What is a legacy? Generally speaking, a legacy is what someone is remembered for. It could be a significant achievement or accomplishment. Or it can be a charitable fund that is making a difference in your community. A legacy can be something you leave behind that will benefit others, including future generations.

A legacy gift is a wonderful and impactful way to honor a loved one or your family. It is a great way to keep your family name alive for decades to come while benefiting the community you love.

Establishing an endowed fund is a perfect example. Creating an endowed charitable fund gives caring citizens the opportunity to give back to their community for the longterm.

The Fort Dodge Community Foundation promotes legacy giving and encourages people to consider establishing endowment funds because they make the most powerful and lasting impact on our community. The Fort Dodge Community Foundation is able to offer donors attractive tax saving advantages that accompany a legacy gift.

In certain cases, an endowed fund with the Fort Dodge Community Foundation can offer donors a triple tax benefit. For example, longterm 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 federal income tax charitable deduction. Second, assuming the asset is owned for more than one year, the donor can avoid longterm capital gain taxes when the asset is 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. This tax credit is only on donations to qualified community foundations. The Fort Dodge Community Foundation is qualified.

The example here demonstrates how this works.

A donor owns stock with a fair market value of $100,000. The stock was originally purchased at $20,000. The donor’s income tax rate is 30 percent, with a capital gains tax rate of 15 percent.

Tax benefits of donating longterm capital gain asset with Endow Iowa Tax Credit:

Value of the gift: $100,000

Federal tax deduction: $30,000

Capital gains tax savings: $12,000

Endow Iowa Tax credit: $25,000

Total tax savings: $67,000

Out-of-pocket cost of gift: $33,000

The state and local tax deduction permits taxpayers who itemize when filing federal taxes to deduct certain taxes paid to state and local governments. This deduction is capped at $10,000 per year. The Fort Dodge Community Foundation recommends that all donors consult with their tax advisor for specific tax advice or consultation regarding any contributions.

Donor advised fund: When donors establish an endowed donor advised fund, they can structure it as a donor-advised fund so they can recommend what donations they wish to make to their favorite charities or charitable causes from their fund on an annual basis.

In the true spirit of giving, a legacy gift 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 for future generations.

For more information on how a legacy fund might meet your longterm charitable goals, contact the Fort Dodge Community Foundation at (515) 573-3171 or visit our website at www.fd-foundation.org.

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