July ’23 Advisor News: DAF Power, AI, and Summer ReadingPartnership with advisors help ACF connect with people in the community when the time is right for them to include charitable planning in their financial and estate plans. Whether it’s helping a client set up a donor advised or scholarship fund, creating a plan to document intentions for a charitable legacy, or even facilitating meetings to bring families together around charitable goals or service in the community, ACF works alongside advisors to provide highly responsive, personalized service .
From time to time throughout the year, we will use our “Mission Moment” to share the stories of advisors who lead the way by engaging their clients in conversations about philanthropy and using the services of the Community Foundation to help clients realize their goals.
We hope you enjoy this profile of Arlington Law Group Founding Partner, Ryan Brown, who, “through a series of accidents”, found his way from working in computer science and Artificial Intelligence 25 years ago, to tax law and estate planning… and ringing bells and singing Christmas carols at Pentagon City Metro along the way.
Donor advised funds (DAF) offer opportunities for clients to organize their giving, enhance their impact and maximize the tax advantages of giving. Arabella Advisors outlines five ideas for donors to unlock the full power of their DAFs in this succinct and helpful report.
The experienced, competent and well-trained community foundation staff can support your clients in these areas. The Arlington Community Foundation, and our like community foundations around the country, help donors process their thoughts and feelings about how best to achieve impact and personal fulfillment through their giving. We help people make a plan and act on it. It’s a constant feedback loop, and along the way we help families deal with interpersonal tension and confront their own fears about making mistakes so they can give confidently.
Bonus: Through the Community Foundation, this is available to everyone, not just the ultra-wealthy of the world!
Are all DAFs created equally? Check out ACF’s DAF comparison chart to see the differences between a community foundation DAF and one managed by a commercial provider.
News about the capabilities of artificial intelligence has skyrocketed over the last few months. As attorneys, accountants, and financial advisors, no doubt you are watching these developments closely, both because of the potential legal issues involved and also because of the ways AI can enhance your work.
Here are three suggested discussion points when your clients ask how AI might impact their philanthropy plans:
–For clients who serve on boards of directors of nonprofits or work for a nonprofit, AI could mean significant advancements in fundraising capabilities. From research to communications, generative AI could help fundraisers get their work done, which would be a welcome development in a profession that has been under stress due to a shortage of professionals and a challenging fundraising environment.
–Some of your clients may be investing in AI companies. Pay close attention to this. While certainly not all AI ventures will make it, some AI startups will likely be very successful, creating huge financial gains for their shareholders. Talk with your clients about contributing shares of these companies to their donor-advised or other funds at the community foundation. Upon an eventual exit, the shares held by a donor-advised fund will not be subject to capital gains tax, allowing your client to support their favorite charities much more significantly than if the client waits to sell the shares and transfer the proceeds (minus the tax hit) to a charitable fund.
–While AI can certainly help your clients research their favorite charities, and similarly will also play a role in helping charities fundraise and carry out their missions, it’s important to remember that right now, in AI’s early stages, most AI results are still only as good as the prompts and instructions provided by humans. The key to getting the right answers is to ask the right questions, and sometimes asking the right questions is the hardest part.
As always, please reach out to the community foundation for help as you serve your charitable clients. Our team has deep, personal knowledge and experience in all areas of charitable giving, from tax deductibility rules, to planned giving techniques, to understanding the needs of our community and how your clients can make a difference in the causes they care about. We welcome the opportunity for human interaction as that becomes even more of a rarity!
Giving is down, but the total amount-–nearly $500 billion—is still impressive
Just reported in June by Giving USA was a rare decline, 3.4%, in charitable giving by Americans in 2022. Though giving totaled nearly $500 billion, officials cited high inflation and the stock market’s pullback as reasons for the decline from $516 billion of total giving in 2021. Despite households’ financial pressures, 64% of giving came from individual donors. Dig into this compelling (and free!) infographic for a comprehensive look at the state of philanthropy in America.
NIL collectives: DOA?
NIL collectives have been all the rage in some higher education circles, but that may be changing. Contributions to these entities may not be tax-deductible after all, according to the IRS in a May 23, 2023 memo. This development serves as an excellent reminder that private benefit and charitable tax exemptions do not mix well.
Even more reasons to talk about philanthropy with your clients
If philanthropy is not a regular topic of your client conversations, you may be missing out. Not only can it be an easy icebreaker, but also studies have documented strong organic client growth through such conversations. And as this article points out, the combination of client dissatisfaction, wealth transfer, and the affluence of future generations spells o-p-p-o-r-t-u-n-i-t-y for advisors.
If you have any questions related to the Community Foundation, charitable giving, or something client-specific, we’d love to hear from you. Contact Christy Cole, Director of Philanthropy, at ccole@arlcf.com or 703-243-4785×206.
