Insights
Best Practices of Highly Effective Nonprofit Organizations
Fall 2022 Vol. 2 // Issue 3
CONTENTS GOVERNANCE
TAX
4 / Want to be tax-exempt? This is what it takes.
Charitable Giving and Estate Planning:
6 / HBK Nonprofit Solutions Contacts
Elevate Your Pitch to Potential Donors
A SSURANCE
7 / Endowment Funds Key factors to Consider GUEST ARTICLE
10 / Executive Compensation for Nonprofit Organizations
By Amy Dalen, JD PRINCIPAL | CO-NATIONAL DIRECTOR, HBK NONPROFIT SOLUTIONS
A
lmost all charitable organizations have one thing in common. They rely
The donors most sought after, those with significant assets, likely have an estate that is or will be subject to estate tax. With the current estate tax rate at 40 percent and the estate tax exclusion (the amount that can pass to a decedent’s heirs free of estate tax) set to be cut in half in 2026, these high net worth individuals are likely to consider charitable planning as a means of mitigating or eliminating future estate taxes.
on donor support to carry out their tax-exempt purposes. However, attracting donors and receiving sufficient funds to continue operations year-to-year is often challenging and timeconsuming, requiring valuable resources that an organization might or might not have. Following is a guide for charitable organizations that want to Nonprofits that can discuss the elevate their pitch to potential tax consequences of donating donors by highlighting the tax planning benefits available to different kinds of assets to both your charitable organization the donor and the charitable and the donor.
Understanding the Assets
Not all assets are equal when it comes to charitable giving. For example, donating a minority interest in a closely held organization will go a long way to corporation may not provide Income Tax vs. Estate Tax protecting the organization and the same charitable deduction benefits as a gift of publicly It is important to understand impressing the donor. traded securities. In addition, which type of tax most the gift of the closely held concerns the donor. In most corporation generally results in greater complexity instances, it will be the immediate benefits: “Will I for the charitable organization, often leading to get an income tax deduction from this donation, compliance issues that a nonprofit might not have and how much will it save me in income taxes?” But the resources to address properly. focusing solely on the immediate benefits ignores the value of a proper charitable giving provision within an estate plan.
CLIENT SPOTLIGHT
14 / Van Wezel Foundation: Inspiring a Community Through the Power of the Arts
Donors often are willing to use retirement funds for charitable giving. Retirement fund distributions are
ABOUT HBK NONPROFIT SOLUTIONS HBK Nonprofit Solutions is a dedicated team of subject matter experts within HBK CPAs & Consultants, an Accounting Today Top 100 CPA firm. With more than 800 clients in the nonprofit sector, and more than 70 years providing financial compliance and consulting to nonprofits, we offer the hands-on experience and technical skills to help nonprofit organizations fulfill their missions.