PROFESSIONAL ADVISOR CONNECTION
October 2020
Elections & Giving: Tips for Advising Your Clients

Individuals who are passionate about community causes are frequently also passionate advocates for candidates running for public office. Indeed, according to the Pew Research Center, the percentage of Americans making political contributions has doubled in recent decades, from 6% in 1992 to 12% in 2016. By contrast, the percentage of Americans giving money to charity stands at a new low of 73% in 2020, according to a Gallup poll, down from a previous low of 79% in 2009.

Still, the number of Americans giving to charity each year remains significantly higher than the number of Americans making political contributions. Charitable giving is still going strong, relatively speaking, even in the midst of political frenzy. Indeed, historically, charitable giving is influenced, but not negatively affected, in election years.  
 
With elections top of mind for your clients, how can you best advise them about their charitable priorities? Consider the following:
  
1. Share the statistics with your clients. Many clients may not realize that the number of people giving to charity each year is going down, and that community organizations are an important component of the social fabric that helps improve quality of life for citizens.
 
2. Remind clients that in the face of uncertainty about potential tax law changes, it is generally a reasonable approach for clients to continue with charitable giving plans as they normally would. Most clients probably don’t “give away a dollar to save 50 cents,” and community needs are as urgent as ever in 2020.

3. Encourage clients to reach out to the organizations they support to learn about unique needs this year due to economic hardship and the ramifications of the pandemic.

As always, our team is happy to be a resource and sounding board. 
An Eye Toward Year-End Tax Planning

Appreciated stock, anyone?
Yes, 2020’s stock market has been a rollercoaster, but as you guide your clients into year-end, don’t forget the powerful benefits of giving appreciated securities to a donor-advised fund at Community Foundation of the Lowcountry. Now is the time to start helping your clients with tax planning. Remember, not all stock is down! For many clients, 2020 is an excellent year for year-end giving.

Closely-Held Business Exits
Clients who are preparing to sell a business should start thinking ahead about charitable planning. Before any deal is struck, or any binding commitments discussed, encourage your client to consider the benefits of making a gift of their closely-held stock to a charitable entity, such as a donor-advised fund at Community Foundation of the Lowcountry.

Remember, though, that the “step transaction” doctrine is still very much alive and well. The IRS could argue that the transfer of stock to a charity should be treated as “combined” with the sale of the stock, thereby eliminating the tax benefits of the charitable transaction. The IRS could win this argument if the facts indicate that the multiple “steps” in the process were really just a single-step transaction when considering the intent and economic reality of the taxpayer’s actions. 

Back Door Roth IRA Conversions
Last but not least, consider the step transaction doctrine when you are advising your high income-earning clients on whether to pursue the so-called “back door” Roth IRA planning strategy. When a client’s modified adjusted gross income crosses the IRS’s designated phase-out thresholds, contributions to a Roth are no longer permitted. Contributions to a traditional IRA, however, are not subject to income limitations. In addition, there are no income limits on who can convert from a traditional IRA to a Roth. So, with the “back door” strategy, your client makes a contribution to a traditional IRA using after-tax dollars and then executes a tax-free Roth conversion. Consider carefully researching these issues and even advising clients to wait several months between the contribution and the conversion, just in case.
FUND SPOTLIGHT:
Student Tech Connect Fund
The sudden need for virtual learning has created many challenges for students, educators and schools. A Community Foundation of the Lowcountry Fund has been created to address these challenges – The Student Tech Connect Fund. Local groups, faith-based organizations, concerned citizens and donors with funds at the Community Foundation, enlisted our help in formulating a creative approach to ensure students, particularly those at risk, were provided the virtual learning tools they needed to keep up with their peers.
 
The Student Tech Connect Fund has already made a $54,000 Grant to the Pre-Kindergarten Digital Curriculum Program in the Beaufort County School District. Read this story to see how that grant will be put into action. If your clients would like to support this effort, they can visit the Student Tech Connect Fund’s donation page at cflowcountry.civicore.com/student-tech-connect-fund or contact us at 843.681.9100.
NEWS AT THE FOUNDATION
Continued COVID-19 Pandemic Response

Since our response fund was created in March, it's raised over half a million dollars, and we have granted $556,000 of it to 40 nonprofit organizations meeting pandemic-related needs in Beaufort, Colleton, Hampton and Jasper Counties. 

We’re seeing there’s still a great need in our community.

Some of our Lowcountry neighbors are under-employed or unemployed. Others are food and housing insecure. We have citizens fighting mental and physical health issues. And a number of local students have been marginalized by the technological demands of online learning.
 
Please continue sharing the news of our Lowcountry Community COVID-19 Response Fund. Donations can be made at: cflowcountry.civicore.com/covid.
Board of Directors
Staff
Jim Allhusen
Chair
 
Sandra Benson 
 
Geoff Block
 
Yvonne Curl 
 
Arno Dimmling 
 
Linda Fiore 

Doug Fletcher

John Levy 
 
Sheila Mahony 
 
Michael J. Marks  
  
Paul Moeri 
 
Al Panu

Shirley Peterson

David Rosenblum

Allen Ward 

David Wetmore 

Michelle Wycoff
Interim President and CEO

VP for Community Investment
 
VP for Finance and Administration

Program Associate 
 
VP for Marketing and Communications

Donor Services Associate

Finance Associate

Communications Specialist

VP for Development and Donor Services

Administrative Assistant
 
Donor Services Associate