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Image January 2024 Nonprofit News: What to watch in the new year for you, your org, and your board

It’s never too early to plant seeds for planned giving

Millennials and Generation Z are already focused on retirement, and 30% of them are setting their sights on becoming millionaires to achieve their goals. What this means for you and other charitable organizations is that it’s likely a smart move to expand your planned giving outreach strategies to include younger donors, as well as the traditional audience of generations who are retired or approaching retirement. Indeed, many of your younger donors are increasingly becoming investment savvy and will understand the value of planning ahead.  

Because younger generations are often motivated to give online and inspired by social media, your planned giving strategies should be tailored accordingly. Many planned giving techniques are complex, which is understandable considering the various legal and tax considerations that factor into structuring a bequest, charitable remainder trust, or beneficiary designation of a retirement plan or life insurance policy. Try to do whatever you can, though, to keep your language and promotional materials simple to match the preferences of this audience and the channels where they receive information.

For example:

–When you use social media, try to keep your language short, sweet, and to the point. Instead of throwing out terms such as “bequest” and “charitable remainder trust,” tap into younger generations’ motivation to make a “lasting impact” by “getting organized” and “planning ahead.” 

–You can appeal to younger generations’ desire to be financially savvy by referencing various ways a young donor can use techniques to make a difference in the causes they care about and tap into tax savings strategies at the same time. 

–You might also consider publishing stories about younger donors to your organization who’ve already structured their estate plans to make sure they’re taking care of your organization and others they care about. 

–Recognize that young people may start new jobs frequently, and this gives you an excellent opportunity to mention the benefits of naming your endowment fund at the community foundation as the beneficiary of an employer-sponsored 401(k) plan or rollover IRA. 

As always, please reach out to the team at the community foundation. We are here to help you grow your endowment and reserve funds in whatever way we can to keep your mission strong and thriving for generations to come in our community.

Back to basics: An endowment refresher course

More often than not, boards of directors of nonprofit organizations are made up of business and community leaders who are not typically embedded in the day-to-day operations of charitable organizations. That’s why it’s important to focus on continuous learning opportunities for your board members, including (and especially) board members’ roles in maintaining your organization’s financial stability.  An endowment is a key component of achieving that financial stability, and, if your organization has an endowment or reserve fund, you’re likely well on your way; however, even with an endowment or reserve in place, many boards struggle to maintain the right balance between directing resources to current needs and planning for long-term sustainability and growth.

We are here to help if your team wants to develop policy and practices to plan for your financial future. At your next board meeting, consider reminding your directors about why donors may want to support your organization’s long-term reserves.

Here’s a list of talking points to help get you started:

–The donor wants to leave a legacy to the community after the donor’s death so that the donor’s commitment to your mission continues beyond the donor’s lifetime.

–The donor wants to ensure that family members can experience the joy of giving for years to come by setting up long-term support for your organization, such as a gift to your endowment fund, or even a designated fund. at the community foundation, which include guidance for connection points for family members to stay involved.

–The donor wants to make the most of tax benefits associated with setting up a future gift to your organization, including avoiding capital gains tax, securing an income tax deduction up front, and even retaining a life income stream.

–The donor owns certain assets that are not suitable to leave to family members but would make ideal gifts to charity, especially by making a gift to your endowment fund at the community foundation. Not only will a list like this help remind your board of directors, but it also even inspire a board member to make a current gift or structure a planned gift.

We look forward to working with you and your board leadership to plan for your organization’s financial stability, ongoing sustainability and future opportunities for impact.

FAQs to ring in the new year

A new year ushers in a fresh batch of resolutions and goals. It’s also a time when new questions pop onto the radar. That’s certainly the case even in these early days of 2024. Here are a few of the top questions we’re already hearing from our nonprofit partners, along with answers to help you navigate the year ahead.

“Okay, what’s this we’re hearing about the Corporate Transparency Act, and does our organization need to do anything about it?”

New laws known as the Corporate Transparency Act are now in effect. These provisions were enacted as part of the Anti-Money Laundering Act of 2020. The purpose of the law is to build a national registry of “beneficial owners” of businesses for which ownership information is not otherwise readily available (e.g., as is the case for public companies). The main purpose of the Act is to help prevent people from concealing their ownership in business entities that are used for money laundering, financing terrorism, tax fraud, and other illegal activities. The good news for charities is that 501(c)(3) organizations are exempt from the Act. 

What are a few fundraising trends we should be watching this year?

Not surprisingly, challenges with fundraising–in some cases reminiscent of the financial crisis era–are causing organizations and their boards of directors to stay laser-focused on development techniques that can break through the noise to cultivate new donors and more deeply engage current donors. Leveraging influencer strategies, instilling trust among your donors, and understanding how donor-advised funds work (give our team a call anytime!) are making the list of priorities for 2024 development plans. 

“How can we make sure we’re not violating donor intent?” Donor intent issues have been in the news recently, and charities are asking what they can do to ensure that their organizations don’t run afoul of the rules. The bottom line here is that you need to be careful, especially when you are raising money for your endowment fund or setting up planned gifts. If a donor expresses interest in restricting a gift to your organization in any way, consider reaching out to the team at the community foundation for help. In many cases, we can work with you and the donor to establish a fund at the community foundation to achieve the donor’s intentions, secure resources to support your mission, and reduce the risk of misunderstandings and legal trouble.  

This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.