foundation can help you and your advisors evaluate whether a potential continuation of low interest rates might mean that a charitable lead trust would be a good fit for you. Through a charitable lead trust, you can arrange for an income stream to flow into your fund at the community foundation while future asset appreciation passes to your heirs, minimizing tax consequences. You can also use a charitable lead trust to take advantage of the presently high estate tax exemption, especially in light of uncertainty as to whether it will continue past the end of 2025.

Bunching your charitable gifts. Right now, the standard deduction is still high. It’s a good reason to consider making a gift to a fund at the community foundation this calendar year that allows you to itemize your deductions. If you give appreciated stock to your donor-advised fund, for example, you can not only avoid capital gains tax, but also use a large gift this year to support your favorite charities now and for years to come.

Use your IRAs for charitable giving. Even with all the question marks, it is reasonably safe to suspect that IRAs will remain excellent tools for charitable giving. If you are over the age of 70 ½, absolutely get in touch with the community foundation team to arrange for a tax-savvy Qualified Charitable Distribution of up to $105,000 (increasing to $108,000 in 2025) to a designated, field-of-interest, or unrestricted fund at the community foundation. And, regardless of your age, it is worth considering naming your fund at the community foundation as the beneficiary of your IRA or other qualified plan because not only is estate tax avoided, but your fund won’t trigger the income tax that would apply if IRA proceeds flowed to your heirs. 

The net-net here is that we encourage you to reach out to us and/or toyour professional advisor/tax accountant! The team at the community foundation is here to help you support your favorite causes. It is our honor to serve as your home for charitable giving. 

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Doubling down: More good in your retirement years 

If you’ve reached or are nearing retirement age, you may be evaluating how charitable giving fits into your life in a bigger way than it did during your working years. If you’ve found that you have more time, more money, or both, now that work and raising children are in the rear view mirror, be sure you’re familiar with the various charitable giving techniques that are most appealing to retirees and the various ways the Morton Community Foundation can help.

Here are four signals that it may be time to update your philanthropy strategies with the help of the Morton Community Foundation:

• You’re feeling more connected to local issues. Retirees often feel a greater connection to their community and favorite charities than people who are not retired. Whether it’s because annual income and corresponding giving capacity are more predictable, or because you have more time, getting involved with favorite charities can help you stay active and even avoid loneliness. The Morton Community Foundation stays in close contact with the many nonprofit organizations in our region, and we are happy to serve as a sounding board as you ramp up your involvement. 

• You may be less likely to itemize deductions. Many retirees apply the standard deduction on their income tax returns because they don’t have many expenses that qualify for itemization, such as business expenses and mortgage interest deductions. Now is a good time to evaluate with your tax advisor whether itemizing deductions in certain years could be beneficial. Through your fund at the community foundation, you may be able to concentrate charitable contributions to your donor-advised fund in particular tax years to trigger itemized deductions. This is called “bunching,” and a donor-advised fund, for example, can help you take advantage of itemizing tax deductions while still allowing you to provide steady support to nonprofits out of that fund in years that follow the itemizing year.

• You are more interested in involving your children and grandchildren in your philanthropy. The Morton Community Foundation is happy to help you fulfill your desire to stay connected with children and grandchildren, including formalizing roles for family members as advisors and successor advisors of your donor-advised fund at the MCF, or involving younger family members in site visits and other educational programs. The Morton Community Foundation offers many ways to structure philanthropic priorities for generational wealth as well as create positive, authentic communication channels across an extended family.

• You are ready to start making Qualified Charitable Distributions. If you are at least age 70 ½, you can direct a tax-free distribution (up to $105,000 per spouse in 2024 and $108,000 in 2025) from an IRA to a qualified charity such as a field-of-interest or designated fund at the Morton Community Foundation. If you must take Required Minimum Distributions (RMDs), the Qualified Charitable Distribution (QCD) is especially beneficial. This is because the distribution to charity counts toward RMDs and therefore never lands in your taxable income.

If these ideas capture your attention, please reach out! The Morton Community Foundation is here to help you make the most of your giving, no matter what causes you choose to support. We look forward to collaborating to make your retirement years fulfilling and rewarding for you and the people–and community–you love. 

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Gifts of life insurance: Securing your charitable future 

You’re likely well aware of the important role life insurance can play in your estate and financial plans. Indeed, more than half of GenX and Baby Boomers hold life insurance policies, and annual payouts from these policies total nearly $800 billion! What you might not know, though, is that life insurance can be a very effective charitable giving tool under certain circumstances, offering a unique opportunity to support causes you care about as you work with the Morton Community Foundation to carry out your charitable objectives. 

Consider the following strategies:

Beneficiary designation. It’s easy to name your fund at the Morton Community Foundation as a beneficiary of your life insurance policy. Although IRAs and other qualified retirement plans are frequently more tax-effective for charitable giving, life insurance is sometimes a viable and flexible option for a charitably-minded individual who wants to leave an estate gift that can fund favorite causes for many years into the future. 

Estate tax planning. "Second-to-die" life insurance policies, which may become more popular if the estate tax exemption decreases after 2025, can be used to hedge against anticipated estate taxes, thereby allowing you to provide well for family members and still have plenty in your estate to satisfy a bequest to a charity, such as your fund at the Morton Community Foundation.

Boost your charitable capacity. Increasing coverage on an existing policy can be a cost-efficient way to include charitable giving in your estate plan. For example, if you have a million-dollar policy intended for four family members, adding $250,000 in coverage typically won't increase premiums by 25%. This allows you to include a fund at the Morton Community Foundation as a fifth beneficiary, each receiving an equal share.

Repurposing term insurance. The U.S. life insurance market is growing rapidly, expected to reach more than $4 trillion by 2033–and a lot of it is term insurance. If you've outlived the initial need for your term policy (such as covering college expenses or a mortgage), consider continuing the policy for charitable purposes. Past premiums can be viewed as sunk costs, while future premiums become a moderate "investment" relative to the potential charitable impact.

Please reach out to the community foundation to discuss how you can use your life insurance to support your charitable priorities. Whether through a beneficiary designation, together with perhaps even a potentially tax-deductible transfer of the policy itself or ongoing dollars to pay the annual premium, we can work with you to navigate the options! The Morton Community Foundation is here to help you create a lasting legacy that supports the causes you care about most, especially while optimizing your estate planning at the same time.

The Morton Community Foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation.

November 2024 Donor/Fund Holder Newsletter

Tips to wrap up 2024, matters of trust, and generational impact 

 Hello from the Morton Community Foundation! 

The year is winding down! Where did 2024 go? 

The Morton Community Foundation is here to help you navigate your charitable giving priorities all year round, and especially during the giving season when we know many of you are beginning to turn your attention to tax planning and ensuring that you'll meet your charitable goals before the end of December.

Here’s what’s trending: 

• Year-end is fast approaching! GivingTuesday is Tuesday, December 3. We hope you’ll consider a gift on that special day of giving.  We’re providing several savvy tips to consider as you evaluate where you stand with your charitable giving goals for 2024 and review your tax situation with your advisors. Whether you’ve already established a fund at the MCF or are considering it, we look forward to hearing from you.

• The Morton Community Foundation is the Morton area’s trusted source for all things philanthropy. We are honored to serve you and your family as you pursue the charitable endeavors that mean the most to you. Learn how our team helps structure your giving in ways that respect your desire for trust in the impact your dollars can make.

• Charitable giving is important to couples whether or not they have children. Discover how the Morton Community Foundation can help you serve your clients’ charitable intentions to support our community across generations in situations where heirs will be involved and in situations where there are no heirs. We’re here for everyone!    

Wishing you all the best for a safe and happy Thanksgiving!

