Understanding Donor-Advised Funds and Charitable Giving with Christopher Rigsby, CAP®
Understanding Donor-Advised Funds and Charitable Giving Show Notes
The Tax Cuts and Jobs Act changed many aspects of our lives. For those who give to charity, it also had a massive impact on how we give. Many of the tax benefits associated with charitable giving have disappeared because of the increased standard deduction, and many organizations have been impacted by this change.
Joining me to talk about what happened and what to do about it is Chris Rigsby. Chris is from the Greater Kansas City Community Foundation, where he’s helping people find new ways to continue their charitable giving with strategies such as donor-advised funds, and take advantage of the updated tax code. His work is helping both the organizations that need donors and the donors themselves – a true win-win.
Today, Chris explains how the new tax code has changed charitable giving for his organization and others, the new tools available to donors to help take your money further, and tax benefits you can take advantage of as you prepare your return this year to support organizations you love.
In this podcast interview, you’ll learn:
- Why the new standard deduction in the Tax Cuts and Jobs Act impacted charitable giving.
- How “bunching” can benefit you as a donor and create a consistent cash flow stream for charities in need.
- Setting up a donor-advised fund for grants and giving.
- How money coming out of an IRA can be used to make a charitable donation without having to claim distributions.
- The unique benefits of working with an organization like the Greater Kansas City Community Foundation to manage your giving.
- “People aren’t necessarily giving to the charities just for the tax deduction. They’re giving because they want to support those organizations.” – Christopher Rigsby, CAP®
- “We try to make it as easy as possible to give. That’s really our mission: to increase charitable giving.” – Christopher Rigsby, CAP®
- Greater Kansas City Community Foundation
- Donor-Advised Funds – Your Charitable Giving Account
- IRA Qualified Charitable Distributions
- Bunching Donations in Donor-Advised Funds
- Scholarship Funds
- Corporate Giving
- Supporting Kids Foundation
- Kansas City Royals
- The Guided Retirement Show Website
- The Guided Retirement Show YouTube
[00:00:07] Dean Barber: Welcome to The Guided Retirement Show. I’m your host, Dean Barber. You’re going to love the conversation that I’m going to have today with Chris Rigsby of the Greater Kansas City Community Foundation. The Tax Cuts and Jobs Act changed many aspects of our life. And those of you that are charitable, the Tax Cuts and Jobs Act is changing the way that you’re giving. Enter the Greater Kansas City Community Foundation, they have a lot of ideas and a lot of ways for you to continue your charitable giving and take advantage of the change in the tax code due to the Tax Cuts and Jobs Act and still be able to get those deductions that have disappeared for so many people because of the higher standard deduction. Please enjoy my conversation with Chris Rigsby of the Greater Kansas City Community Foundation.
[00:01:00] Dean Barber: Chris Rigsby with the Greater Kansas City Community Foundation, welcome to The Guided Retirement Show. Great to have you here.
[00:01:07] Christopher Rigsby: Thanks, Dean. I’m happy to be here.
[00:01:08] Dean Barber: All right. So, Chris, I think that charitable giving is a big deal. When you look at how a lot of the things that do great things for people across America, a lot of people want to point to the government. They’re the ones that are doing these things, but you and I both know that it is charitable organizations across the country that really make an impact. And there are people out there that truly understand the impact that these charitable organizations make. And there are a lot of people that are very charitable, they want to make a difference. They’ve accumulated some money and they really want to make a difference, but the way that people are giving today, post Tax Cuts and Jobs Act has changed dramatically because some of the tax benefits for giving were changed in the Tax Cuts and Jobs Act.
Let’s start there, if you would, and how has that affected the Greater Kansas City Community Foundation? And let’s talk about what’s that doing? And how’s it changed the makeup of what you’re doing and how you’re interacting with the people that are giving today?
