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As attorneys guide their clients through complex estate planning, tax, and charitable giving issues, they have a powerful but often overlooked tool at their disposal—community foundations. At these philanthropic organizations, staff are experts in local issues and the nonprofits that work to address them. And community foundations can partner with estate attorneys to develop philanthropic plans that align with their clients' core values, create meaningful charitable gifts, and make the most of tax planning opportunities.
There are more than 900 community foundations operating in the US, according to the most recent data from the Council on Foundations. The Silicon Valley Community Foundation (SVCF) is the largest, with more than $14 billion in charitable assets and $4.58 billion in grants made in California and worldwide in 2023.1
While advocates may know that community foundations exist in their communities, they may not be familiar with all the resources that community foundations can provide them for sophisticated charitable planning.
At SVCF, for example, donors can open donor-advised funds (DAFs), endowment funds, scholarship funds, and more.
Donors can fund their philanthropy with highly appreciated assets that many smaller nonprofits are unable to accept and, in certain circumstances, can even recommend their own trusted financial advisors to manage a charitable asset donated.
Donors who want help creating a philanthropic strategy or finding the right organizations to support can work with philanthropic advisors who have deep expertise in local issues and knowledge of the organizations working to address them. Donors who want to recommend complex or international grants can rely on SVCF's in-house expertise in grantmaking and compliance.
Attorneys are often looking for the most tax-efficient ways for clients to support their favorite causes, and community foundations can be a powerful ally in that effort. They can help ensure that clients' philanthropic intentions are aligned with long-term tax strategies, driving meaningful social impact while reducing the overall tax burden.
For entrepreneurs, executives and wealthy clients who have accumulated long-term assets valued at a low tax basis, liquidating those assets to make charitable gifts of cash can generate significant capital gains taxes.
In addition, some of these assets may be illiquid or may be subject to restrictions on sale.
But donating your own assets to charity often offers powerful charitable planning and tax benefits. By donating appreciated publicly traded securities, for example, donors can avoid the capital gains tax owed upon the sale and the charity is able to use the full value of that asset for charitable purposes. The donor will generally receive an immediate fair market value deduction up to an adjusted gross income limit of up to 30%, with a five-year rollover.
The same benefit may apply to gifts of other types of long-term appreciated assets. This is where SVCF's ability to accept complex assets for charitable donations can help estate attorneys formulate effective estate plans. Many nonprofits cannot accept such donations, but SVCF often can—giving donors the opportunity to contribute diverse and complex assets to create or augment their donor-advised funds.
In addition to donations of publicly traded stocks, mutual funds and bonds, SVCF facilitates the giving of private business interests including:
- Private C-Corp and S-Corp Stock
- LLC and Limited Partnership Interests
- Private equity and hedge fund interests
- Pre-IPO stock
- Interest paid
In addition, SVCF may generally accept donations of non-publicly traded assets, including:
- Cryptocurrency
- Real estate
- Life Insurance
- Oil and gas tariffs
- Limited stock
When it comes to estate planning and legacy gifts, SVCF offers valuable services that make making a will easier and more flexible.
Donor-advised funds (DAFs), for example, allow donors flexibility in lifetime giving, but they are also excellent vehicles for legacy and multigenerational giving. Families can collaborate to create a giving mission and decide on grants together. Donors can also add family members over the age of 18 as fund advisors, enabling them to recommend grants themselves. Donor-advised funds can also hold gifts of assets from endowments, wills and beneficiary designations to centralize all charitable gifts into one charitable vehicle. Parents can then appoint their children as successor advisors to administer the family's philanthropy to the next generation.
If a donor doesn't have a donor-advised fund—or has one but doesn't want the fund to continue after their death—they can work with SVCF to create a legacy agreement to give new funds to the good of the community. The agreement can be updated without having to change the property documents.
And if a donor wants to benefit their community but doesn't know which organizations to support, a gift to SVCF's Community Outreach Fund provides unrestricted funds that will be allocated to meet future community needs . Such a gift provides SVCF with the flexibility to address the community's most important needs as they arise over time.
Community foundations offer expertise in giving strategies, deep knowledge of local charities and access to a community of other philanthropists. SVCF can help with every step of the philanthropic process, including:
- Guiding donors to charities that match their goals and values and structuring gifts, including annual or conditional gifts
- Customization of investment options for fund holders.
- Building communities of like-minded philanthropists
In certain circumstances, community foundations may also be able to partner with a donor's existing team of advisors, including investment advisors for ongoing asset management, CPAs for tax planning, and private foundation staff for consolidated
financial reporting.
By partnering with SVCF, attorneys can offer their clients flexibility and support in their charitable giving plans. Whether offering advice on structuring a tax-efficient gift, acquiring complex assets for later charitable giving, or supporting attorneys in guiding families through the complexities of estate planning, community foundations serve as trusted allies in the process.
For donors, this partnership opens the door to thoughtful and impactful philanthropy that can evolve over time. And for attorneys, it's an opportunity to deepen client relationships by ensuring that their clients' charitable and financial goals are aligned.
1Council on Foundations, Survey Results, https://cof.org/cfinsights/results/2022/assets
*Silicon Valley Community Foundation does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied upon for, tax, legal or accounting advice. You should consult your tax, legal and accounting advisors before engaging in any transaction.