With gratitude…

Your Morton Community Foundation Staff
Scott Witzig, Executive Director
Darcy Roecker, Administrative Manager

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Several savvy tips to wrap up 2024 (Special note to Caterpillar Employees & Retirees)

Year-end is closing in, and it’s easy to get overwhelmed by all the advice floating around about what to do before December 31. We’re making it super easy for you! Here are four reminders that typically are among the most important for year-end charitable giving. 

1. Give stock. Evaluate your highly-appreciated stock positions and use these assets to give to your fund at the Morton Community Foundation, coordinating with your tax and financial advisors to optimize your 2024 goals. Appreciated assets generally are far better charitable gifts than cash because you not only can take advantage of the income tax deduction, but also you can avoid capital gains tax.  When you donate stock, you’ll want to notify us of your gift, so we can be looking for the transfer in our account, immediately liquidate, and place the proceeds in the fund of your choice at the MCF.

2. Use your donor-advised fund. Consider deploying a “bundling” or “bunching” technique by making a gift to your donor-advised fund at the Morton Community Foundation this calendar year that allows you to leverage itemized deductions (the standard deduction is very high, at least at the moment), and then use your donor-advised fund over the next few years to support your favorite charities.

3. Explore a QCD. If you are age 70 ½ or older, you should look into making a Qualified Charitable Distribution (“QCD”) to a designated or field-of-interest fund at the community foundation. Each spouse can give up to $105,000 in 2024, and the distributions will satisfy your RMDs if you’ve also reached that age. CLICK HERE to find out why the QCD is so powerful. Note that your donor-advised fund is not an eligible recipient, but there are lots of other ways you can leverage this tax-savvy giving opportunity. 

4. Are you a Caterpillar employee or retiree? In support of Giving Tuesday, the Caterpillar Foundation will provide a limited-time 2:1 match through their Matching Gifts Program for global employee and U.S. retiree gifts made December 2-6, 2024 (or once the match total reaches $2M USD).  This includes donations to any of the 100+ individual endowment funds with the MCF.  Since the total dollars available for the 2:1 match are limited to $2M USD, you’ll want to get your donations made as early as possible, preferably Monday, Dec 2.  You may donate up to a total of $500 in increments of no less than $25.  Example:  A donation to your favorite MCF fund of $500, will trigger a $1,000 donation to that same fund by the Caterpillar Foundation, for a total gift of $1,500.

November is the time to set things in motion so you don’t get caught up in the year-end rush. Reach out to the Morton Community Foundation today! We are here for you! 

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Fostering trust and making a difference

Many people are not aware of the extent to which America’s charitable organizations help improve quality of life in our communities. From social services to the arts, virtually every aspect of our lives is touched by the work of nonprofits. Indeed, the gifts Americans give to charity every year total more than $557 billion and provide critical support for nearly 1.5 million organizations that are helping communities thrive. 

Research shows that trust continues to be an important factor in charitable giving. Unfortunately, high levels of trust sometimes can be hard to achieve; 73% of donors surveyed said they felt that it is very important to trust a charity before giving, but only 19% say they highly trust charities.

So what should you do if you know you want to support a particular organization but you’ve not quite yet gained a level of trust to go “all in?” Or what if you want to support an overall area of community need but you’re not sure which organizations are best aligned with the results you want your charitable gifts to achieve? Or what if you’re fairly certain you know the specific organizations that are addressing your areas of interest right now, but you’re concerned that this “fit” might change over time as needs shift and charities evolve?

The Morton Community Foundation can help in situations like these and many others like them. Here are four examples:

1. If you’ve established a donor-advised fund at the Morton Community Foundation to organize your giving, lean on the MCF for insights into which charities are best suited to achieve your goals for impact at any given time. Our team stays up to date on local charities, their priorities, and their programs and staff. We can provide information and insights to help you make informed decisions.

2. If you’re committed to supporting a specific charity but you’d rather not give the money outright, you could consider setting up a designated fund at the Morton Community Foundation to make distributions to the charity according to parameters you set. Because the charity receives the money in increments every year, charitable dollars remaining in the fund are protected from the charity’s creditors if the charity were to fall on hard times.  

3. If you’d like the Morton Community Foundation to help out even more, you might consider establishing a field-of-interest fund so that the MCF can deploy its expertise in selecting charities that are best suited from year to year to achieve your goals for community impact. 

4. To ensure that the mission of the Morton Community Foundation itself stays strong and that dollars will flow to support critical community needs for generations, you can establish an unrestricted fund at the MCF. You can add to the unrestricted fund during your lifetime, such as through gifts of appreciated stock, and you can also include a gift to the fund in your estate plan through your will or an IRA beneficiary designation. 

The Morton Community Foundation is unique in its structure as a perpetual institution governed by an independent board of directors. Our mission is to improve the quality of life in the Morton area across generations by connecting donors to the causes they care about and leading on critical community issues. We’re honored to work alongside you and your family as you build trust with the charitable organizations that are making a difference for everyone who lives and works in the community we love. 

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Generational impact, with or without children

At the Morton Community Foundation, we’re honored to work with our donors and fund holders to achieve a wide range of charitable giving priorities often involving multiple charitable giving vehicles. It’s not uncommon, for example, for an individual’s or couple’s “portfolio” of philanthropy with the Morton Community Foundation to look something like this: 

• A donor-advised fund to make it easy to donate appreciated stock and organize annual giving to favorite charities.

• A designated fund to support the mission of a particular charity over the long term, especially because when one spouse reaches the age of 70 ½, the designated fund can receive tax-savvy Qualified Charitable Distributions from IRAs.

• A beneficiary designation on an IRA to leave those assets to an unrestricted fund at the Morton Community Foundation, avoiding both income tax and estate tax, so that the fund can support the MCF’s mission in perpetuity.

What’s more, many people don’t realize that a mix of charitable giving vehicles works well to achieve your charitable goals whether or not you have children. For example, if you have children, you can work with the community foundation to explore naming them as successor advisors on your donor-advised fund to carry on your philanthropic priorities beyond your lifetime. If you don’t have children, your donor-advised fund can roll into your designated fund or unrestricted fund following your death. 

Changing demographics are becoming a catalyst for the Morton Community Foundation’s increased role in many estate plans. For example, not having children is becoming more common, both among millennials and older people. According to a study conducted by the Pew Research Center, 20% of U.S. adults age 50 and older hadn’t had children. In addition, children of affluent parents tend to move away, which means that many parents embrace the notion that working with the community foundation can help children maintain ties to their childhood community even across generations. 

Indeed, many couples who don’t have children and couples who do have children feel a strong sense of peace of mind knowing that the Morton Community Foundation will be involved with their charitable legacy long after their lifetimes, whether through advising children and grandchildren or administering charitable bequests for maximum community impact. The Morton Community Foundation always has its finger on the pulse of the greatest needs in the Morton area and the nonprofits that are meeting those needs at any given point in time, whether right now or decades in the future. 

Please reach out to the team at the Morton Community Foundation to learn more about how we can help you leave a legacy across generations, whether or not you have children. We’re here to help! 

The Morton Community Foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation.

October 2024 Donor/Fund Holder Newsletter

$25,000 Grant for Morton High School’s CTE program, funds for year-end, gifts from your IRA, and assets you can give to your fund

Hello from the Morton Community Foundation! 

We’re honored to work with so many of you as you support the charitable causes that mean the most to you and your family. If you’ve not yet established a fund at the MCF, please reach out! We’d love to help you structure a charitable giving plan that’s just right for you, including a donor-advised fund, legacy gift, designated fund, field-of-interest fund, or all of the above and more. Our goal is to help you make a difference in the ways that mean the most to you.

