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Philanthropy in times of crisis: A conversation with our professional advisor network

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Last week we brought together our professional advisor partners for a discussion of philanthropy in times of crisis. We discussed how the Vermont Community Foundation is responding organizationally and working with fundholders to mobilize philanthropy across the state. We touched on the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) incentives for charitable giving and invited our partners to share experiences and questions they are fielding from clients in this unprecedented time. Here is a glimpse into the conversation.

What is the role of philanthropy in Vermont during COVID-19?

Dan Smith, our President & CEO, put it best when speaking about the role of the Community Foundation currently. “We are committed to living up to the idea that philanthropy can and must function differently at a time like this. That means moving quickly and being flexible. We have done both.”

Dan went on to discuss how the VT COVID-19 Response fund is raising and distributing millions of dollars to nonprofits addressing the most pressing and urgent needs of vulnerable Vermonters, including food assistance, homelessness, healthcare, mental and behavioral health services, and youth support. “We continue to learn from our work in other initiatives and navigate the intersection of philanthropy, state, and national resources at every level to stretch capacity against a broad range of needs in this moment.” Learn about our Giving Recommendations here.

What are some of the charitable giving strategies the Community Foundation Philanthropic Advisors have discussed with fundholders?

Stacie Fagan, Vice President of Philanthropy states, “One primary role the Foundation plays is working in an advisory capacity, to help fundholders as they decide where and how to give in response to the crisis. Many fundholders are thinking carefully about deploying charitable assets to support immediate and basic needs in their communities, while also keeping an eye on recovery and what it will take to build more resilient communities across our State.”

A few of the charitable giving strategies we have been discussing with our fundholders include:

  • Giving grants to support general operations rather than special projects
  • Moving up grantmaking previously planned for later in the year
  • Making new relationships with nonprofits who are pivoting to response and recovery work
  • Engaging with funding partners throughout the State to understand co-funding opportunities
  • Staying involved with State and Federal partners to understand the funding gaps
  • Working with professional advisors to utilize temporary changes to charitable gift planning tools and changes to tax law, i.e. CARES ACT
  • Assisting fundholders and their advisors with legacy and estate planning through our testamentary fund options

What are some of the temporary changes to charitable giving as indicated in the CARES Act?

Emilye Pelow Corbett, Philanthropic and Planned Giving Advisor, highlights the changes that might impact charitable giving in 2020.

  • An above-the-line charitable adjustment of up to $300 for cash gifts made to public charities. This is available for taxpayers that elect not to itemize their deductions on their tax returns. The deduction does not apply to contributions made to a donor advised fund or a supporting organization.

  • Under the CARES Act, the 60 percent Adjusted Gross Income (AGI) limit will not apply for charitable contributions made in cash during 2020; meaning taxpayers who itemize may deduct up to 100 percent of their AGI for qualifying charitable gifts. This applies to cash contributions only and does not apply to contributions to a donor advised fund or a supporting organization.

  • The CARES Act also makes temporary changes to the distribution requirements for individual retirement accounts (IRA). Typically, an IRA owner is required to take required minimum distributions (RMD) from a retirement account when that owner reaches a certain age (either 70 ½ or 72 years of age). The CARES Act waives the requirement for IRA owners to take RMDs in 2020.

    However, making a Qualified Charitable Distribution (QCD) this year will still allow itemizers and non-itemizers alike to direct up to $100,000 from their IRA to charities in a tax efficient manner.

While it’s too early to tell if these temporary changes in the CARES Act will encourage more charitable giving in 2020, we are optimistic that our community members will continue to give time, talent, and grants at a level that makes sense for their personal situation.

How are professional advisors responding to the changes in the CARES Act?

Patricia Morse, Certified Public Accountant, suggests that her clients who have given in the past are continuing to support those nonprofits with whom they have long-standing relationships. “It’s still part of our planning strategy with or without the changes in the CARES Act,” says Pat. She is concerned about the temporary change to waive the RMD for IRAs because it might change the incentive for those that were using the QCD option of up to $100,000 to charity.

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Professional advisors are some of our most trusted partners in helping meet the philanthropic goals of Vermonters. We look forward to continuing to be a resource around charitable giving in service to our State and to our communities.