For Professional Advisors
SPECIAL SITUATIONS
Often, one of your greatest opportunities to assist clients in maximizing the personal benefits of giving occurs when they are making other major business, personal, and financial decisions. The following are options for charitable giving that your client may want to consider in some of these special situations.
Transferring a Private Foundation:
As charitable donors, your
clients may wish to create a vehicle that allows them to maintain
long-term involvement with charitable assets. A private foundation
can be an attractive giving vehicle for a person in the right
circumstances. However, the disadvantages of private foundations,
including costs, administration, and lesser tax benefits,
cause many people to seek a better alternative. While some
donors may find a private foundation suited to their needs,
the alternative of establishing a fund at The Community Foundation
of Middle Tennessee often proves more attractive. Private
foundations can transfer assets to establish a permanent,
named fund or supporting organization of The Community Foundation
of Middle Tennessee. In either case, the private foundation's
name and philanthropic goals can be retained. No tax or penalty
is assessed on such transfers. We invite you to discuss with
us ways in which we can help your private foundation clients
achieve their charitable purposes and avoid burdens and limitations
associated with the maintenance of a private foundation.
When Your Client Owns a Closely Held Business:
Owners of a closely held or family business are often very involved
in the community and in charitable giving. A partnership with
The Community Foundation of Middle Tennessee, a public charity,
is a cost-effective method to maximize and target charitable
involvement while minimizing tax liability. The Foundation
can be of particular assistance under the following circumstances:
- Passing ownership of the company to children or others
- Selling the company and minimizing taxes
- Getting equity out of the company to provide income for the donor and others
- Facing taxation on excess retained earnings
When Your Client is a Corporation
Corporations are often inundated with requests for contributions, which
may result in a n unfocused program of corporate giving. The
donations a corporation makes may depend on the executive
contacted by a particular charity and, therefore, may vary
from year to year. Some corporations may be unsure of the
charitable dollars they will have available. In addition,
a corporation may wish to focus on a particular community
problem, but may find prohibitive the cost of the necessary
administrative time and effort.
By setting up a fund in The Community Foundation of Middle Tennessee, a corporation can simplify the process and focus its giving. Corporate staff is freed from the administrative details of charitable giving and may choose their level of involvement in grant-making. The Community Foundation of Middle Tennessee staff provides technical assistance and grant-making services at a low cost and handles all administrative paperwork, check-writing, and investment oversight. Ideally, the corporation may be able to expand its corporate giving programs without increasing corporate staff.
A corporate fund provides a dependable stream of income to meet the company’s charitable obligations, even during years when cash flow is tight. In good times, the company can add to the fund, providing additional flexibility to even out the peaks and valleys inherent in most corporate financial fortunes.
The Community Foundation of Middle Tennessee offers in-depth knowledge of the Middle Tennessee area, particularly in terms of the major issues affecting the nonprofit sector. The Foundation is familiar with many of the activities of the community’s nonprofit organizations and consists of individuals with diverse academic backgrounds and experiences.
A corporation can establish a fund and ask The Community Foundation of Middle Tennessee to distribute either principal, income, or a combination at various times throughout the year. The corporation may make suggestions to The Foundation’s Board as to specific grantees; it may ask The Foundation to follow specific guidelines in grant-making from its fund; or it may give The Foundation discretion over disbursements.