Here are the stories in this month’s newsletter:

• The MCF had the opportunity to partner with Compeer Financial in the Rural Collaboration Project, receiving a $25,000 grant to benefit Morton High School’s Career and Technical Education program, and the SkillsUSA program.  SkillsUSA is the #1 workforce development organization for students. They empower students to become skilled professionals, career-ready leaders and responsible community members.  READ MORE

• We’re so glad to see that field-of-interest funds and designated funds are gaining popularity. A field-of-interest fund allows you to support a specific charitable cause by leveraging the community foundation’s expertise. A designated fund allows you to support a favorite charity or charities over time. Best of all, if you’re over the age of 70 ½, both of these funds are eligible recipients of Qualified Charitable Distributions (QCDs) from your IRA, up to $105,000 a year. Reach out to learn more about field-of-interest funds, designated funds, and QCDs. READ MORE

• Many Americans hold a significant portion of their net worth in one or more IRAs. Have you thoroughly considered all of the ways your IRA can help you meet your charitable giving goals, both during your lifetime and through a legacy? Giving to charity from an IRA is one of the most tax-savvy moves you can make. Reach out to the community foundation team to learn more.  READ MORE

• It’s that time of year! You may be starting to review your tax projections to determine an ideal level of charitable giving at the end of 2024. Before you start writing checks, stop to consider the many types of assets that frequently make even better gifts to your fund at the community foundation. Our team can help you and your advisors identify the best assets for year-end giving.  READ MORE

Finally, and most importantly, our hearts go out to the millions of people affected by Hurricane Helene. Community foundations in the affected areas and across the country are making it as easy as possible to donate to relief efforts. Please contact the team at the Morton Community Foundation to learn more about how you can help swiftly and most effectively. 

With gratitude…
Your Morton Community Foundation Staff
Scott Witzig, Executive Director
Darcy Riddle, Administrative Manager

P.S. We’re excited about the first ever DAF Day, a national campaign to encourage giving from donor-advised funds. We love watching so many of you deploy your donor-advised fund for good, year in and year out. Please reach out to the community foundation team if you’d like to learn more. 

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Morton Community Foundation Joins Compeer Financial in Rural Collaboration Project…$25,000 Grant for MHS SkillsUSA program.

L to R: Scott Witzig, Executive Director, Morton Community Foundation; Cheyenne Durbin, SkillsUSA Historian; Tessa Fitzgerald, SkillsUSA Secretary; Chad McFarland, Industrial Technology Teacher; Mila Cronkleton, SkillsUSA Reporter; Sydni Hoffman, SkillsUSA Treasurer; Emma Belsly, SkillsUSA -President; Tiffany Beard, Technology Education Teacher; Karen Schieleer, Compeer’s Manager of Corporate Giving.

The Morton Community Foundation is proud to announce its partnership with Compeer Financial in the Rural Collaboration Project, an initiative designed to bolster rural vitality across the Midwest, with a focus on Youth entrepreneurship, leadership and financial education/experiences. Programs focused on youth volunteerism, integrity, excellence, diversity & community partnership.

In a significant step toward enhancing rural communities, the MCF was selected as one of 13 community foundations across the upper Midwest to participate in this pioneering initiative, receiving a $25,000 grant from the Compeer Financial Fund for Rural America donor-advised fund, the Agriculture and Rural Initiative.

These funds will be used at Morton High School for their SkillsUSA program, specifically to support leadership opportunities for students, and to help start a Diesel Education program. MHS teacher, Tiffany Beard, said, “This grant is life changing for our Career and Technical Education program.  It accelerates the start of a Diesel Ed program at MHS by at least 5 years.

Compeer Financial, a Farm Credit cooperative, is committed to leading the way in pursuing a collaborative approach to rural vitality. Their vision centers around active, strong rural communities capable of supporting thriving economies.

“We see rural communities flourish when organizations and individuals unite around a shared purpose,” said Karen Schieler, manager of corporate giving at Compeer. “With this project, we’re able to support a multitude of efforts ranging from community and farming needs to education and entrepreneurship.”

This year, Compeer selected 13 community foundations across Illinois, Minnesota and Wisconsin, awarding a total of $663,750 in grants.   The Morton Community Foundation was one of 6 community foundations selected in IL.  The other IL CFs were:  Community Foundation of the Quincy Area, DeKalb County Community Foundation, Freeport Community Foundation, Galesburg Community Foundation, and Moline Regional Community Foundation.

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Field-of-interest and designated funds could be your year-end friends

As you’re looking ahead to year-end giving, you’re likely thinking about transferring cash, or ideally appreciated stock, to your donor-advised fund so that you can maximize tax benefits and support the charities you love. And absolutely, a donor-advised fund can be a fabulous component of your overall charitable giving portfolio. 

Think beyond donor-advised funds, though, especially at year-end. The Morton Community Foundation offers a wide variety of funds to meet your charitable giving goals and also help you maximize your tax and financial planning efforts.

Two excellent fund types that are sometimes overlooked are designated funds and field-of-interest funds. 

When you set up a field-of-interest fund at the community foundation, you’re setting aside charitable dollars for a specific charitable purpose. For example, you might decide to set up a field-of-interest to support youth sports, to support organizations that assist individuals with disabilities, to enable the installation of adaptable recreational equipment in public spaces, and so on. With a field-of-interest fund, you’re leaning on the knowledgeable of the Morton Community Foundation to distribute grants to achieve your wishes. As is the case with a donor-advised fund, you’ll choose a name for your fund, whether you wish to use your own name (e.g., Samuels Family Fund or Samuels Family Fund for the Arts), maintain anonymity (e.g., Morton Fund for the Arts), or something else altogether (e.g., Bettering Our World Fund).    

A designated fund is a good choice if you know you want to support a particular charity or charities for multiple years. This is useful so that the distributions can be spread out over time to help with the charity or charities’ cash flow planning, which allows you to potentially benefit from a larger charitable tax deduction in the year you establish the fund if, for example, your tax rates are higher than usual in that particular year. Your designated fund document allows you to specify the charities to receive distributions every year…forever.  You can choose just one charity as the recipient of the annual grants, or list several charities to receive portions of the grant money divided however you like.

Last but not least, if you are over the age of 70 ½, pay particular attention to designated funds and field-of-interest funds as year-end approaches because these two types of funds, unlike donor-advised funds, can receive “Qualified Charitable Distributions” from IRAs–up to $105,000 per person in 2024! 

As always, thank you for the opportunity to work together! 

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Your IRA is a force for good

It probably would not surprise you to learn that over 42% of Americans own an IRA. In many cases, IRAs–especially for people who have rolled over one or more employer retirement plans–represent a significant portion of a household’s net worth. When it comes to charitable planning, IRAs should never be ignored. Indeed, your IRA may offer some of the best opportunities to support the causes you care about most. 

For starters, no matter what your age, consider the benefits of changing the beneficiary designation on your IRA to name your donor advised fund at the Morton Community Foundation as the recipient of all or a portion of the account. This is an easy, tax-effective way to leave a bequest to support the causes you care about. The MCF can help you structure the terms of your fund to match your intended charitable legacy. For example, you can make arrangements for your children to serve as advisors on the fund to recommend grants to particular areas of interest, or the Morton Community Foundation itself could deploy the money to support Morton’s areas of greatest need.

The reason an IRA beneficiary designation is such an ideal form of charitable bequest is because of the tax advantages. Dollars flowing to the MCF from an IRA upon your death are not subject to estate tax. In addition, as a public charity, the Morton Community Foundation does not pay income taxes on the IRA assets it receives. By contrast, if you were to name your children as beneficiaries of the IRA, those IRA distributions to the children are subject to income tax, which can be hefty given the tax treatment of inherited IRAs. Plus, the IRA assets would be included in your estate for estate tax purposes. 

