What is a legacy? John Maxwell, author of numerous books on leadership, said, “What you do with the future means the difference between leaving a track record and leaving a legacy. “

Legacies are the result of accomplishment. They are more or less what someone is remembered for, to leave a lasting legacy is a journey from success to significance. A legacy could involve an idea, a significant achievement, or a fund that is making a difference in one’s community, state or nation. A legacy can and should be something you leave behind that will benefit others — perhaps future generations. Establishing an endowed fund is a perfect example.

The Fort Dodge Community Foundation and United Way promotes legacy giving and encourages people to establish endowment funds because they make the most powerful and lasting impact on our community and region. Creating an endowed charitable fund gives citizens the opportunity to give back to their community, the place they call home; where they raised their family, made their living and shared their lives with lifelong friends and neighbors.

Endowment fund

In layman terms, an endowed fund serves as a “charitable savings account.” Held in perpetuity, endowed funds are prudently invested to grow over time. A portion of the earnings from the funds’ balance (usually 4 to 5 percent) can be granted out on an annual basis to support nonprofits, community needs and charitable causes specified by the donor. The remainder of the investment yield is returned to the principal so the funds will continue to grow and become a permanent source of capital, helping do good work today and in the future. When donors create an endowed charitable fund with the Fort Dodge Community Foundation, they create an opportunity to benefit the community today and tomorrow.

Donor-advised fund

A donor-advised endowment fund offers donors the opportunity to create an easy-to-establish and flexible vehicle for charitable giving. Donor-advised funds are the fastest growing means of charitable giving today, offering immediate tax advantages, simplified record-keeping, and flexibility in grant-making and professionally managed investment options.

An endowed donor-advised fund offers donors complete flexibility to support any charitable organization, purpose, or cause of the donor’s preference. Grant recommendations can be made any time throughout the year allowing donors to support different organizations each year if they so desire. Donor-advised funds with the Community Foundation can support a wide range of community organizations, needs and causes including human services, education, health, recreation, arts and culture, environment, youth development, public safety, economic development and more.

Triple your tax benefits

In certain cases, an endowed fund with the Fort Dodge Community Foundation can offer donors a triple tax benefit. For example, often times long-term capital assets may be ideal for charitable gifts because assets such as stock, real estate, and farmland may receive a double federal tax benefit. First, donors can receive an immediate charitable deduction off federal income tax, equal to the fair market value of the stock, real estate, or farmland. Second, assuming the donor owned the asset for more than one year, the donor can avoid long-term capital gain taxes when the asset is donated to the community foundation. These taxes would have been owed if the asset was sold rather than donated.

The third tax benefit is the Endow Iowa Tax Credit. Donors can receive a 25 percent Endow Iowa state tax credit for gifts made during their lifetime, lowering the after tax cost of charitable gifts even further. Under Endow Iowa, gifts made during the donor’s lifetime are eligible for a 25 percent Iowa tax credit, as long as the gift is endowed and is given to a qualified Iowa community foundation to support charities and charitable causes in Iowa. The box below clearly shows the triple tax advantage.

In the true spirit of giving, an endowed donor-advised fund is a great way to establish an honorable and meaningful legacy for an individual or family by giving back to their community in an impactful way to help improve lives and enhance the quality of life of future generations.

For more information about how an endowed donor-advised fund might meet your long-term charitable goals, contact the Fort Dodge Community Foundation at 573-3171, or visit our website at www. fd-foundation.org.

Randy Kuhlman is chief executive officer of the Fort Dodge Community Foundation.