2014 Okoboji Foundation Nonprofit Forum

Live…Give…Better Together.

Community Foundation of Greater Des Moines

Wade A. Den Hartog, Director of Affiliates & Charitable Partners

Joe Sorenson, Manager of Affiliate Relations

Presentation Outline

Power of Endowments

Endow Iowa

Charitable Gift Annuities

Keep Iowa Growing

Power of Endowments

YEAR 1

Establish a Named Fund or contribute to an existing fund

$10,000 gift

Initial gift has been invested

YEAR 15

$9,000 in cumulative grants and services$16,000 balance

1 Time

YEAR 50

$66,000 in cumulative grants and services$57,000 balance

6+ Times

YEAR 25

$19,000 in cumulative grants and services$23,000 balance

2 Times

assumes 4.5% annual payout and 8.5% rate of return

Power of Endowments

Donors who want to assist in the sustainability of your organization may find giving to an endowment appealing

Endowments can be use to support:General OperatingProgramsStaff Positions

ExamplesOkoboji Foundation Operations EndowmentJohnny Danos Professional Development Fund

Creating Lasting Legacies Through Endow Iowa

Helping You Help Your Donors

Endow Iowa

An Incredible Incentive for Donors

Must be held at a qualified community foundation

Iowa charitable causes

No more than 5% annual spending/granting policy

Endow IowaThen donors can be eligible for

• 25% state income tax credit for contribution – in addition to federal deduction (can carry forward for up to five (5) years)

• Limit each year, per taxpayer and also statewide

• Tax credit paperwork submitted; awarded on a first come-first served basis

• Tax Credit Letter/# sent by IEDA once awarded

Endow IowaWith Endow Iowa, donations to Community Foundation endowments cost donors less.

$10,000 giftLess tax benefits:Net federal tax savings -3,960Endow Iowa Tax Credit -2,500Net Cost of Gift $3,540

Note: Use appreciated assets subject to capital gains and the savings are even better!

Disclaimer: Information provided is general and educational in nature. It is not intended to be, and should not be construed as, legal or tax advice. The Community Foundation does not provide legal or tax advice. Consult an attorney or tax advisor regarding your specific legal or tax situation.

Endow IowaWho Uses it?

• Donors who wish to be charitable to Iowa non-profits

• Donors with a taxable event• Inheritance• Sale of business• Influx of income

• Donors who pay Iowa state income tax

**Endow Iowa does not apply toward estate taxes

Charitable Tools

Win – Win Scenarios

Charitable IRA Rollover

It MIGHT be back?!

• For Individuals 701/2 and older

• Can transfer up to $100K of IRA assets directly to charity

• No charitable deduction but the money is not realized as income for tax purposes

• Iowa Taxpayers can qualify for Endow Iowa tax credits!

Gift Examples

1. Appreciated Securities2.Gifts of Grain

The Johnsons

A GIFT OF APPRECIATED SECURITIES• Ted and Marlene own 1,000

shares of stock• They originally paid $10 per

share or $10,000 more than 11 years ago

• The fair market value today is $37 per share or $37,000

• If they sell the stock, they’ll have $27,000 in long-term capital gain income

• If they are in the 20% LTGC tax bracket, their bill equals $27,000x.20=$5,400

• Their net amount after selling the shares will be $31,600

The Johnsons

CONTINUED

• If they instead give the stock to charity, they bypass all $5,400 of capital gains tax

• Plus, they can deduct the fair market value of their stock $37,000 (up to 30% of their adjusted gross income)

• In addition they get 25% state tax credit

• They have a 5-year carry forward, too

Janice Jones

A GIFT OF GRAIN• Donor gifts 2,500 bushels of

corn• Elevator transfers

ownership of corn to the Community Foundation

• Donor does not include the sale of corn as income (charitable deduction is $0)

• Donor receives Endow Iowa tax credit based on actual selling price of corn ($7.39 per bushel X 2,500 bushels= $18,475)

• Donor deducts cost of growing the corn

• Donor saves in self-employment federal and state income tax

Charitable Gift Annuities

A Charitable Gift Annuity (CGA) is an agreement in which a donor makes a gift to a nonprofit and

in turn receives guaranteed annual income payments for the rest of their life and or the life

of one other person.

• Donors 62 years of age and older.• Committed individuals wishing to give, but

needing security of income for retirement.• Donors wishing for their income stream to be

continued but being relieved of investment responsibilities.

• Donors with highly appreciated but low income producing securities or other property.

Donors benefit from a CGA

• The “rate” of payment on each CGA is dependent upon the age of the donor(s) at the time of the gift. These rates are determined by the Council on Gift Annuities.

• The older you are when you start receiving payments, the larger the payments. These payments can be monthly, quarterly, semi-annually or annually depending upon the amount.

• Donors can choose to receive a lower rate of return for their payments if they wish.

Who determines the annual rate of payment to my donor?

Keep Iowa GrowingIowa’s Farmland Giving Program

…for the love of the land

Why?Farmland is by far Iowa’s most valuable asset:

Total number of farms 88,631 Total amount of farmland 30.6 million acres Average farm size 345 acres Average dollar value per acre $8,716 Aggregate value of Iowa farmland

is estimated at $267 billion

Why?

The Community Foundation’s 30 affiliated county community foundations, together with Polk County, hold a combined 9.5 million acres of farmland.

If Keep Iowa Growing captured only 1% of this farmland, the value of assets held for charitable causes would be an estimated $866 million.

What types of Gifts will be accepted through Keep Iowa Growing?

Outright gifts of farmland made during life Bequests Retained life interest

For term of years For term of life donor For term of life of donor and spouse (“last-to-die”)

Questions?