Exploring ways to give your IRA to charity can also serve as a helpful reminder to review all of your beneficiary designations. Although they may appear to be innocuous and may even be easy to overlook, those beneficiary designation forms actually represent critical components of your estate plan. To understand this, you need look no further than the cautionary tale of a Procter & Gamble employee who died in 2015, leaving behind a retirement plan. Way back in 1987, the employee had named his girlfriend as the beneficiary of his retirement plan. Despite their relationship ending, the employee never updated the beneficiary designation. By the time the employee died, the retirement plan, which had grown to nearly $1 million, passed via the beneficiary designation to the 1980s ex-girlfriend. Wow!

Finally, if you have reached the age of 70 ½, you can make what’s known as a Qualified Charitable Distribution (“QCD”) from your IRA directly to certain charities, including a designated fund or a field-of-interest fund at the Morton Community Foundation–up to $105,000 per year per spouse. You won’t pay income tax on the distribution and, happily, if you’ve reached the age for Required Minimum Distributions, your QCDs count toward those distributions. 

The upshot? Next time you review your financial and estate plan with your advisor, take a close look at your IRAs. If you intend to leave a charitable legacy, or if you’d like to support your favorite organizations during your retirement years, your IRA may be your best bet to make a big difference in the causes you care about.   

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Variety is the spice of … giving

If you’ve been working with the Morton Community Foundation for a while, you certainly know that it’s easy to make a contribution to your fund. And by now, you likely know not to automatically reach for your checkbook! The Morton Community Foundation is happy to work with you and your tax advisors to review the options for types of gifts. Here’s food for thought:

Marketable securities
Gifts of long-term appreciated stock to a donor-advised or other type of fund at the MCF is always one of the most tax-savvy ways to support favorite charitable causes because capital gains tax can be avoided. Gifts of publicly-traded stock, for example, are easy to transfer to a fund. The Morton Community Foundation provides transfer instructions to make the process simple.  CLICK HERE.

As is the case with a cash gift, the Morton Community Foundation will provide a receipt for tax purposes, and the gift of stock will be valued at the shares’ fair market value on the date of transfer. When the MCF sells the shares, the proceeds flow into your fund without any reduction for capital gains taxes. This is because the Morton Community Foundation is a 501(c)(3) charitable organization and therefore does not pay income tax. That would not have been the case, however, if you had sold the stock first and then transferred the proceeds to your fund; you would owe capital gains tax on the sale. Especially in cases where you have held the stock a long time and it’s gone up significantly in value, the capital gains hit can be big.

Closely-held business interests
The Morton Community Foundation is happy to work with you and your advisors to explore how you might give shares of a closely-held business to a fund at the MCF. Not only will transfers be eligible for a charitable deduction during the year of transfer (and at fair market value if the shares are held for more than one year), but also these gifts could potentially reduce income tax burdens triggered upon a future sale of the business. Be sure to talk with us well before any potential sale is in the works; otherwise, you could lose out on tax benefits. Gifts of closely-held business interests are powerful but can be tricky to administer. 

QCDs from IRAs
As always, keep in mind that the Qualified Charitable Distribution (“QCD”) is a very smart way to support charitable causes. If you are over 70 ½, you can direct up to $105,000 from your IRA to certain charities, including a field-of-interest, designated, unrestricted, or scholarship fund at the Morton Community Foundation. If you are subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. That means you avoid income tax on the funds distributed to charity. Plus, keep in mind that leaving your IRA to your fund through a beneficiary designation is a very tax savvy move, so be sure to discuss this option with our team and your tax advisors. 

Real estate 
You can give a tax-deductible gift of real estate, such as farmland or commercial property, to your fund in a variety of ways. An outright gift is always an option; lifetime gifts of real estate held for more than one year are deductible for income tax purposes at 100% of the fair market value of the property on the date of the gift, which also avoids capital gains tax and reduces the value of your taxable estate. Other ways to give real estate include a bargain sale or a transfer to a charitable remainder trust which produces lifetime income for you and your family.

Life insurance
Don’t overlook life insurance as an effective charitable giving tool, whether by naming your fund at the Morton Community Foundation as the beneficiary or, in the case of whole life policies, naming the fund as beneficiary and transferring the policy itself. If you transfer a policy, you may be able to make annual, tax-deductible contributions to the MCF to cover the premiums. 

Other “alternative” assets
The Morton Community Foundation is happy to discuss your options for giving other non-cash assets to your fund at the MCF, including oil and gas interests, negotiable instruments, cryptocurrency, artwork, and collectibles. 

We look forward to working with you to explore all the options! 

The team at the Morton Community Foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation.

September 2024 Donor/Fund Holder Newsletter

Planning for the standard deduction, and why giving makes you smile

Hello from the Morton Community Foundation! 

Thank you for the opportunity to work together! Already we are hearing from many donors and fund holders about your year-end giving plans. We couldn’t be happier that so many of you are planning ahead to be sure you have plenty of time to accomplish your charitable goals for 2024. Of course, we’re happy to help put things together right up until the end of December, but it’s really nice to have plenty of time to ensure that charitable, tax, and estate planning objectives are all considered. This is especially important if you’re just getting started working with the Morton Community Foundation or are considering doing so this year. We’re ready to talk when you are! 

In this issue, we’re covering three topics that have popped up several times recently in conversations. 

1. We're in the midst of our 25th Anniversary fiscal year, and As an MCF “insider,” we want to be sure you’re in the know about MCF’s 25 Years of Gather, Grow, Grant celebrations, which has already begun! We are honored to work with you and other generous donors who are committed to improving the quality of life in our region through philanthropy. We'll offer ways you can get involved.
   
   

2. With potential tax law changes on the horizon, many people are taking a closer look at how the standard deduction might impact their charitable planning for the next few years. Learn how the Morton Community Foundation can help you and your advisors work through various scenarios for organizing your giving so you don’t leave dollars on the table either for yourself or your favorite charities.

3. Giving to charity makes people happy. That certainly does not come as a surprise to most people who incorporate philanthropy into their lives, but you might be interested to learn how the research on these positive emotions connects to the charitable giving tools available through the MCF. Lots of reasons to smile! 

As always, we look forward to hearing from you! Thank you for everything you do for the community we all love.

 With gratitude…

Your Morton Community Foundation Staff

Scott Witzig, Executive Director

Darcy Riddle, Administrative Manager

Standard deduction planning: Avoid leaving dollars behind

One of many items on the legislative “watch list,” especially in light of the upcoming elections, is the standard deduction. Without intervening legislation, in 2026 the standard deduction for individual taxpayers younger than age 65 is scheduled to drop from $14,600 to $8,300. 

While this may spell higher taxes for some taxpayers, the news could be positive for charitable giving. You’ll recall that the Tax Cuts and Jobs Act of 2017 increased the standard deduction significantly. As a result, only 9% of taxpayers itemized deductions in 2020 compared with 31% in 2017. Although certainly not the only factor motivating charitable giving, tax incentives do play a role in donors’ decision-making about whether, when, and how much to give. Indeed, statistics recently released by the National Bureau of Economic Research indicated that the increased standard deduction resulted in $20 billion fewer charitable donations in 2018 alone.

The Morton Community Foundation is happy to work with you and your tax advisors to map out a charitable giving plan for the next few years to navigate anticipated changes in the law. For example, this year you could consider using a technique called “bunching” to make two years’ worth of gifts up front to your donor-advised fund to take advantage of the standard deduction while it is still high. 

If you determine that bunching is right for you, naturally, cash is easy to give in a year of higher-than-expected income. So, for example, if you earn a large bonus this year, get a big increase in compensation, take a job buyout, or experience a significant liquidity event, your surplus income could make bunching ideal. 

Most of the time, though, even when you deploy a bunching strategy, donating highly-appreciated marketable securities is a better choice than giving cash because it is extremely tax efficient. Stock given to a public charity, such as your donor-advised or other type of fund at the MCF, typically is deductible at the asset’s fair market value. The Morton Community Foundation, in turn, pays no capital gains tax on its sale of the asset, thereby generating more dollars to support your philanthropic interests than if you had sold the stock and given the proceeds to your fund. 

