ALASKA COMMUNITY FOUNDATION SM Connecting People Who Care With

ALASKA COMMUNITY FOUNDATION SM Connecting People Who Care…With Causes That Matter

Growth in personal wealth Affluent households Net worth of $500 K+, not including primary residence 19. 4 million 11. 2 million 1995 2000 Sources: Spectrem Group; Cerulli Associates; Tower. Group; Packaged Facts; Celent Communications; HNW, Inc. 2005

Growth in personal wealth 74% first generation high net worth 276 billionaires 350 thousand deca-millionaires

Growth in personal wealth Transfer of wealth: $41 trillion to $136 trillion

what is a community foundation? is

We are a tax-exempt public charity created by and for the people of Alaska.

A community foundation has three special features.

one personalized service

feature one Personalized service › Educate people on charitable giving vehicles › Customize giving approaches to match personal interests and tax planning needs › Facilitate complex forms of giving › Share knowledge on community needs › Offer grantmaking expertise and administrative services › Help people create personal legacies via named funds › Offer involvement in recommending uses of a gift › Provide the option to give anonymously Creating solutions that fit every situation

two local expertise

feature two Local expertise › Local organization with local staff and board members › Knowledge of community issues, opportunities, and resources › Monitor all community needs… Arts and culture Economic development Education Environment Health Human services Recreation Neighborhoods › Gather information and track local agencies and programs › Direct grants and resources to appropriate areas Making a difference where it is needed most

three community leadership

feature three Community leadership › Act as a community catalyst › Build endowments to ensure grants are always available to support the community › Support high impact opportunities › Are governed by leaders with strong ties to our community › Foster development of new organizations and programs › Re-direct funds as community needs change Our business is building community

A bit of background.

foundation facts A brief history 1914 First U. S. community foundation established in Cleveland, Ohio 1986 Alaska Community Foundation incorporated today Nearly 700 community foundations in the United States › › Serving citizens across the nation More than $30 billion in assets More than $2 billion in local grants each year And growing!

foundation facts Our vital statistics Alaska Community Foundation › More than 140 funds › $30, 000 in endowed assets › More than $3, 000 in annual grants

Tools for giving.

named funds A personal legacy of giving Donors can establish a fund in their name, in a family’s name, or in the name of any person or organization they wish to honor. Grants distributed from a donor’s fund are awarded in the name of their fund. This person or organization will always be remembered and linked to good works in our community.

tools Charitable funds for giving › Unrestricted Fund Meeting ever-changing community needs › Field of Interest Fund Addressing needs in a specific area or cause › Designated Fund Directing gifts to specific agency or agencies › Donor Advised Fund Involving donors in the use of their gift › Agency Fund Build a sustainable source of funds for a NPO › Special Project Funds Fiscal oversight for short term community projects You can create a named fund in any of these categories.

tools Charitable instruments for giving › Outright Gifts Give cash, stocks, real estate or other assets › Bequest by Will Designate a portion of an estate › Charitable Lead Trust pays the community foundation a fixed amount for a number of years and then assets go to beneficiary › Charitable Remainder Trust pays beneficiary for life and then assets transfer to community foundation › Life Estate Contract Donor transfers home to community foundation and still enjoys use while living We accept a wide variety of assets.

The advantages of planned giving People giving back

people The advantages of planned giving back Charitable Lead Trust: › Transferred $1, 000 in appreciated assets › $75, 000 paid annually to community foundation for 15 years; establishing a fund in their name › After 15 years, remaining assets transfer to children › The family meets regularly to recommend charitable distributions

people The advantages of planned giving back Conventional Community Investment/ Foundation Estate Plan Lead Trust A quick comparison Initial value of stocks and bonds Current taxable gift to heirs Gross amount to heirs at end of 15 years Less: Federal estate tax (@ 45%) Less: Gift tax adjustment Net amount to heirs $1, 000 $300, 000 $2, 396, 558 ($1, 078, 451) ($0) $1, 318, 107 Amount to charity — Donor Advised Fund Total family and charitable benefit (sample calculation — for illustration only) 0 $1, 318, 107 $1, 000 NA $1, 440, 414 ($0) ($135, 000) $1, 305, 414 $1, 125, 000 $2, 430, 414

Professional advisor’s role in helping clients realize their charitable goals.

listening for opportunities Talking with your clients about charitable giving As clients look for more meaning in their lives, planning must become more inclusive. Three levels of exploration: › Financial security for self and spouse › Appropriate inheritance for family › Legacy for society

listening for opportunities Talking with your clients about charitable giving Clients expect professional advisors to suggest charitable opportunities. . . or might assume it is not an option. In fact, you may be able to help them: › Increase their current income › Increase theirs’ inheritance › Leave a legacy in the community › Teach their children about philanthropy

people Teaching charitable giving back Philanthropic goals: › Opportunity to make charitable decisions as a family › Hands-on experience for children— each can express giving preferences › Teach financial and community responsibility › Passing along family “giving values” to next generation

Some of the greatest opportunities to make charitable gifts arise when making major business, personal and financial decisions.

listening for opportunities Helping your clients realize their charitable goals Year-end tax planning Scenario Just earned a large bonus, but no time to decide on the most deserving charities. Opportunity Establish a Donor Advised Fund for an immediate tax deduction, and stay involved in gift for years to come.

listening for opportunities Helping your clients realize their charitable goals Private foundations Scenario Thinking about establishing a private foundation, but looking for alternatives. Opportunity › Establish a Donor Advised Fund and stay personally involved with the distribution of gift dollars. › Use community foundation for simple administration and grantmaking expertise.

listening Comparing the differences for opportunities Donor Advised Fund Private Foundation › Cash gifts, deduct 50% AGI › 30% AGI › Deduct 30% AGI on long-term appreciated securities › 20% AGI on long-term appreciated securities › Easy to establish › Several months to establish › Minimal administrative fees › Typically higher administrative fees › No minimum payout › 5% minimum payout › Grantmaking advice › On their own › 1– 2% excise tax › Self dealing disclosure requirements

listening for opportunities Helping your clients realize their charitable goals Strategic giving Scenario Passionate about meeting a specific community need and wants to make a meaningful gift. Opportunity Community foundation uses grantmaking expertise to recommend ways to make the greatest impact.

listening for opportunities Helping your clients realize their charitable goals Sale of a business Scenario Owns highly appreciated stock in a company that is about to be acquired. Opportunity › Structure a charitable gift of stock before the company is sold to reduce capital gains and increase charitable deductions. › Establish Donor Advised Fund so once-in-alifetime event can help client do good forever.

listening for opportunities Helping your clients realize their charitable goals Closely held stock Scenario Personal net worth is tied up in a closely held company, but wants to give back. Opportunity › Donate a portion of company stock to the community foundation; company may buy it back for fair market value. › Establish Donor Advised Fund or planned gift; donor is eligible for a tax deduction at the fair market value of appreciated stock (less any planned gift value).

listening for opportunities Helping your clients realize their charitable goals High estate taxes Scenario Estate planning identifies significant taxes going to the IRS, but wants to keep dollars local. Opportunity › Reduce taxable estate through charitable bequest or other planned gift. › Create personal legacy in community that stays true to client’s charitable intent forever.

listening for opportunities Helping your clients realize their charitable goals Frugal living in retirement Scenario Concerned about running out of money during lifetime, but has always been charitable. Opportunity › Establish a charitable remainder trust that pays an annuity for life. › Upon death, the fund begins distributing grants with client’s charitable interests in mind.

listening for opportunities Helping your clients realize their charitable goals IRA and 401(k) Scenario Wants to leave estate to family and community and has substantial assets in retirement accounts. Opportunity Help client evaluate the most beneficial asset distribution to minimize taxes, giving more to heirs and preserving charitable intent.

listening for opportunities Helping your clients realize their charitable goals Sale or disposition of highly appreciated assets Scenario Have appreciated stock, but many charities are too small to accept direct stock gifts. Opportunity Give appreciated stock to a community foundation and receive a tax deduction on its full market value, while avoiding the capital gains tax that would otherwise arise from sale of the stock.

ten reasons people choose to give through community foundations

ten People choose to give through community foundations reasons 1 We are a local organization with deep roots in the community 2 Our professional program staff has broad expertise regarding community issues and needs 3 We provide highly personalized service tailored to each individual’s charitable and financial interests 4 Our Donor Advised Funds help people invest in the causes they care about most 5 We accept a wide variety of assets, and can facilitate even the most complex forms of giving

ten People choose to give through community foundations reasons 6 We partner with professional advisors to create highly effective approaches to charitable giving 7 We offer maximum tax advantage under state and federal law 8 We multiply the impact of gift dollars by pooling them with other gifts and grants 9 We build endowment funds that benefit the community forever and help create personal legacies 10 We are a community leader, convening agencies and coordinating resources to create positive change

When a person plants a tree under which she will never sit, then you know that civilization has come to that land. Greek philosopher