alaska community foundation

ALASKA COMMUNITY FOUNDATIONSM

Connecting People Who Care…With Causes That Matter

Growth in personal wealth

Sources: Spectrem Group; Cerulli Associates; TowerGroup; Packaged Facts; Celent Communications; HNW, Inc.

Affluent households

1995 2000 2005

11.2million

19.4million

Net worth of $500K+, not including primary residence


74%74% first generation high net worthfirst generation high net worth

276276 billionairesbillionaires

350350 thousand deca-millionairesthousand deca-millionaires


$41 trillion to $136 trillion$41 trillion to $136 trillion

Transfer of wealth:Transfer of wealth:

tw ahis a community foundation?is a community foundation?

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

A community foundationA community foundationhas three special features.has three special features.

o enpersonalized servicepersonalized service

Personalized servicefeature

one

› 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

t owlocal expertiselocal expertise

Local expertisefeature

two

Making a difference where it is needed most

Arts and cultureEconomic developmentEducationEnvironment

HealthHuman servicesRecreationNeighborhoods

› Gather information and track local agencies and programs

› Direct grants and resources to appropriate areas

› Local organization with local staff andboard members

› Knowledge of community issues, opportunities,and resources

› Monitor all community needs…

eet rhcommunity leadershipcommunity 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

Community leadershipfeature

three

Our business is building community

A bit of background.A bit of background.

1914 First U.S. community foundation established in Cleveland, Ohio

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!

1986 Alaska Community Foundation incorporated

foundation

facts A brief history

› More than 140 funds

› $30,000,000 in endowed assets

› More than $3,000,000 in annual grants

foundation

facts Our vital statistics

Alaska Community Foundation

Tools for giving.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.

› Unrestricted FundMeeting ever-changing community needs

› Field of Interest FundAddressing needs in a specific area or cause

› Designated FundDirecting gifts to specific agency or agencies

› Donor Advised FundInvolving donors in the use of their gift

› Agency Fund Build a sustainable source of funds for a NPO

› Special Project FundsFiscal oversight for short term community projects

for giving

tools Charitable funds

You can create a named fundin any of these categories.

› Outright Gifts Give cash, stocks, real estate or other assets

› Bequest by Will Designate a portion of an estate

› Charitable Lead Trust Trust pays the community foundation a fixed amount for a number of years and then assets go to beneficiary

› Charitable Remainder Trust 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

for giving

tools Charitable instruments

We accept a wide variety of assets.

The advantages of The advantages of planned givingplanned giving

People giving back

› Transferred $1,000,000 inappreciated assets

› $75,000 paid annually to community foundation for 15 years; establishing afund in their name

› After 15 years, remaining assets transfer to children

› The family meets regularly to recommend charitable distributions

Charitable Lead Trust:

The advantages of planned giving

giving back

people

A quick comparisonConventional CommunityInvestment/ FoundationEstate Plan Lead Trust

Gross amount to heirs at end of 15 years $2,396,558 $1,440,414Less: Federal estate tax (@ 45%) ($1,078,451) ($0)Less: Gift tax adjustment ($0) ($135,000)

Amount to charity — Donor Advised Fund 0 $1,125,000Total family and charitable benefit $1,318,107 $2,430,414

Net amount to heirs $1,318,107 $1,305,414

Initial value of stocks and bonds $1,000,000 $1,000,000Current taxable gift to heirs NA $300,000

The advantages of planned giving

giving back

people

(sample calculation (sample calculation — — for illustration only)for illustration only)

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

As clients look for more meaning in their lives, planning must become more inclusive.

for opportunitieslistening

Three levels of exploration:

› Financial security for self and spouse

› Appropriate inheritance for family

› Legacy for society

Talking with your clients about charitable giving


Clients expect professional advisorsto 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 their heirs’ inheritance

› Leave a legacy in the community

› Teach their children about philanthropy

Talking with your clients about charitable giving

› Opportunity to make charitable decisionsas 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

Philanthropic goals:

Teaching charitable givinggiving back

people

greatest opportunitiesSome of the

to make charitable gifts arise when making

major business, personal and financial decisions.

Scenario

Just earned a large bonus, but no time to decide on the most deserving charities.

Establish a Donor Advised Fund for an immediate tax deduction, and stay involved in gift for years to come.

Opportunity

Year-end tax planning

Helping your clients realizetheir charitable goalsfor opportunities

listening

Scenario

Thinking about establishing a private foundation, but looking for alternatives.

› Establish a Donor Advised Fund and stay personally involved with the distribution ofgift dollars.

› Use community foundation for simple administration and grantmaking expertise.

Opportunity

Helping your clients realizetheir charitable goals

Private foundations


Donor Advised Fund Private Foundation

Comparing the differences

› Cash gifts, deduct 50% AGI

› Grantmaking advice

› Deduct 30% AGI on long-term appreciated securities

› Minimal administrative fees

› No minimum payout

› Easy to establish

› 20% AGI on long-term appreciated securities

› Typically higher administrative fees

› 5% minimum payout

› On their own

› 30% AGI

› 1–2% excise tax

› Self dealing disclosure requirements

› Several months to establish


Scenario

Passionate about meeting a specific community need and wants to make a meaningful gift.

Community foundation uses grantmaking expertise to recommend ways to make the greatest impact.

Opportunity

Strategic giving


listening

Scenario

Owns highly appreciated stock in a companythat is about to be acquired.

› 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-a-lifetime event can help client do good forever.

Opportunity

Sale of a business


listening

Scenario

Personal net worth is tied up in a closely heldcompany, but wants to give back.

› 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 (lessany planned gift value).

Opportunity

Closely held stock


listening

Scenario

Estate planning identifies significant taxesgoing to the IRS, but wants to keep dollars local.

› Reduce taxable estate through charitable bequest or other planned gift.

› Create personal legacy in community that stays true to client’s charitable intent forever.

Opportunity

High estate taxes


listening

Scenario

Concerned about running out of moneyduring lifetime, but has always been charitable.

› 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.

Opportunity

Frugal living in retirement


listening

Scenario

Wants to leave estate to family and community and has substantial assets in retirement accounts.

Help client evaluate the most beneficial asset distribution to minimize taxes, giving more to heirs and preserving charitable intent.

Opportunity

IRA and 401(k)


listening

Scenario

Have appreciated stock, but many charities are too small to accept direct stock gifts.

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.

Opportunity

Sale or disposition of highly appreciated assets


listening

t nereasonsreasonspeople choose to givethrough community foundations

reasonsten People choose to give

through community foundations

1 We are a local organization with deep roots in the community

5 We accept a wide variety of assets, and can facilitate even the most complex forms of giving

4 Our Donor Advised Funds help people invest in the causes they care about most

3 We provide highly personalized service tailored to each individual’s charitable and financial interests

2 Our professional program staff has broad expertise regarding community issues and needs

reasonsten People choose to give

through community foundations

7 We offer maximum tax advantage under state and federal law

10 We are a community leader, convening agencies and coordinating resources to create positive change

9 We build endowment funds that benefit the community forever and help create personal legacies

8 We multiply the impact of gift dollars by pooling them with other gifts and grants

6 We partner with professional advisors to create highly effective approaches to charitable giving

under which she will never sit, then you know

that civilization has come to that land.

Greek philosopher

plants a treeWhen a person

alaska community foundation

Documents

donors fund

designated fund

gift agency fund

assets bequest

endowed assets

appreciated assets

named funds

personal wealthgrowth