You can think outside of the box, too, and explore other assets that make great gifts to your fund. As is the case with gifts of other long-term appreciated assets, a gift of real estate or closely-held stock avoids capital gains taxes and results in more money for your favorite causes than if you had sold the asset, taken the tax hit, and donated the proceeds. 

The bottom line?  Now is a perfect time to look ahead at your charitable giving plans so that you don’t leave dollars behind. Your own financial situation, as well as the charities you support, will benefit from your careful planning. The Morton Community Foundation is here to help! 

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Giving to others gives us lots of reasons to smile

The Morton Community Foundation is honored to serve as the “hub” of your philanthropy. Whether you’ve established a donor-advised or other type of fund, arranged for a bequest to a fund or to the Morton Community Foundation itself, or both, our team strives to help you organize your giving to make it easy and convenient. If you’ve not yet established a fund or arranged for a bequest but are considering it, we look forward to continuing the conversation! 

Charitable giving is important not only locally and nationally, but also internationally. Indeed, the World Giving Index 2024 Global Trends in Generosity reports that 4.3 billion people worldwide helped someone they didn’t know, volunteered time, or donated money to a good cause in the preceding month. 

It’s no surprise that research indicates that giving to others actually puts donors in a good mood. This is especially the case, studies show, in three ways:

• The act of giving feels good in the moment

• People like having choices about their giving

• People like to see the results of their giving

We know this intuitively based on our own experiences. For instance, many of us enjoy picking out a birthday gift for a friend or family member and watching them open it. 

The same good feelings translate to charitable giving. People enjoy working with the Morton Community Foundation. Certainly one reason is because the MCF activates the research’s three key factors:

• Feels good in the moment. The Morton Community Foundation makes it easy to give cash, stock, or other assets to a type of fund that is the best fit for you, whether that’s a donor-advised fund, designated fund, field-of-interest fund, or unrestricted endowment fund. When you initiate the stock transfer, for example, it’s fun because the Morton Community Foundation makes it easy. You know immediately that you’ve taken meaningful action.

• Offers choices. The Morton Community Foundation’s tools are flexible to meet your charitable giving goals. We can help you set up an annual giving strategy, establish a bequest to your fund in your estate plan, and everything in between. Most of all, we want to help you support the causes that are most important to you, whether those are particular charities or broader areas of community need. 

• Shows results. The Morton Community Foundation has its finger on the pulse of our region’s priorities and how charitable giving can improve quality of life for everyone. Every day, we work with you and other families, individuals, and businesses to help you not only make a difference, but also actually see the difference you are making. From research and hands-on site visits, to networking with other donors and meeting with community leaders, our team will provide a wide range of opportunities for you to see first hand the results of your philanthropy. 

We look forward to helping you incorporate charitable giving into your life in ways that help the community and make you happy! 

The team at the Morton Community Foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation.

August 2024 Donor / Fund Holder Newsletter

Making a move, the kitchen sink, and getting more out of your giving

Greetings from the Morton Community Foundation! 

We hope summer is treating you well! If you’re already working with the MCF to organize your giving and make an impact, thank you! If you have not yet established your donor-advised or other type of fund at the community foundation, we look forward to working together to explore the best options for you and your family. We’ve mentioned before, but it bears repeating…as part of our 25th Anniversary Celebration, we’re offering a dollar for dollar match up to $10,000 when you start a new endowment. We committed $250,000 in matching funds, but half of that is already spoken for, so time is of the essence. LEARN MORE

It’s our pleasure to keep you up-to-date on issues and ideas that can help you make the most of your philanthropy. In this issue, we’re covering three strategies to help meet tax objectives, address community needs, and achieve your expectations for administrative simplicity.  

• Unfortunately, many people (as well as their attorneys, accountants, and even financial advisors) are not aware that a donor-advised fund established at the community foundation is in most cases a far better fit for their clients than a donor-advised fund set up at a national financial institution. The community foundation offers much broader services, more personal attention, and deeper connections to the nonprofits whose work is essential to effecting positive community change. 

• If you’re planning to leave your residence to your children in your estate plan, you might reconsider because they may not want it! We can help you evaluate the various options for giving the family home to charity. You might be surprised by the possibilities.

• Building good habits is important in many areas of your life, and charitable giving is no exception. The community foundation is happy to offer tips and suggestions to make your philanthropic endeavors easier and more satisfying, which in turn makes it more fun to add regular giving into your routine.

As always, it is our pleasure to work with you as you fulfill your charitable intentions. Every day, we are inspired by the generosity of our donors and fund holders. Thank you.

With gratitude,

Your Morton Community Foundation Staff
Scott Witzig, Executive Director
Darcy Riddle, Administrative Manager  

This may be your best move yet! 

If you’ve already established a donor-advised fund at the Morton Community Foundation, you can understand why it’s become such a popular tool to organize your family’s giving and serve as a springboard for so many other ways to make a difference in our region. 

Recently, we’ve talked with a lot of donors who work with the MCF in a variety of ways, such as regularly contributing to a favorite organization’s already existing endowment fund, supporting the community foundation’s operating endowment, or making distributions from an IRA to a designated fund. Interestingly, we are discovering that some of these donors also have established a donor-advised fund at a national financial institution and in many cases did not realize that they could have set up their donor-advised fund at the Morton Community Foundation. 

It’s time to set the record straight! 

For starters, the Morton Community Foundation offers donor-advised fund holders the same tax and administrative benefits as a national financial institution, including:

• Simple process for requesting grants to favorite charities

• Streamlined tax reporting, often represented by just one letter to provide to an accountant at tax time, even when the donor-advised fund is used to support dozens of individual charities throughout the year.

• All back-office administration, tax receipts, recordkeeping, and other requirements for the donor-advised fund’s 501(c)(3) status

• Favorable tax-deductibility of contributions to the fund

Unlike standard national financial institutions’ donor-advised funds, though, the Morton Community Foundation offers high-level, customized services to its donor-advised fund holders, including:

• Concierge-level service by knowledgeable staff to structure estate gifts to charities and accept gifts of appreciated stock or complex assets such as real estate or closely-held stock

• MCF staff has a finger on the pulse of community needs, the strengths of specific nonprofits, and how to structure grant making for the highest possible community benefit

• Opportunities to collaborate with other donors who care about similar issues and forums to tap into local and national subject matter experts

• Opportunities to go deep into specific issue areas, both through education and hands-on involvement

• Family philanthropy and corporate giving services to foster a well-rounded, holistic approach to philanthropy 

• Administrative fees that are reinvested into the Morton Community Foundation, itself a nonprofit, to help support operations, grow its mission, and help even more donors support the causes they care about

• Hands-on assistance from local experts who understand both local and distant needs, and welcome the opportunity to research and identify causes aligned with donors’ goals and priorities 

• Staff members who live in the community they serve and often personally know the leaders and staff of grantee organizations and regularly hear about their needs first-hand.

If you’ve established a donor-advised fund at a national financial institution, we’d love to chat about moving it over to the Morton Community Foundation. At the community foundation, your hard-earned assets receive the attention they deserve as you and your family strive to make a difference in the causes you care about the most. 

Not even the kitchen sink: Giving your house to charity is worth exploring

August is national Make-A-Will month and a great time to check in on key components of your estate plan. The reality, as we know, is that all property remaining at death has to go somewhere. And as heartbreaking as it may be for parents of grown children, it’s usually a mistake to assume that you should automatically leave the family home to children in your will or trust. Indeed, your children may not be nearly as attached to your things as you are, and the reality is that they may not want any of them–including the house. 

But don’t let this get you down. When one door closes, another door opens. It may be time to explore giving your personal residence to charity. The Morton Community Foundation can help! 

