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FEBRUARY 2018 CONNECTING PEOPLE WHO CARE WITH CAUSES THAT MATTER

New Tax Bill Presents Challenges, Opportunities for PhilanthropistsCommunity Foundation President Rose Meissner offers strategies for maximizing the tax benefits of philanthropic giving in this new environment.

While many are delighted by the lower tax rates associated with the new tax bill, there is some cause for concern among charities and religious organizations that people will give less to charity in the future. A study by Indiana University’s Lilly Family School of Philanthropy estimates that charitable giving could decline by as much as $13 billion per year.

Why? When taxes decline, so does one of the incentives to give money away. Further, the doubling of the standard deduction included in the new tax bill means that the majority of people who currently itemize on their tax returns will start taking the standard deduction in 2018 and beyond. Congress retained the income tax deduction for charitable gifts, but many fewer people will be able to take

advantage of it because they will not itemize. The Lilly study suggests that these two factors together may cause a significant reduction in gifts to charities and religious organizations.

One potential future solution proposed by the nonprofit sector is to implement a “universal charitable income tax deduction.” Such a provision would allow all taxpayers to deduct their charitable contributions regardless of whether they itemize. The Lilly study suggests such a provision could cause an increase in total charitable giving across the board.

In the meantime, there may be strategies that will encourage people to keep giving.

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The new tax bill doubled the standard deduction, which means that fewer people are likely to itemize—one of the potential challenges to charitable giving.

A study by Indiana University’s Lilly Family School of Philanthropy estimates that charitable giving could decline by as much as $13 billion per year.

HIGHLIGHTS

One of the Community Foundation’s most valuable resources is our remarkable, committed Board of Directors. We appreciate their leadership and service!

Board of Directors

Jeffrey P. Costello, Chair Timothy D. Sexton, Past Chair Brad C. Beutter, Vice Chair Mary Jan Hedman, Treasurer Greta Roemer Lewis, Secretary

Spike Abernethy Jose Alvarez Katie Anthony Curtis Bethel Carl L. Bossung Kyle Chamberlin Roland W. Chamblee, Jr. Shannon B. Cullinan Richard C. Currey John C. Firth Marion Fulce Richard L. Hill Pam Jarrett Matthew Kahn Christopher Karam Amy Kuhar Mauro Donna Lamberti Lauri Miro Tina Patton

UPDATE: In our last newsletter, we let you know about a special gift-matching opportunity for Camp Millhouse, which was working hard to raise enough money to buy its camp property before the lease expired at the end of 2017. We’re happy to report that, with the help of many donors who care deeply about the disabled, Camp Millhouse raised the $500,000 it needed. Many thanks to all of those who helped with this campaign!

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Scenario 2: John and Emily instruct their plan administrator to distribute $12,000 directly to their church and favorite charities. They receive the $68,000 RMD balance as income. They take the standard deduction of $24,000 and pay taxes on the balance of $44,000. In this way, they avoid paying income taxes on the money they gave to charity—a significant savings!

Please consult your tax advisor to see if any of these ideas make sense for you. And remember: While tax incentives are definitely an added bonus, they are only a small part of the reason people give. Your favorite charities, and the good work they do every day, rely on your continued generosity—maybe now more than ever.

To learn how to establish a Donor-Advised Fund with the Community Foundation, contact Rose Meissner directly at (574) 232-0041 or rose@cfsjc.org, or visit cfsjc.org/donoradvisedfunds.

STRATEGY 1: Donor-Advised Funds. People who have donor-advised funds at the Community Foundation or elsewhere may consider doubling their contributions every other year and distributing the gifts to charity over two years.

Scenario 1: John and Emily give $12,000 per year to charity. With these gifts and $10,000 of additional deductions (e.g. mortgage interest), their deductions total $22,000. While in the past it made sense to itemize, in 2018 they would normally opt for the standard deduction of $24,000. Therefore the money they gave to charity does not save them any additional taxes.

Scenario 2: John and Emily have a donor-advised fund. In 2018, they decide to contribute $24,000 to their fund, recommending that $12,000 be granted to their favorite charities immediately and the remaining $12,000 be granted the following year (2019). That brings their total deductions to $34,000, which will cause them to itemize to reduce their taxes. In 2019, they will not make gifts to charity and opt for the standard deduction.

While tax incentives are definitely an added bonus, they are only a small part of the reason people give.

This is sometimes referred to as “bunching” multiple years of charitable giving into one tax year. The donor-advised fund vehicle allows the gifts to be spread over multiple years to provide consistent support to your favorite charities.

STRATEGY 2: IRA Charitable Rollover Gifts. Donors over age 70½ should consider doing their charitable giving directly from their IRA plans. While such gifts are not deductible, they will not be included in income and therefore will not be taxed. These gifts count toward the donor’s Required Minimum Distribution (RMD).

Scenario 1 (simplified): John and Emily receive their RMD of $80,000 as income. They make their usual contributions of $12,000 to their church and favorite charities. They take the standard deduction of $24,000 and pay taxes on the balance of $56,000.

