Our Donor-Advised Gift Fund streamlines the charitable giving process for individuals and businesses – enabling donations in a convenient, cost effective, and tax efficient manner that simplifies record keeping.
Some prefer to make one-time or multiple gifts. Others may be experiencing an unusually profitable year or have sold a business. The Fund allows donors to maintain charitable giving and avoid setting unsustainable expectations regarding future gifts, even though annual contributions to the Fund may vary.
Since this is a non-endowed fund, there is an added benefit – you control the distribution rate for the remaining balance in your account. You decide how much you want to give to charities each year, unlike endowments that may have a required spending policy and private foundations that must make a minimum distribution each year. An initial donation of $10,000 will open your gift fund. Donations to the Fund may be in the form of cash, securities, or transfers from an existing foundation or similar charitable trust. Additional contributions worth $2,500 or more may be made at any time. Investment income attributable to your gift is added to your account, increasing the amount available for giving. Under certain circumstances it may be possible to transfer funds from an existing foundation or similar Donor-Advised charitable fund. These transfers are considered on a case by case basis. You do not need to be an Iowa resident to participate in the Hills Bank Donor-Advised Gift Fund.
Frequently Asked Questions About the Donor Advised Gift Fund:
-
Who Can Open an Account?
Individuals and businesses anywhere within the United States may establish an account.
-
How do I get started?
Complete an application and return it with your initial deposit or security transfer instructions. An application can be mailed to you by contacting the Trust Department at 319-338-1522. When securities are used to fund the account, please allow sufficient time to complete the transfer prior to your fiscal year-end.
-
What is the minimum contribution to the account?
The minimum contribution of cash or marketable securities to open a gift fund account is $10,000. Additional contributions having a minimum value of $2,500 may be made at any time.
-
What can I donate to the Fund?
Cash and marketable securities – stocks, bonds, and mutual fund shares – are appropriate funding sources. As securities are accepted, they are sold and the proceeds are invested by the Fund. You can make multiple distributions to several charities from a single donation to the Fund. Some securities are not marketable or transferable, so all contributions to the Hills Bank Donor-Advised Gift Fund are subject to acceptance by the Trustee.
-
When do I deduct my donation to the Fund?
You deduct your donation in the year that the contribution is accepted by the Fund, regardless of how much was actually distributed to charities during that tax year. There may be limitations on the amount which is deductible depending on the contributed asset and your adjusted gross income (AGI).
-
Why would my business use the Fund?
The Fund provides an opportunity for tax planning combined with community-building charitable gifts. An account within the Fund allows donors to maintain charitable giving and avoid setting unsustainable expectations regarding future gifts, even though annual contributions to the account may vary.
-
How is the value of marketable securities as a donation determined?
Although you are responsible for the valuation of your gift, our administrative team can assist you by gathering daily security quotes for you on the day the security was received.
-
Is the Fund a private foundation?
No. The Fund is a public charity and Donor-Advised fund. What is the process for making charitable distributions from the Fund? You complete a donor request form for each charity, which includes the amount you want distributed. The minimum amount is $250 per distribution. Prior to distribution, the request is approved by the Trustee. Forms and envelopes may be obtained by contacting your account relationship manager.
-
How is the distribution made to a tax-exempt charitable organization and how will it be recognized?
As Trustee of the Fund, Hills Bank and Trust Company will verify the 501(c)(3) status of the charity and approve the distribution. Your donation will be sent to the charity with a letter stating: “This check is a gift from the Hills Bank Donor-Advised Gift Fund on behalf of (your Fund name here).”
-
Can gifts be made anonymously?
Yes.
-
Can the Fund be designated as a beneficiary of my Individual Retirement Account (IRA) or Retirement Plan?
Yes. The Fund may be named as the beneficiary of a specific sum or specific percentage of your IRA or 401(k) balance at your death.
-
Can the Fund be a beneficiary of life insurance proceeds?
Yes. The Fund may be named as a beneficiary of life insurance proceeds.
-
Can I donate to the Fund through my estate?
Yes. Donations to the Fund through your will or trust are treated like any charitable bequest. Your charitable legacy will continue as distributions are made to charities at the direction of a family member or a trusted friend.
-
Will my Fund account be published in an annual report or other publication?
Hills Bank will not publish any materials indicating accounts or amounts given. However, charities may publish lists of donors that contribute to that charity. You have the ability to gift anonymously if you would like your name and gift amount to remain private.
-
What happens if I die before gifting to the Fund is completed?
When you open an account, you may elect a successor individual or charitable advisor to recommend distribution to qualified charities upon your death. Or, you may specify the charities that should receive the undistributed balance. You can revise this information at any time.
-
Are Fund assets part of my estate?
No.
-
What if I don’t make gifts and my account is inactive?
Account holders will be notified of the inactive status and will be encouraged to make qualified distributions from the account. The Fund reserves the right to close accounts with a de minimis balance. Small balances remaining in the account will be distributed to a qualified charity or charities.
-
What is the annual cost to administer the account at the Fund?
The annual cost of asset management and administrative services is 1% of the first $500,000, then 0.2% on balances in excess of $500,000. Our minimum annual fee is $100. The fee is automatically deducted from your account balance.
For more information about the Donor-Advised Gift Fund, contact an Investment Professional online or give us a call at 319-338-1522.
Please note that neither Hills Bank nor the Hills Bank Trust and Wealth Management Department provide tax or legal advice. You should always consult an attorney along with a tax professional to determine how to prepare the best estate plan for your situation. Investment products are not a deposit, not FDIC insured, not insured by any federal government agency, carry no bank guarantee, and may go down in value.