Reach out anytime to discuss the possibilities with the Morton Community Foundation team. As we begin the conversation, we’ll evaluate which type of gift format might be a good fit for your situation. For example: 

• You can certainly deed your house to the Morton Community Foundation outright. This might be a solid option if you are planning to sell the house in the near future to downsize or move to a retirement community. This is an especially good option if you do not need to rely on the sale proceeds to fund either your next move or your ongoing living expenses. And, if the total value of all your assets is in a range where you could be subject to estate tax, transferring your house to the community foundation takes the home’s value out of your estate, tax free, because of the charitable deduction. The MCF will likely list the property shortly after you make the gift. Then, the proceeds from the sale will flow into your donor-advised or other type of fund to help you fulfill your charitable goals.   

• If you’re hoping to get a little money from the sale of your residence, but you don’t need the full amount of its value, you can explore what’s known as a “bargain sale.” This transaction allows you to sell the property to the MCF at a price below market value, allowing you to receive some income while still making a charitable contribution.

• Another option is to transfer your residence using a “charitable remainder trust.” You’d transfer title to the property to the trust, and the trust would provide you with income for the rest of your life (or a term of years). Any remaining value would flow to your fund at the Morton Community Foundation to support the causes you care about. You’d also be eligible for an up-front income tax deduction based on the present value of the amount projected to pass to your charitable fund in the future. 

If you’re interested in giving your residence to your fund at the Morton Community Foundation, our team will work closely with you and your advisors to carefully evaluate the opportunities and walk through all of the steps in the process. For example, it’s important to look at factors such as valuation (which must be documented with a qualified appraisal), whether there’s a mortgage on the property that would make a gift more challenging, how long you’ve held the property and your cost basis, and ensuring that a sale is not already formally or informally in the works.

You’ve spent years making your house a home. We look forward to exploring the possibilities for extending the joy your personal residence brings to you and your family by transforming the property into a source for community benefit. 

 Inspiring good habits: Tips for better giving

The team at the Morton Community Foundation is committed to sharing tips and insights that can help you get more satisfaction from your charitable giving and in turn make an even bigger difference in the causes you care about. 

Here are three recommendations: 

1. Strive for energetic effectiveness. Whether a gift to charity is $25, $2500, or $25 million, it’s cause for celebration. Philanthropic support of all shapes and sizes can make a difference. What’s even better, though, is to apply discipline to those dollars so that the strategy matches the enthusiasm. Certainly media-based philanthropy efforts are effective to raise the overall awareness about charitable giving, but awareness is just the beginning. At the Morton Community Foundation, our team is dedicated to helping you apply your charitable passions to make a meaningful impact, especially by helping you address root causes with your giving, above and beyond providing immediate relief to those in need.

2. Give from the heart. A recent Rolling Stone article illustrates how philanthropy can shape leaders by instilling values of empathy and responsibility. The author shares a heartwarming perspective based on participating in charitable activities as a child to rally around a sister with Down Syndrome. This makes such an important point: When your philanthropic efforts mean a lot to you, you’re more likely to stay engaged for the long term, resulting in significant cumulative community return on your personal investments. It’s really inspiring to see charitable individuals view their contributions as part of their personal and professional development.

3. Get your kids involved. The Morton Community Foundation is always striving to offer ways for fund holders to involve their children and grandchildren in charitable giving. This is really important in light of the decline in charitable giving, especially among younger generations, which is becoming a significant concern. We encourage you to explore the factors behind this trend and reach out to the Morton Community Foundation to discuss potential solutions and ways you can help. 

Thank you for your commitment to philanthropy! If you’re already a fund holder, we are grateful that you’ve made the choice to organize your giving by working with the Morton Community Foundation. If you’re considering getting started, we’d love the opportunity to work together.

The Morton Community Foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation.

July 2024 Donor and Fund Holder Newsletter

$10,000 Match, tax laws up in the air, philanthropy personalities, and forward-worthy reading material

Hello from the Morton Community Foundation! 

In this issue, we’re covering topics that tend to be popular as we head into the second half of the calendar year. The summer months are a great time to regroup with your family about your charitable giving plans and also ensure that you’re coordinating with your advisors to accomplish key estate and financial planning priorities before the year-end rush is upon us.

• In celebration of the Morton Community Foundation’s 25th Anniversary Celebrations to be held throughout their fiscal year 2024/2025 (July 1, 2024 through June 30, 2025) the MCF Board has set aside $250,000 in matching funds to be used as an incentive for donors who start a new endowment fund in this timeframe.  The $250,000 was a portion of a very generous unrestricted estate gift received by the MCF.  The foundation Board of Trustees agreed that a great way to celebrate the MCF’s 25th Anniversary would be to leverage $250,000 to create $500,000 by matching new funds up to a maximum of $10,000 per new fund. 

• Election years are interesting for many reasons! For philanthropists and their advisors, election years can be tricky because it’s impossible to predict what might happen with the tax laws. That’s certainly the case in 2024. The Morton Community Foundation can help you and your advisors navigate various approaches to charitable strategies, even when the tax laws themselves are up in the air. 

• Whether you’ve been involved in philanthropy for many years or you're just starting out on your charitable giving journey, you’ve likely noticed that there are many, many ways to support the causes you love. The MCF can help you evaluate various giving vehicles based on your own “charitable giving personality type.” 

• The team at the MCF wants to help you help your advisors stay up-to-date on legal and tax developments that might impact the charitable giving components in your estate and financial plan. We’re happy to offer tips and reading material to share with your attorneys, accountants, and financial advisors, and our team is always available to join a discussion. 

Whether you’ve already established a donor-advised or other type of fund at the Morton Community Foundation, arranged for a bequest to the MCF, or are currently evaluating whether to work with the Morton Community Foundation, we are here for you! Please reach out anytime to review your charitable plans. We’re here to help you make a difference in our region and support local nonprofits that are working every day to improve the quality of life for so many people. Thank you for the opportunity to work together! 

With gratitude,

Your Morton Community Foundation Staff
Scott Witzig, Executive Director
Darcy Riddle, Administrative Manager 

1. 25th Anniversary New Fund $10,000 Challenge Match Opportunity is available for newly established endowment funds only, that are started with a MINIMUM INITIAL DONATION of $5,000. 
   Does not apply to newly established non-endowed Donor Advised Funds (Donor Choice Funds).

2. A one-time match will be made based on the INITIAL donation to the fund and will be a 1:1 match of a minimum $5,000 and a maximum of $10,000.
   If the INITIAL donation is more than $5,000, but less than $10,000, MCF will match only the INITIAL donation amount.  The MCF will not continue monitoring the fund over the match period to match 1:1 on additional donations up to the maximum $10,000.  In other words, in order to receive the maximum $10,000 match, the donor(s) must make a one-time INITIAL donation of $10,000.

3. Agency endowment funds are started by non-profit charities to establish a permanent source of future revenue for the operations of their organization.  If an Agency wishes to take advantage of the New Fund Challenge Match $10,000 Opportunity, they may collect funds from multiple donors so their initial donation is as close as possible to the $10,000 maximum (or more).

4. PLEASE NOTE…When the $250,000 match has been reached, there will be no further match.  So, the sooner the better for starting a new endowment fund.

5. If you are a current Caterpillar employee or retiree, you could also take advantage of the Caterpillar Foundation's match of up to $10,000.  That's right...It's possible for a CAT employee or retiree to start a fund with $10,000, receive the MCF's 25th Anniversary New Fund $10,000 Challenge Match Opportunity, and then apply for the Caterpillar Foundation's match of up to $10,000.  This would turn your $10,000 fund into a $30,000 fund!

If you have any questions, or if you’d like to brainstorm some ideas you have for a new fund, please contact Scott Witzig, Executive Director.  Phone:  309-291-0434, or Email:  switzig@mortoncommunityfoundation.org.