African American Community Fund Supports MLK Concert, More EventsBecause the arts are always more powerful when they reflect the diversity of the community that creates them, the African American Community Fund regularly supports arts and culture projects of interest to African Americans. This past summer, AACF funding supported the creation and installation of the beautiful bronze sculpture of Dr. Martin Luther Jr. and Rev. Theodore Hesburgh C.S.C. in downtown South Bend’s Leighton Plaza. South Bend Civic Theatre’s August 2017 performance of Black Eagles, a historical drama

about the Tuskegee airmen, received funding support from the AACF, as did the South Bend Symphony Orchestra’s popular “Dr. Martin Luther King Jr. Celebration Concert,” which was conducted by Dr. Marvin Curtis and Chelsea Tipton II and featured a performance by cellist Ifetayo Ali, 2017 Junior Division winner of the national Sphinx Competition. The AACF is also supporting the annual “Lift Every Voice: Celebrating the African American Spirit” concert at Indiana University South Bend, scheduled for Saturday, February 24.

Featured cellist Ifetayo Ali, 2017 Junior Division winner of the Sphinx Competition, with SBSO Maestro Alastair Willis after the MLK Concert

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By 2025, one in five Indiana residents will be 65 or older. Through our Senior Living Initiative, we’re funding efforts that improve the lives of our older community members.

Grants to Nonprofits Serving Seniors. Through a competitive grants process that takes place twice a year, the Community Foundation regularly provides grant funding to support the work of local nonprofit organizations that serve seniors. During our last grant cycle, for example, the Foundation provided more than $130,000 to support projects with Healthwin Specialized Care, the St. Joseph County Chapter of the Red Cross, Servants at Work, and REAL Services.

Music & Memory. Support from the Community Foundation’s Milton Fund has made it possible for seven local nursing facilities to be trained in the national Music & Memory program,

Working to Improve the Quality of the Lives of Local Seniors

Volunteers, staff, and residents at Healthwin Specialized Care participate in the Music & Memory program.

When two or more organizations can find a way to combine resources and work together, they can accomplish far more than they could alone. That’s why the Community Foundation works hard to encourage efficient, productive partnerships among organizations that serve seniors.

A wonderful example of this type of teamwork is a recent partnership between Habitat for Humanity of St. Joseph County and REAL Services. With Community Foundation support, these two organizations joined together to launch an Aging in Place program in late 2016. Through it, low-income seniors in St. Joseph County can receive critical home repairs that make it possible for them to continue living in their own homes longer.

It’s a partnership that’s making a big difference for local seniors. Since the program began, more than 95 homes have been repaired so far, and an additional 50 homes will receive weatherization packages early this year.

which trains nursing home staff and volunteers to create personalized playlists of music for residents who suffer from memory disorders. Saint Mary’s College students have been key to the program’s implementation, and the formation of a Music & Memory club at Notre Dame has boosted the number of volunteers further.

Nursing Home Round Tables. Whenever professionals in the same field have a chance to share best practices and common concerns, there’s a benefit for those they serve. That’s why, for the past four years, the Community Foundation had funded a peer-learning community of nursing home administrators, as well as periodic professional development opportunities hosted by nationally recognized experts.

You can learn more about the Community Foundation’s work on behalf of seniors at www.cfsjc.org/seniors.

Bringing Partners Together to Help Keep Seniors in Their Own Homes Longer

Habitat for Humanity of St. Joseph County staff with a beneficiary of the Aging in Place program

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Don’t miss your chance to apply for two of the Community Foundation’s most popular scholarships:

• TheCharles Martin “Touch a Life” Scholarship provides academically motivated African American students from St. Joseph County with a 250-hour paid internship each summer and up to $5,000 in tuition assistance

• TheJonandSonjaLaidig Community Service Scholarship provides students with a $2,500 stipend for serving a summer internship with a community nonprofit organization and a $5,000 annual scholarship

The deadline to apply for both of these highly competitive scholarships is Thursday, March 1, 2018. To apply, students must complete the 2017–18 General Scholarship Application, available at www.cfsjc.org/scholarships. Completing the General Scholarship Application will also make you eligible for other Community Foundation scholarships.

Scholarship Deadlines Foundation Awards Lilly Scholarships

Clockwise from top left: Benjamin Burns, Indy Brown, Patrick Gouker, and Kendra Laidig

The Lilly Endowment Community Scholarship is the type of scholarship that every student dreams of earning: Lilly Scholars receive four-year, full-tuition scholarships and a book stipend for the Indiana college or university of their choice.

That means, of course, that the Lilly process is extremely competitive. This year, the Community Foundation received 155 Lilly applications from 17 area schools. Fourteen of the applicants were ranked first in their graduating classes. With such a talented pool, it’s never an easy task for our Lilly Committee to select the scholarship recipients.

This year, Lilly scholarships have been offered to Indy Brown, John Adams High School; Benjamin Burns, Culver Academies; Patrick Gouker, Mishawaka High School; and Kendra Laidig, Penn High School. These outstanding students have until March 1 to formally accept the scholarships.

Congratulations to our Lilly Scholars

and all of our community’s talented, hard-working young people!

Every year, Community Foundation scholarships help some 300 young people follow their dreams. Learn more at www.cfsjc.org/scholarships.