[00:02:21] Christopher Rigsby: Yeah, perfect. There was a lot of uncertainty on what was charitable giving going to look like after that tax reform? So, essentially, one big change was the standard deduction level increasing to I think, was 24,000 from 12,000 for married couples filing jointly. For all intents and purposes, I think most people that were going to take the standard deduction, I think, was 90% in 2018 to have the standard deduction level to the standard deduction.
So, what we were going to see was like, what would that look like? A lot of charities were concerned that maybe people weren’t going to be giving charitably to their causes. What we ended up seeing was, people aren’t necessarily giving to the charities just for the tax deduction, it’s because they want to support those organizations. Then, also a donation strategy ended up coming up from that extra form called bunching.
So, in grouping, clumping, so essentially, it’s combining multiple years’ worth of charitable donations into one year to be able to combine that with the state and local taxes and mortgage interests to be able to itemize your deductions for that level. And then, year two, year three, you take the standard deduction; year four, you bunch your donations again and you can itemize your deductions for that year; year five is a standard deduction. So, we’ve had a lot of donors that have taken on that strategy to be a little bit more strategic with their giving.
[00:03:58] Dean Barber: Right. So, let’s address that, Chris, because I think one of the things that you and I both know, is that if I give a bunch of money to a charity one year, they’re going to turn around and go, well, Dean, you gave this much last year, let’s do it again. And that’s not what you’re talking about, though. You’re talking about a different strategy in that bunching strategy in order to make it effective and efficient because you may want to give to one charity this year and then, you might see another charity next year that you want to give to. So, you don’t necessarily want to give the money all to charity in that year, but you want to be able to get that tax deduction.
And so, they enter in the use of what’s called the donor-advised fund and that’s where the Greater Kansas City Community Foundation comes in, is the holder of that donor-advised fund that then the person that actually gives the gifts on a year-by-year basis can say, well, this is how much out of my donor-advised fund I want to give to each charity, because if you think about it, the ability for people to itemize that we’re giving $500 to the church, they’re giving some money over here to Red Cross, they’re giving some money to a cancer foundation, they might be giving money to another foundation that might be near and dear to their heart and one of the ones for us is, the Supporting Kids Foundation which supports families that have kids with cancer.
There are all kinds of charities out there and the cool thing about what you’re talking about that bunching is when you give money in a single year, you’re not giving it to the charities yet, you’re donating that to a donor-advised fund and then you, as the giver, get to choose which charities for years to come will receive those funds that are inside that donor-advised fund. That’s your bunching strategies. And that’s been around really for decades, but because of the Tax Cuts and Jobs Act, it’s really now becoming something that is an important planning tool for people.
[00:05:55] Christopher Rigsby: Yep, absolutely. And that is one of the big benefits of a donor-advised fund is the year you make your donation or contribution to your donor-advised fund, that doesn’t have to be the year you grant out all your money. We do have some donors that treat their donor-advised fund like a charitable checking account, where they do all their giving from there and by the end of the year, it’s down to zero, but for a lot of individuals, the year they’re giving to their donor-advised fund is a different year than where they’re going to be granting it all out.
And so, we’ve actually had feedback from charities, where they’ve said that they have appreciated that consistent stream, so those 5000-a-year donors as 1000-a-year donors are continuing to give that same amount on year two, year three, and for some donors, their charitable interests change over time. And so, they’re able to change that and grant to a different charity in the upcoming year. So, yeah, it’s been a great benefit for those donors.
[00:06:52] Dean Barber: So, when someone wants to set up a donor-advised fund, are they going through their financial advisor to set up that donor-advised fund? Do they come directly to the Greater Kansas City Community Foundation to set up that donor-advised fund? Let’s answer that question first.
[00:07:10] Christopher Rigsby: Sure. So, we have over 3.7 billion in assets at Greater Kansas City Community Foundation. We’re the third largest community foundation in the US. So, over two thirds of it is managed by financial advisors and that’s a big part of what we do. And we can work with your financial advisor, they’re able to provide the investment strategy, knowing the time horizon and investment goals. So, we work really well with financial advisors on that and we do have the option of, if someone doesn’t have a financial advisor, they can come straight to the community foundation and open up a donor-advised fund.
[00:07:45] Dean Barber: So, when people put money into the donor-advised fund, you talk about an investment strategy. Are there restrictions to the donor-advised fund on certain custodians that you have to use? Or are there restrictions on the types of investments that can be held within the donor-advised fund?
[00:08:05] Christopher Rigsby: So, when a donor is working with their financial advisor, we try to streamline it and make it as easy as possible. We’re custodian agnostic so we have hundreds and hundreds of accounts in all the major custodians. So, for us, it doesn’t make a difference where the assets are custody, and then also for investments where we have a tremendous degree of investment flexibility. There are stocks, mutual funds, ETFs. There’s no specific asset allocation that the portfolio has to adhere to. Yet, I think the only time we’ve really ever had an issue was uncovered calls in the donor-advised fund, that would be something that we wouldn’t really have as much interest in that aspect.
[00:08:49] Dean Barber: So, in other words, no gambling.
[00:08:52] Christopher Rigsby: Yeah, exactly.
[00:08:54] Dean Barber: Because that’s what an uncovered call is, is gambling.
[00:08:57] Christopher Rigsby: Yeah.
[00:08:58] Dean Barber: Now, that’s interesting. So, then you mentioned earlier that you can change your mind on who you give the money to year after year. So, let’s say that you took advantage of this bunching thing and you normally gave $5,000 a year and you were able to itemize because of some other things, but now because the standard deduction being 24,000, that $5,000 a year of gifts doesn’t allow me to itemize.
Let’s go back to that term of bunching and you’re saying, all right, so now what I’m going to do is I’m going to give four- or five-years’ worth of gifts at once. I’m going to put in, let’s just call it $25,000 into my donor-advised fund, but I’m not going to dole out that $25,000 in the first year, you’re going to take that $25,000, you’re going to itemize your tax return. So, you’re going to get a significant deduction on the contribution to the donor-advised fund.
Then, you’re going to direct how does that money get to what charities that are near and dear to you on an annual basis, sending out that $5,000 per year to various charities. Is there a limit to how many charities you can give to? Is there a dollar 1 limit on the amount that can go to any individual charity? What are the restrictions there?
[00:10:06] Christopher Rigsby: So, we try to make it as easy as possible to give and that’s really our mission is to increase charitable giving. So, we have no minimums on grants out to charities. We want our donors to support their favorite charitable causes, no matter the dollar level, and then there’s no maximum amount of grants. So, you can have as many as you want, like, I mentioned, those donors that treat you like a charitable checking account and they do all their giving over the year. And so, there’s no maximum amount that you can get into.
[00:10:33] Dean Barber: So, do they actually get a checkbook for the donor-advised funds so that they’re physically writing the checks to the charities? How does the money get to the charities?
[00:10:40] Christopher Rigsby: Sure. It’s not a checkbook because the donor is receiving that tax receipt when upon the gift to the donor-advised fund. So, we have to ensure that the client’s granting to a 501(c)(3) charity, religious organization, not-for-profit college or governmental entity. We have a donor portal, where the donor can go in and select the organizations they want to support and we send out our check to those organizations or they can call our donor services department. It’s one of those two ways that we can process those grants.
[00:11:18] Dean Barber: So, essentially, I’ve put that $25,000 into my donor-advised fund. I’m going to have a login that I can get onto my cell phone, I can get onto my iPad, I can get onto my computer. And I can say, all right, I want to give $250 to my church this week and then you send the money.
[00:11:36] Christopher Rigsby: That’s correct.
[00:11:37] Dean Barber: That’s how it works and that’s easy. And then, I could change my mind, then next week, I might find another church I want to go to and I’ll give them $500 because I like the priest or pastor better, I don’t know, but you got the flexibility is my point.
[00:11:49] Christopher Rigsby: Absolutely. As long as it falls into one of those four categories, we can process those grants for our donors.
[00:11:55] Dean Barber: Alright, let’s talk about where there is no flexibility. You’ve put the money into that donor-advised fund, it’s gone, you can’t take it back out. You’ve given that money away, so you can’t look at this, as I’m going to think about giving this money in the future, it’s already been given. What you have to decide then is, where’s the money actually going to go?
[00:12:17] Christopher Rigsby: That’s correct. So, that is now earmarked for charitable purposes. So, there’s no way to take that out of the donor-advised funds. And well, things have changed, I’m not trying to give that much away, but they can tell us where they want to grant out to, but they can’t remove the charitable dollars from the donor-advised fund.
[00:12:38] Dean Barber: Well, I think that donor-advised fund is to me, especially after the Tax Cuts and Jobs Act, one of the premier ways to give to charity. Now, I want to go to another strategy and I want to know what the Greater Kansas City Community Foundation has a role in this, if any, and that’s what we call a qualified charitable distribution coming out of an IRA. Let me explain that to the listeners here to the podcast.
The idea behind a qualified charitable distribution is that you can give money directly out of an IRA or 401(k), most 401(k)’s won’t allow it to go directly to charity, but so say you’re in an IRA and you want to give that money to charity. You can give the money directly from the IRA to charity, you never touch the money, it’s a check that goes directly to the charity. Therefore, you don’t have to claim that part of the IRA distribution on your tax return.
Now, you have to be of age 70-½ or older in order to do that. And the confusing part about that, Chris, is that now with the Tax Cuts and Jobs Act, the required minimum distributions don’t even start until 72, but now you can do the QCD at 70-½. So, as if our tax code wasn’t complicated enough, instead of simplifying it once again, the government did the same thing that they always do when they change the tax code, they make it more complicated. So, I think QCDs are great for people that are over the age of 70-½, it’s a great way to give. Does the Greater Kansas City Community Foundation support QCDs?
[00:14:15] Christopher Rigsby: So, yes. Unfortunately, where there was still hope that QCDs would be able to go into a donor-advised fund, a donor-advised fund is not eligible for a qualified charitable distribution. What we do have is two different charitable solutions at the Greater Kansas City Community Foundation that can support those QCDs. The first one is a designated fund that’s a fund that’s designated for one specific charity church religious organization.
So, what the QCD can come from the IRA into that designated fund and then the donor controls the timing of their giving. So, essentially, it doesn’t have to all go at once. That fund is designated for that specific church or charity, but they can control how much they’re giving on what basis. And so, we’ve had some donors that have set up designated funds with the intent that they’re wanting it to support their church, but maybe they’re giving 10,000 normally on an annual basis and their QCDs are a much larger amount. So, they have the full amount coming into the designated fund and they can continue to grant out the 10,000 to their church and then the rest of it can be invested and can grow tax free.
[00:15:31] Dean Barber: So, on the designated fund, Chris, I want to be clear, you can only have one ultimate charitable beneficiary per designated fund?
[00:15:41] Christopher Rigsby: That is correct. And so, kind of the scenario, once you set up that designated fund, you funded it, if you were to switch churches, that money that’s earmarked in that designated fund is still earmarked for that specific first church. So, there’s no way to change that, that fund is essentially set in stone as far as the recipient.
[00:16:03] Dean Barber: All right, so let’s say that I’ve got a million dollars in an IRA and my required minimum distribution was going to be $36,000, but I don’t want to give that full $36,000 to charity, so I set up a designated fund, the full 36,000 goes into the designated fund, I’m not going to send it all out to that specific charity. What if I come in, in year two of my required minimum distributions and I decide that there’s another charity that I want to give to and I still want to use a designated fund, can I form a second designated fund and a third designated fund? In other words, can I set up as many designated funds as I want to the specific charities?
[00:16:40] Christopher Rigsby: So, we’ve had donors that have set up, I think, two, maybe three designated funds. Where it kind of gets difficult is, if you’re splitting it up, you’re having administrative fees for each one of those designated funds. So, you have to kind of weigh the cost benefit of having that many funds and they each have their own administrative fee, but yes, so the next year, you can set up another designated fund for a different charity.
We have some donors that half of their QCD is going to one, the other half go into the second designated fund, but what you don’t want to do is, I talked to some advisors and some clients and donors where they use their QCDs, they send 15 QCD checks out a year to all the charities they support. That’s where you really don’t want to set up that many designated funds because one, the administrative fees and then, the benefits of the donor controlling the giving is kind of a lesson because there’s not as much money being per designated fund.
[00:17:46] Dean Barber: The way that I see this, Chris, and maybe you see a little bit differently, so it’d be interesting to get your perspective, but the way I see it is that the designated fund could be used as a great tax planning tool. So, in other words, you may have a year or two where you don’t want those required minimum distributions to hit your tax return. And so, you could do those designated funds for a couple of years for all of the RMDs, have the money sitting there, dole it out over a long period of time.
And then, in the future years, when you get a change in your tax situation, for whatever reason, due to your own personal situation, now, it’s okay to have those required minimum distributions set the tax return. So, I think it’s a way to pick and choose how and when you’re going to give that money. And ultimately, at the end of the day, as a financial planner, my goal is to help people pay as little tax as possible and still accomplish all the things that they want to accomplish from a financial perspective.
So, you mentioned several times in your conversation with me there about administrative fees. And of course, most people, they want to know what are these administrative fees that you’re talking about, Chris. And so, let’s go back to the donor-advised fund first and talk about how does the Greater Kansas City Community Foundation, you said you’re agnostic, you help people dole out the money, obviously, that’s not free, how do people pay for that?
[00:19:11] Christopher Rigsby: So, essentially, we have that administrative fee schedule. And so, it essentially keeps the lights on for the community foundation. We are a nonprofit organization, but we’re not reliant on donations made from donors out there. It’s really our mission is just to increase charitable giving and to be there to support our donor. That administrative fee helps pay the expenses of the community foundation. And then, it starts at a 1% fee schedule on the first $500,000. There’s a minimum of $250 on there and then, it tiers down from there depending on how big a fund it is.
[00:19:54] Dean Barber: Okay, so you’re starting out at a 1% fee up to $500,000 and then it starts to decline after that?
[00:20:00] Christopher Rigsby: Yes.
[00:20:01] Dean Barber: Is there always the 1% fee on the first $500,000 and then it’s less on the extra money? Or does the fee on the entire bucket of money that’s in the donor-advised fund get reduced as they exceed that 500,000?
[00:20:13] Christopher Rigsby: So, essentially, the next 500,000, 60 basis points, and then the next is, I believe, 30 basis points, but it’s per lot. So, essentially, that first 500,000 is still 1%. And then, I think when there’s a really large fund, that’s when it’s a flat fee.
[00:20:34] Dean Barber: Okay, so Chris did something there that the people in the financial industry are guilty of all the time, he used a term that you may not understand, he talked about basis points. All right. That’s our industry talk here, right? So, what he’s saying is that 1% is 100 basis points. So, 60 basis points is six tenths of 1%, 40 basis points is four tenths of 1%. Just so that you can put some math to that and I understood what you were saying, Chris, but a lot of people listening to the podcast may not have. All right.
[00:21:02] Christopher Rigsby: Yep, I apologize.
[00:21:03] Dean Barber: And so, what about the designated fund, do you have the same fee schedule there?
[00:21:07] Christopher Rigsby: Yes. So, it’s the same fee schedule there. And then, the second solution that we do have, so we administer over 250 scholarships at the community foundation, wide range, there’s a lot of flexibility for donors on what their mission is, whether it’s going to be to support the memory of a loved one, support our specific high school, college, community service. So, there’s a lot of flexibility there, but the QCD can come from the IRA and establish a scholarship fund. And that’s the other solution that we have. And then, pretty, we’ve had a lot of donors that have been using that as a way to get hands on with their charitable giving.
[00:21:51] Dean Barber: Interesting. So, do they get to choose the university or the high school or whatever that the scholarship can go to?
[00:21:58] Christopher Rigsby: Yep. It’s very much donor centric. So, the founder of that scholarship has a lot of leeway as far as what they’re wanting to do. And we have great scholarship staff that helps them. If they say they want one specific high school, going to one specific college, we can look based on our history and say, this is how many applicants you would have received. So, maybe we need to broaden that up or it can be as specific as they like. The donor, we have an online portal where they can go in and read the applications or the essays or if they want to say, this is the criteria that I want, you guys choose the best recipient. And then, we do the administrative work on that in reaching out to the universities to make sure that those students are still in good academic standing.
[00:22:44] Dean Barber: Okay, so we talked about using the QCDs, that qualified charitable distribution to fund a scholarship fund, the QCD to fund a designated fund, I’m assuming that you don’t have to fund it only through a QCD, that if you wanted to give money to a scholarship fund or to a designated fund, it doesn’t have to come out of an IRA through a QCD, right?
[00:23:07] Christopher Rigsby: You’re absolutely correct. So, yeah, it just has gained in popularity, those two solutions because of the QCD and the tax reform.
[00:23:16] Dean Barber: Interesting. All right. So, tell me about some other solutions. And you talked about your mission for the Greater Kansas City Community Foundation is just to open up the ability for people to give to the charities of their choice, kind of on their own terms. What are some other solutions that the Greater Kansas City Community Foundation has to assist people in charitable giving?
[00:23:37] Christopher Rigsby: Yeah, so the other aspect that we do is we work with corporate giving. So, whether that’s a corporate donor-advised fund or a corporate foundation, those are used in the same manner, or if it’s a matching gift program, we have some employers that set up this program where they really want to support the charitable giving that their employees give to you. So, they tell their employees that all donations made to nonprofits up to $250 will be matched by the corporation. And so, we have that software that will allow them to submit their receipt or tax receipt and then the corporation through us will send out the check to those nonprofits. So, it’s a great way to really support what the employees are passionate about.
[00:24:27] Dean Barber: Interesting. That’s fascinating. So, the employee gives to whatever charity they want, they give the receipt then to their employer, say here, I gave to XYZ charity and then through, you call it a corporate giving fund, the corporation already has that money set up, it’s already sitting in the greater community foundation’s account and then they match that contributions. Is that how it works?
[00:24:51] Christopher Rigsby: Yeah, so logistically, essentially, we have a donor to the matching gift portal where the employee would go in and submit their receipt. And then, yeah, we would essentially cut the check to that charity that’s matching that. So, yeah, it’s a great way to really support their employees.
[00:25:10] Dean Barber: So, why would a person or a corporation use the Greater Kansas City Community Foundation, as opposed to just saying, Hey, tell me what you gave to, will give to it, and then the corporation just gives the money. Where’s the benefit there?
[00:25:24] Christopher Rigsby: So, a lot of it is record keeping. We’ve worked with corporations and they’re trying to keep track of where their employees are giving in and making sure that it’s within any restrictions that they have or making sure that they’re keeping up with it. So, a lot of it’s done, so we have that portal where it allows it to be all automated and online and then, just a way to make it cleaner and just take some of that responsibility off other individuals’ plates.
[00:25:53] Dean Barber: I can imagine that that might become kind of a pain in the rear for whoever’s doing the bill paying the accounting or whatever. So, yeah, I can see where that would come in and I’m assuming that then you still have that small percentage there for the administrative fee for that. Is that the same as you do for the donor-advised funds and for the designated funds?
[00:26:14] Christopher Rigsby: So, the matching gift programs, there’s a contract fee that’s involved with there. So, it kind of depends on the amount of employees and what the scope that they’re looking for, but yeah, that’s a little bit different than the other administrative fee schedule since it’s kind of just a contract on that.
[00:26:34] Dean Barber: I’m sure there’s going to be business owners that are listening to the podcast here that want to know, all right, so what size of company would do this? And is there a minimum amount that I’d have to put into that corporate giving fund? How does that all work?
[00:26:53] Christopher Rigsby: So, there’s two aspects of corporate giving. It’s the corporate donor-advised fund, where it’s maybe the corporation that’s wanting to be charitable and wanting to support that, that is still an administrative fee and that is still in that fee schedule. So, that kind of depends, I guess, on the corporation, how charitably inclined they want to be and if they want to use this avenue. And then, the matching gift programs, I would have to check with you, I think it has to be a decent sized amount of employees for it to kind of justify the contract fee, but yeah, I can get back to you when it starts making sense?
[00:27:38] Dean Barber: Well, I’m sure we’re going to have a lot of educational literature on charitable giving. in the show notes here of the podcast. We’ll also put a link to the Greater Kansas City Community Foundation website, so people can get there and ask questions and do things. And of course, if you want to talk to us directly, we use the Greater Kansas City Community Foundation for clients as well. So, Chris, what are some other unique things about the Greater Kansas City Community Foundation that you’d like to share?
[00:28:05] Christopher Rigsby: Yeah, absolutely. So, I mentioned we’re the third largest community foundation. One of our claims of themes is we were actually the owner of the Kansas City Royals for a period of time. So, Mr. Kauffman loved Kansas City, loved the Royals organization. He wanted the Royals to stay in Kansas City, even upon his passing. And so, how do you get in that organization to his trust? It would have had to have been sold to the highest bidder.
What he did was he gave it to his donor-advised fund and essentially said, and that’s what we do with all our funds is to match the donor’s intent, that’s what we try to do. Essentially, we held the organization in the early 2000s and we held it until the last family came in and purchased it. That’s our small piece of claim right there is just that, yeah, we were the owners of the Royals there.
[00:28:59] Dean Barber: So, then the Greater Kansas City Community Foundation received the proceeds from the Royals and then, I assume that he had said, Okay, these are the charities that I want the money to go to once the Royals are sold.
[00:29:12] Christopher Rigsby: Yeah, the proceeds went into different funds at the community foundation that were kind of set up with that intent.
[00:29:20] Dean Barber: So, let’s go back to that donor-advised fund. Let’s say that I’ve got a piece of farmland or I’ve got some rental real estate and I want to give farmland or rental real estate, whether it be commercial or residential. Can I give those things to the donor-advised fund as well?
[00:29:37] Christopher Rigsby: Yeah, that’s what I was going to mention was that we have a complex asset team that essentially, we received gifts of privately held business interests, real estate, we’ve done oil interests. So, we’ve received those types of gifts throughout the years and so, that’s something that we’re very comfortable with. And so, we’re always available to have those conversations to see if it makes sense of giving a piece of S Corp, C Corp ownership interest prior to a sell. So, that’s something that we do pretty frequently.
[00:30:13] Dean Barber: So, let’s just give an example here, I want our listeners to understand what we’re talking about here. If I have a piece of rental real estate and let’s say that that piece of rental real estate, say commercial real estate properties and generating a quarter of a million dollars a year in free cash flow. So, it’s rented, the rents are coming in, that quarter of a million dollars cash flow. That quarter of a million dollars cash flow is going to stay within the donor-advised fund and then, the donor, whoever gave the real estate can then choose which charities he wants that or she wants that cash flow to go to; otherwise, it’s going to sit in the account and can be managed in the way that we talked about at the very beginning of the podcast. Am I seeing that right?
[00:30:53] Christopher Rigsby: So, what essentially happens all with real estate and so, we have a real estate charitable foundation that reviews any possible donation. So, they want to make sure that it’s something that’s viable, that is something that would be sold most of the time. It is a property that someone, maybe, it’s a second home that they’re wanting to sell or essentially donate to the community foundation and have the proceeds in their donor-advised fund.
We have had some where it is income producing, but that would be something on kind of a case by case basis where our complex asset team would need to make sure the logistic is on that, but yeah, that’s kind of what happens, we do review those cases and just make sure that it’s a viable gift.
[00:31:38] Dean Barber: And you have all the experts on staff there that can help people that are wanting to look at different ways to and again, you’re going to do this, number one, because you’re charitable and number two, because you’d like to get some sort of a tax benefit from it, but you want to have control over what’s going on to some degree. And that’s really why you guys exist.
[00:32:00] Christopher Rigsby: Yep, absolutely. And so, yeah, we have our own CPAs on staff, we have attorneys, corporate counselors on staff, but yeah, we’re there as a resource to the donors and their financial advisors to make sure that we’re bringing the correct charitable solution.
[00:32:19] Dean Barber: So, how long has the Greater Kansas City Community Foundation been in existence? I mean, to be the third largest community foundation in the United States, that says a lot, I mean, right here in the Midwest. And you and I live here, so we know that there’s a lot of great people in the Greater Kansas City area and a lot of very charitable people in the Greater Kansas City area. So, it doesn’t necessarily surprise me that it’s there, but how long have you guys been around?
[00:32:45] Christopher Rigsby: So, we were actually founded in 1978 and we have a neat story. So, seven families passed around the hat collecting $210 and some change with the thought being that charitable giving should be for everyone, not just the extremely wealthy. And we’ve grown to, I mentioned over 3.7 billion in assets, but a lot of that has been just being donor centric, making sure we’re doing what’s the donor’s intent and also streamlining it for the financial advisors, so make it easy for them to manage those charitable investment accounts.
And then, we were actually one of the first community foundations to offer donor-advised funds. So, that has really helped us propel our growth and we have donors in all 50 states, half of the assets are under our greater horizons, our non-geographic entity, but yeah, those are really some of the ways that have helped propel our growth over the years.
[00:33:42] Dean Barber: That’s fascinating. So, is there anything else that you think that anybody that’s charitable should know about the Greater Kansas City Community Foundation and how you can help make their charitable gifts more impactful on the way that they give, how they give, and more impactful from a tax perspective for the person that’s donating?
[00:34:05] Christopher Rigsby: Like I’ve mentioned, we’re very donor centric, we pride ourselves on our customer service and that can be a hard way to quantify. And we actually did an internal study, where since 1994, we’ve received 6 million in contributions and in that time, only 7 million has left us to go to a competing organization. So, it’s over 99% fund retention rate as far as kind of quantifying what people’s enjoyment of once having to find that community foundation. So, we’re very donor centric and we really want to follow what the donor’s intent is, so that’s a little bit.
[00:34:47] Dean Barber: Well, Chris, I want to take this time just to thank you for joining me here on The Guided Retirement Show. Well, this conversation may not have anything to do with how a person lives their life in retirement and the decisions that they make, I think it has an awful lot to do with the legacy that we leave behind. And this is a legacy that can go on for years and years and years and I appreciate you taking the time to join us here. You guys do a great job there at the Greater Kansas City Community Foundation. And I want to encourage everybody that listens to today’s podcast to share this with your friends, share it with your relatives and your co-workers, and encourage them to listen to all the podcasts of The Guided Retirement Show. Chris, thank you very much.
[00:35:27] Christopher Rigsby: Perfect. Thank you, Dean. Appreciate it.
[00:35:30] Dean Barber: Well, I hope you enjoyed that conversation with Chris Rigsby of the Greater Kansas City Community Foundation. It’s obvious that he loves what he does, it’s obvious that the Greater Kansas City Community Foundation is reaching not only people in the Greater Kansas City area, but across the country. I encourage you, if you’re interested in knowing more about charitable giving, get to the show notes, there’s all kinds of links there in the show notes that are going to talk about the charitable giving strategies, a lot of educational materials, and of course, contact information to get in contact with us and see how it fits into your overall financial plan or to get in touch directly with the Greater Kansas City Community Foundation.
Thank you so much for listening to The Guided Retirement Show. I encourage you to make sure to subscribe to The Guided Retirement Show here on your favorite podcast app. Give us a thumbs up, a like on YouTube. And always share this with your friends, your family, your relatives and all those that you care about.[END]
Investment advisory service is offered through Modern Wealth Management, an SEC-registered investment advisor.
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