Up in the air: Charitable planning in a shifting tax landscape 

It’s an election year, which means you may have more questions than answers as you work with your advisors to build out your financial and estate plans. In particular, the looming sunset of key provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 has created a tremendous amount of ambiguity. 

For many taxpayers, the potential sunset of the TCJA’s higher estate tax exemption is top of mind. Unless Congress intervenes, the exemption is set to fall after December 31, 2025 from roughly $27 million per couple to approximately $14 million per couple (depending on inflation adjustments).

No one has a crystal ball, and it is impossible at this point to know whether or when you should implement planning strategies to address potential changes in the law. Nevertheless, if you are among those who would be affected by the estate tax exemption’s precipitous drop, it’s important to know that charitable strategies can fit nicely into a gifting plan that would help offset the sunset’s impact.

If you’re a business owner, for example, you could explore launching a gifting program now to transfer shares of the business not only to your heirs to take advantage of the higher exemption, but also to a donor-advised or other fund at the Morton Community Foundation. With these gifts, you could reduce the value of your taxable estate while also executing a business transition and philanthropy plan that aligns with your overall intentions regardless of the tax laws. 

Along those lines, some families may decide to lean into annual exclusion gifts ($18,000 per gifting spouse per recipient in 2024) to family members and other individuals to reduce taxable estates without eating into the lifetime gift and estate tax exemptions. 

If you’re considering ramping up your annual exclusion gifts, you might consider adopting a parallel strategy for charitable gifts. Gifts to charities are deductible for gift and estate tax purposes (as well as for income tax purposes) and therefore will also reduce the value of your taxable estate without using your exemption. Some philanthropists report that they like the idea of making annual exclusion gifts to family members, and, while they’re at it, making stock gifts of an equal amount into a donor-advised fund.

Given the uncertainty about what might happen with the estate tax exemption, some people are updating their estate plans to increase a bequest to a donor-advised or other fund at the Morton Community Foundation. This would help blunt the impact of estate taxes, and the bequest can be adjusted during lifetime as planning goals and estate tax laws evolve. 

Philanthropy: It’s not one size fits all

Charitable giving traditions are a big part of many peoples’ lives. The ways philanthropic values translate into action and behavior, however, vary widely from person to person. And that’s a good thing! When you align your charitable giving activities with your own personality and the ways you like to do good, you’ll enjoy it a lot more and as a result, you’ll be more likely to get even more involved with your favorite causes. 

Indeed, your choice of the causes you support may be based on personal experiences or even how you view your character. You may also find that philanthropy fosters personal growth and self-discovery. Some people find that getting involved in the community creates opportunities for networking and building relationships based on shared values and goals.

That’s why it’s important to acknowledge that not everyone likes to “do good” in exactly the same way. To figure out what mix of charitable activities might best suit your personality, consider reflecting on whether you tend toward an ”investor,” “connector” or “activator” profile.
Here’s what it might look like to be an “investor” type of philanthropist:

• You like to get involved in community activities where you can act independently, rather than scheduling dedicated time.

• You may feel that you often have more money than time.

• You’re happy to write a check or purchase a product that supports a cause.

If you tend toward the “connector” type, this may describe your preferences

• You like community activities where you can collaborate with friends and family.

• You enjoy the opportunity to meet people who care about a variety of causes, not necessarily a specific charity. 

• You like attending charities’ fundraising events, and you might even regularly promote your favorite causes on social media.

If you’re an “activator” type, here’s what that could look like:

• Your philanthropic passion lies with one or two specific causes.

• You like the idea of playing a small part in “changing the world” and impacting a single issue that could potentially benefit society on a broad scale. 

• You might enjoy serving on charities’ boards of directors.

Whatever your personality type, the community foundation can help! Whether it’s setting up a donor-advised fund to organize your giving, working with you and your advisors to establish a legacy bequest, or getting your family and friends involved in site visits to favorite charities, we’re here for you! 

Summer reading that’s worth a forward

Every week, the team at the Morton Community Foundation works with a wide range of charitably-minded individuals and families who are either already working with the MCF or are considering establishing a donor-advised or other type of fund to organize their giving. We also talk with attorneys, accountants, and financial advisors as they work alongside charitably-minded clients. Indeed, many advisors are telling us that they’re taking advantage of summer’s slower pace to get a jump on 2024 tax planning and estate plan updates.

As you work with your advisors over the next few months, be sure to let them know that the Morton Community Foundation can serve as the hub of your family’s philanthropy by administering a wide range of charitable giving vehicles, including:

• Donor-advised funds, which are frequently a better fit for your family than a private foundation.

• Field-of-interest funds and designated funds, which enable you to support specific causes and organizations and, if you are 70 ½ or older, can receive a tax-savvy “Qualified Charitable Distribution” from your IRA.

• Bequests and other legacy gifts to help ensure that the causes you’ve supported during your lifetime can continue to benefit from your generosity for years to come.

• Unrestricted gifts to support the community foundation’s work to grow philanthropy and improve the quality of life in our region across generations, especially as community needs evolve.

Along these lines, we provide a reading list to pass along to your advisors to help them stay up-to-date on legal and tax issues impacting charitable giving. Here are a few suggestions you could forward to your advisors (or simply forward this email):

• For advisors working with clients who support higher education, it’s important to stay on top of the tax treatment of NIL collectives. The team at the community foundation is happy to talk with your advisors about what’s going on here and how they can follow best practices. 

• It’s becoming more and more popular for philanthropists to explore giving cryptocurrency to charitable causes. Encourage your advisors to reach out to the team at the MCF as they encounter this issue with clients. 

• A focus on donor intent is especially important as cautionary tales emerge in case law. The Morton Community Foundation is committed to helping advisors help their clients achieve charitable goals. Our knowledgeable staff and independent board of directors are dedicated to carrying out donors’ philanthropic wishes. 

As always, please let us know if you’d like our team to be part of a conversation with your advisors. We welcome the opportunity to serve as the go-to charitable giving resource as you build a comprehensive financial and estate plan that includes philanthropy.

The team at the Morton Community Foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the Morton area and beyond. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation. 

June 2024 Donor and Fund Holder Newsletter

Six tips for smarter giving, summer reading, and team sports 

Hello from the Morton Community Foundation! 

We can hardly believe the year is nearly halfway over. It’s been such a pleasure to talk with so many donors and fund holders about all the ways you are pursuing your charitable giving plans for 2024. We’re equally inspired by those of you who have reached out to learn more about getting involved with the Morton Community Foundation by setting up a donor-advised fund, field-of-interest fund, endowment fund, or bequest to align with your charitable priorities.

In this issue, we’re covering a few topics that we think are especially appropriate for summertime.

• Midyear is a wonderful time to check in on a quick punch list of “need-to-know” charitable giving tips. We’ve selected six items that every charitably-minded person really ought to be aware of, whether for purposes of current giving or future giving. You can scan our list of six items in six minutes or less! 

• Summer is a great time to dive into deeper reading, while at the same time take a big picture look at industries and issues. We’re doing just that–with philanthropy. Check out our recommendations for studies and articles about the global role of philanthropy and how it hits home through the work of the community foundation.

• It’s not summer without sports! Fittingly, we’re sharing three ways to look at philanthropy as a team effort and perhaps inspire you to add an even bigger dose of collaboration to your charitable giving efforts. Supporting the community, like many worthwhile activities, is better when it’s done together.

Thank you for the opportunity to serve you and other donors and fund holders who care about the Morton area and strive to invest in both present and future needs of our community. We are committed to growing philanthropic resources to improve the quality of life across generations.

With gratitude,

Your Morton Community Foundation Staff
Scott Witzig, Executive Director
Darcy Riddle, Administrative Manager  

Six for the summer: Mid-year reminders about charitable giving

Welcome to summer! We've put together six tips to keep in mind as you plan your charitable giving for the coming months, years, and even decades. As always, the Morton Community Foundation is happy to be a resource!

