Prep Your Clients for Next Tax Season

Strategies to Jump-Start Client Conversations

• Leverage the Liquidity Event. Entrepreneurs hate to pay taxes. If your client is getting ready for a liquidity event, this is an easy place to ask them about charitable intent. By partnering with OCCF, you can develop creative ideas for them that incorporate charity while reducing tax burdens. Conversations like this can add value and build your relationship with your client.

• Donor-Advised Funds as a Private Foundation Alternative. Donor-advised funds are popular vehicles as an alternative to private foundations. Many clients find that a donor-advised fund operates almost identically to a private foundation, but with more advantageous tax benefits and without the hefty administrative overhead costs and burdensome restrictions. A donor-advised fund can be named after the client or even structured to enable the client to give anonymously. Community foundations are ideal providers of donor-advised funds for clients who want to benefit from OCCF’s customized philanthropic support, community expertise and mission-driven 501(c)(3) status.

• Bunching – Give Now and Decide Later. Giving through a fund at OCCF may allow a client to leverage a helpful technique called “bunching,” which maximizes the client’s itemized deductions for the tax year while still ensuring that the client can give strategically over the next few years to achieve charitable goals and support favorite organizations when they need it the most.

• Gifts of Appreciated, Non-Cash Assets. Many clients naturally think of cash as the source for their year-end giving, but they may be missing a valuable opportunity! Most of the time, highly-appreciated marketable securities or other highly-appreciated, long-term assets are a better gift to their fund at the Community Foundation or other public charity because they are eligible for a tax deduction at the assets’ fair market value. The proceeds from the sale of the assets will flow into your client’s fund at the Community Foundation free from capital gains tax. That means more funds are available to support their favorite causes. Consider gifts of appreciated stock, mutual funds, real estate or business interest. Not only can the client receive a charitable deduction, but they can also eliminate capital gains tax on the portion donated.

• Rebalance Investment Portfolios by Donating Highly-Appreciated Securities to a Donor-Advised Fund. No capital gains tax will be assessed on the donation. Your client will be eligible for a full, fair-market value tax deduction, subject to AGI limitations while diversifying their investment portfolio. They can then make grants over time, taking advantage of OCCF’s philanthropic resources and community expertise.

• Qualified Charitable Distributions. Each taxpayer aged 70½ and older may direct up to $108,000 in distributions from an IRA to a qualified charity in 2025 (up from $105,000 in 2024). Note that your client can make a once-in-a-lifetime QCD to a charitable remainder trust or charitable gift annuity of $54,000 in 2025 (adjusted for inflation from $53,000 in 2024). Your clients can further escape income tax via QCDs and satisfy a greater portion of their Required Minimum Distributions (RMDs). They can use the QCD to set up a named scholarship fund, nonprofit endowment or a community program grant fund.