April 2023
Professional Advisor Newsletter
Hello from Whidbey Community Foundation!
Happy April! As tax time comes and goes for another year, many of you are beginning to address your clients' charitable giving goals in earnest. With that in mind, our newsletter this month covers three topics that very well could be on your clients' minds as they emerge from winter and tax season.

First, we are addressing the philanthropy issues that seem to be emerging from the flurry of activity (!) earlier this year in banking and tech. There are bright spots!

Second, we know you're tracking tax legislation as it begins to bubble up in Congress. We'll share the highlights and what your charitable clients may want to watch as the legislative session progresses.

Third, we are offering tips and further reading to reinforce just how important it is to pay attention to what the IRS is digging into as it reviews charitable transactions.

Thank you for the opportunity to collaborate! We look forward to talking with you soon! 
Turmoil in banking and technology: Optimism for charitable giving?
And, the wild ride continues! It’s been three years since the Covid-19 pandemic swept the globe and wreaked wide-ranging havoc on so many areas of the economy. Then came inflation, rising interest rates, and a volatile stock market. Now, in early 2023, advisors and clients are also dealing with concerns about the health of the banking system in the wake of Silicon Valley Bank’s collapse.

Your philanthropic clients may seek your advice on how the recent events in the banking world could impact their approach this year to charitable giving. We’re sharing three factors to keep in mind as you counsel charitable individuals and families.

The outlook is chilly for tech start-ups and the venture capital firms who fund them. 

“It feels like winter is here,” according to tech sector leadership. When tech was hot and it sometimes appeared that many start-ups could do no wrong, you might have noticed an uptick in conversations with entrepreneurs and venture capital clients about planning for pre-IPO gifts of closely held stock of a tech company or even investing in tech companies using philanthropic assets. Right now, though, opportunities like this may be rare. A silver lining may emerge, however. As both the failure of Silicon Valley Bank and the overall tech sector malaise shake out, what may emerge is a “more sustainable and streamlined asset class,” which, in turn, could lead to more stable future opportunities for your clients to make gifts of highly appreciated, closely held shares.  
Proposed legislation: Is better deductibility back on the table?
Charitable deduction legislation ebbs and flows. Proposed reform efforts come and go, resulting in the occasional change to the provisions of the Internal Revenue Code governing charitable giving. At the same time, popular charitable giving techniques evolve and grow over time, frequently creating new opportunities for your clients to support the causes they love. 
For instance, donor-advised funds (DAFs) were first deployed as a charitable giving technique in the 1930s—long before their popularity ascended in the 1990s—and recently reached record highs.
Proposed legislation: Is better deductibility back on the table?
Charitable deductions and the vehicles that generate them continue to land on the IRS’s radar. For instance:

  • The IRS is really, really picky about requiring a charitable deduction to be calculatable as a true “sum certain,” as the taxpayer in a recent tax court case found out the hard way.

  • The IRS appears to be doubling down on exempt purpose requirements for 501(c)(3) organizations. Keep these rules in mind, especially as you counsel clients who are involved with starting a new charity. 

  • The IRS is taking a close look at sketchy charitable remainder trusts in conjunction with its Dirty Dozen focus areas. As always, if a tax structure seems too good to be true, watch carefully for red flags and do your homework on the IRS’s positions.

Whidbey Community Foundation is here to help! We are always tracking the latest news and trends with charitable giving and our team is happy to help you as you serve your charitable clients.  

Whidbey Community Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.  
Thank you for letting Whidbey Community Foundation assist in your charitable efforts!