Donate appreciated stock to your fund at the community foundation.

Yes, yes, we absolutely understand how easy it is to write a check when you want to boost your donor-advised or other type of fund at the Morton Community Foundation. If you can remember to pause before you pull out your pen, though, it really does pay off to consider whether appreciated stock would be a better way to add to your charitable giving account. When you give shares of long-term appreciated stock, you can be eligible for a charitable tax deduction at the fair market value of the shares. Then, when the community foundation sells the shares and adds the proceeds to your fund, the fund–a 501(c)(3) charity–is not hit with capital gains tax. By contrast, if you were to sell those shares, and give to your fund from the proceeds, you would pay capital gains tax on the appreciated value of the stock leaving you a lot less cash to work with. Please reach out to the MCF anytime to learn more about how easy it is to take advantage of this tax-savvy giving technique.  Click HERE download the information about donating stock directly to the MCF.

Plan ahead for your business exit.

If you own all or part of a private business, keep in mind that charitable giving can factor into your eventual exit strategy. You could be sitting on substantial unrealized capital gains if the business has grown a lot over time. Upon a sale, capital gains tax will be triggered, reducing the proceeds you get to keep. No capital gains tax will apply, however, to the sale of the portion of the business owned by your donor-advised or other type of fund at the Morton Community Foundation. Plus, you can be eligible for a charitable income tax deduction in the year of the transfer based on the fair market value of the shares–not the cost basis, as would be the case if you’d transferred the shares to a private foundation. Keep in mind that a strategy like this only works with careful planning, so be sure to contact the Morton Community Foundation well in advance of setting a plan in motion. We are happy to work with you and your advisors to help achieve your charitable and financial goals. 

Start paying attention now to the estate tax exemption sunset. 

The estate tax exemption–the total amount a taxpayer can leave to family and other individuals during their life and at death before the hefty federal gift and estate tax kicks in–is scheduled to drop, rather precipitously, after December 25, 2025. For 2024, the estate tax exemption is $13.61 million per individual, or $27.22 million per married couple, an increase over 2023 thanks to adjustments for inflation. Later this year, the IRS will issue inflation adjustments for 2025. For 2026, without legislation to prevent it, the exemption is scheduled to fall back to 2017 levels, adjusted for inflation, which would roughly total $7 million per person. That is quite a drop! This means a lot more people–maybe including you–could be subject to estate tax in the not-too-distant future. Be sure to talk with your advisors to explore how charitable giving techniques can help you avoid estate tax and leave a legacy for the community, especially if you start planning now.

If you can take advantage of the QCD, do it.

A Qualified Charitable Distribution (“QCD”) is a very smart way to support charitable causes. If you are over the age of 70 ½, you can direct up to $105,000 from your IRA to certain charities, including a field-of-interest, designated, unrestricted, or scholarship fund at the Morton Community Foundation. If you’re subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. Through a QCD, you avoid income tax on the funds distributed to charity. Our team can work with you and your advisors to go over the rules for QCDs and evaluate whether the QCD is a good fit for you.

Review your IRA beneficiary designations. 

As you review your assets and how they are titled, perhaps in connection with an annual financial and estate plan review, pay close attention to tax-deferred retirement plans such as 401(k)s and IRAs. Typically, you’ll name your spouse as the primary beneficiary of these accounts to provide income following your death or to comply with legal requirements. But as you and your advisors evaluate whom to name as a secondary beneficiary of these tax-deferred accounts, don’t automatically default to naming your children or your revocable trust. You and your advisors may determine that naming a charity, such as your fund at the Morton Community Foundation, is by far the most tax-efficient and streamlined way to make gifts to your favorite causes upon your death and establish a philanthropic legacy. A bequest like this avoids not only estate tax, but also income tax on the retirement plan distributions. That’s why non-retirement fund assets may be better-suited to pass to children and grandchildren. 

Embrace a holistic approach to philanthropy.

When you work with the Morton Community Foundation, charitable giving is easy, flexible, and rewarding. As the hub of your charitable giving, the MCF offers a wide range of fund types, services, and ways for you and your family to get involved with the community you love. Many of our fund holders use a donor-advised fund to organize annual giving to charities. We can also help you establish a designated or field-of-interest fund to complement the function of your donor-advised fund. A designated fund allows you to support a specific charity over the long term, while a field-of-interest fund focuses your support on a particular area of community need by leveraging the Morton Community Foundation’s expertise. We’d also be honored to work with you and your advisors to structure a bequest to the MCF in your estate plan to support important causes, as well as the community foundation’s work, beyond your lifetime. We are here to help you make the most of your philanthropic intentions, and it is an honor to work together. 

Philanthropy snapshot: A global priority with local impact 

Summertime can mean vacations, travel, a slower (or at least different) pace, and time to reflect. This year, our team is thinking quite a bit about the significant role of philanthropy across the world and how that widespread enthusiasm drives so much energy for charitable giving right here at home. 

If you’re spending time this summer reflecting, you might enjoy digging into a few of the sources we found thought-provoking,

• We really like this post from “across the pond” that analyzes why people give and synthesizes a variety of research studies and articles. Altruism, ego, social dynamics, and FOMO are just a few of the reasons people are motivated to give to charity. For a broad look at the role of philanthropy across the globe, you can check out Indiana University’s research.

• Every June, Giving USA releases its annual statistics on the state of charitable giving. We are looking forward to the 2024 report and digging into the numbers from 2023. Last year’s report showed that while individual giving was down, major gifts were ticking up. We’re curious to see what’s changed!

• Some say context is everything, and that may be why we always enjoy going back to the Smithsonian’s Giving in America exhibit and online resources. Even in its semi-archived and “under construction” format, the site is captivating; every time we revisit the site, something different catches our eye. (This time, we were struck by the side-by-side images from 2014’s Ice Bucket Challenge and the collection box from the early 1800s. And by the way, how can nine years have gone by since the Ice Bucket Challenge?) 

As always, the Morton Community Foundation is here for you! We are honored to work with you and your family as you support the causes in our region that are most important to you. You are making a difference! 

Philanthropy: A team sport

At first glance, you may think of charitable giving as mostly an individual act. Certainly, most of the time, the actual money or asset that constitutes the charitable donation comes from a single person, couple, or entity. Beyond that, though, it likely makes sense to think of charitable giving as a collaborative endeavor. 

Here are three examples:

1. Serving on the board of directors of a charitable organization is a rewarding activity for many people. And, many people complement their board service with financial support. Dialogue among board members, leveraging board members’ talents, and collective board oversight are important components of a well-run nonprofit organization. Charities are counting on board members’ objective voices in the boardroom, board members’ constructive questions, and the board’s dedication to ensuring that public trust in the charity is maintained. CLICK HERE to see a current listing of the Morton Community Foundation volunteer Board members.

2. For many people, involving other family members in charitable giving is one of the most rewarding ways to instill philanthropic values and transfer these values across generations. Whether you’re teaching young children about the importance of helping people in need, or joining with siblings to develop a grant-making strategy for a family donor-advised fund at the Morton Community Foundation, you’re experiencing the joy of working together to make a difference in the lives of others. 

3. Working with the Morton Community Foundation is itself a collaborative activity. When you organize your giving through a donor-advised or other type of fund, you are working with the MCF to help you plan your annual gifts, evaluate impact, structure tax-savvy contributions of appreciated stock, and so much more. Plus, the community foundation team often works alongside your attorney, accountant, and financial advisor to ensure that both your financial and community goals are top of mind.

Thank you for the opportunity to work together to the Morton area a better place for everyone, now and in the future. If you’re not yet working with the Morton Community Foundation, we look forward to exploring the options! It would be an honor and pleasure to work alongside you and your family on your charitable giving journey.  

The team at the Morton Community Foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation.