Client Solutions
Tools for Advisors | Summer 2020
DAFs: Working Hard for the Community
In recent years, donor advised funds (DAFs) have been one of the fastest-growing philanthropic planning tools in the marketplace. At WCF, DAFs make up roughly 35% of all funds.

According to a recent survey conducted by the Community Foundation Public Awareness Initiative (CFPAI), grants from DAFs among the 64 community foundations surveyed increased nearly 60% in March and April 2020 compared with March and April 2019. 

DAFs can be an important lifeline for community organizations during periods of hardship, as noted by Bruce Hopkins, a University of Kansas School of Law professor. 

Consider working with your clients to activate their existing DAFs or establish new DAF to help respond to the needs created by COVID-19.

If you need assistance from us, or your clients are interested in setting up a fund, contact Portia Portugal.
Charitable Lead Trusts: A Timely Revival
Among the many factors swirling together in the pandemic marketplace are historically low interest rates and historically high needs for increasing charitable giving to support organizations dealing with the health crisis. This makes the charitable lead trust an attractive vehicle for your clients who want to help charities in the near term and still preserve assets for their families.

Here’s how a charitable lead trust works:
  1. Your client transfers cash or other property to an irrevocable trust
  2. For a term of years, a charity designated by your client (which could be a DAF) receives an income stream. The trust can be structured to maximize income tax benefits, or estate and gift tax benefits, in varying degrees.
  3. At the conclusion of the term of years, the remaining assets in the trust are distributed to the client’s designated non-charitable beneficiaries

Why now? If, over the term of the income period, the trust assets outperform the current IRS 7520 rate (rates are low right now), the non-charitable remainder beneficiaries will receive assets with a value much higher than the taxable gift reported when the trust was created. This results in a tax-free transfer of wealth. 

What’s more...if a client designates a DAF to receive the income during the term, the client can stay involved by recommending grants in the months and years ahead.
>>> Questions? Call us at 316.264.4880 or email Portia Portugal.