Toolbox

American Funds Partnership

The Community Foundation participates in the American Funds Community Foundation Program that allows financial advisors to receive compensation for manageing client assets given to the Community Foundation for qualified charitable agreements.  This program provides your clients with maximum tax benefits on their charitable giving while providing you an opportunity for continued asset management.

Benefits to Financial Advisors:

The Community Foundation is able to accept a wide variety of assets to establish a charitable fund including cash, securities, real estate and more.

You receive a service fee from the American Funds Distributors when the Community Foundation uses the asset proceeds to establish an American Funds account with an opening minimum of $10,000.  You are named investment manager of record for the American Fund account created.

Commissions and service fees are provided at the expense of the American Funds, not the Community Foundation or the donor.  You will be offering a charitable giving plan that maximizes tax-saving benefits for your clients thus creating a valuable additional component to the financial planning services you provide.

Rochester Area Community Foundation’s Planned Giving Program

The Foundation’s planned giving program encompasses gifts whose benefits do not fully accrue to the Foundation until some future time (such as the death of the donor or other income beneficiaries or the expiration of a predetermined period of time), or whose benefits to the Foundation are then followed by the interests of non-charitable beneficiaries.  Planned giving opportunities offered by the Foundation include the following:

Gifts by Will or Trust.  The Foundation may be designated as the beneficiary of a bequest or gift by the terms of the donor’s will or by a revocable or irrevocable trust.  Sample bequest language for restricted and unrestricted gifts is available to donors and their attorneys to insure that the bequest is properly designated.  Suggested language.

Pooled Income Fund.  The Foundation has established a pooled income fund.  A donor irrevocably transfers property to the pooled income fund and retains an income interest for the life or lives of up to two income beneficiaries designated by the donor.  Each income beneficiary receives a proportionate share of the net income earned by the fund.  Upon termination of the income beneficiary’s interest, the remainder interest in the property is transferred to the Foundation for uses specified by the donor at the time the gift is made.

Charitable Gift Annuities.  The Foundation offers charitable gift annuities. The Foundation and the donor enter into a contract providing a fixed dollar return for life to the donor and/or other beneficiaries, in exchange for a gift of cash or marketable securities to the Foundation.  The amount of payment is dependent upon the age of the donor and the size of the gift.  The date that income payments to the beneficiary begin may be deferred. The annuity contract is a general obligation of the Foundation.  Payment rates reflect the recommendations of the American Council on Gift Annuities and are approved by the New York State Department of Insurance.

Life Estate Agreement.  A donor may contribute a personal residence or farm to the Foundation and retain the right to occupy the property until death.  Upon the donor’s death, the Foundation will own the entire interest in the property.  These types of gifts will be evaluated in accordance with the Foundation’s Policy and Guidelines Relating to Gifts of Real Estate.

Life Insurance.  A donor may contribute a new or existing life insurance policy to the Foundation naming the Foundation as owner and beneficiary.  Upon the donor’s death, the proceeds will be used by the Foundation to create an endowed fund in the donor’s name.  The donor continues to make all premium payments and they are tax deductible. 

Retirement Plan Assets.  Retirement plans owned by the donor may be gifted to the Foundation at death.  These include Individual Retirement Accounts (IRA), 401(k), 403(b), and defined contribution plans.  (Annuity plans, such as defined benefit plans, in which retirement benefits are paid out as income and principal does not accumulate, generally cannot be used for charitable gifts.) Methods for gifting retirement assets include:

• Naming the Foundation as primary, successor or contingent beneficiary for all or part of the assets upon death of either the retirement asset owner or spouse;
• Creating a testamentary charitable remainder trust with the assets upon the death of the asset owner, naming the Foundation as remainder beneficiary and non-charitable heirs as income beneficiaries.

Charitable Lead Trust.  Under a charitable lead trust, the Donor irrevocably transfers money, securities, or other property to a trustee selected by the donor.  The Foundation is given an income interest in the trust assets for a period of years or the lives of one or more individuals, at the end of which time the assets of the trust are distributed to non-charitable beneficiaries designated by the donor.  The trustee pays the Foundation each year: 1) a fixed amount from the trust; or 2) a fixed percentage of the net fair market value of the trust’s assets, as determined each year.  As indicated below, the Foundation will not serve as trustee of a charitable lead trust.

Charitable Remainder Unitrust.  Under a charitable remainder unitrust, the donor irrevocably transfers money, securities, or other property to a trustee selected by the donor.  The trustee pays the donor (or one or more income beneficiaries designated by the donor) a fixed percentage of the net fair market value of the trust’s assets, as determined each year.  The payments are made for the life or lives of the income beneficiaries or for a fixed period of years not to exceed 20 years.  Upon termination of the income beneficiary’s interest, the assets of the unitrust are transferred to the Foundation.  As indicated below, the Foundation will not serve as trustee of a charitable remainder unitrust.

Charitable Remainder Annuity Trust.  A charitable remainder annuity trust is identical to a unitrust, except that the income beneficiary receives a fixed dollar amount annually from the trust.  As indicated below, the Foundation will not serve as trustee of a charitable remainder annuity trust.