- Real Estate
- Food & Drink
May 26, 2020
This paid piece is sponsored by the Sioux Falls Area Community Foundation.
Five years ago, Steve and Roxanne Lynch made the decision to open a donor advised fund at the Sioux Falls Area Community Foundation as a way to streamline their charitable giving and maximize tax advantages.
At the time, the couple had no idea that, years later, this unique and relatively simple giving vehicle would enable them to step forward in important and meaningful ways during times of heartbreaking disaster and extraordinary need.
The advantages offered by donor advised funds are many. But most significant, local experts say, is one key point: Because donor advised funds are administered by the Community Foundation, donors receive the full tax benefit up front when they contribute to the fund.
“For those wanting to optimize tax benefits or for those who find themselves in a financial windfall, either from the sale of a business, year-end bonus or other situation, donor advised funds work well because they offer significant tax advantages as well as the flexibility to delay decisions on where to direct charitable gifts in order to develop a more strategic and impactful strategy over time,” said Mary Kolsrud, the Community Foundation’s vice president for philanthropy.
That’s exactly what the Lynches did.
“We started our donor advised fund with a sizable contribution that was advantageous at the time from a tax standpoint,” Steve Lynch said. “From there, we’ve been able to give … over time, when and where it’s made sense.”
Over the past two years, the Lynches have directed gifts from their donor advised fund to help restore a local church following a devastating fire and, most recently, to help provide food and necessities to families impacted by the coronavirus pandemic.
Their use of a donor advised fund to respond to community needs aligns with a trend researchers are seeing throughout the U.S.
According to a recent study by Dan Heist, a professor at the University of Pennsylvania, and Danielle Vance-McMullen, an assistant professor at the University of Memphis, the ability for donor advised funds to act as a kind of “philanthropic capital reserve” for local communities during times of fiscal stress or unprecedented challenge further illustrates their value.
That’s because, experts say, local community foundations know and understand the communities they serve, as well as the needs and opportunities that exist within them. In turn, foundations pass on that knowledge and insight to their donors to help guide their giving decisions. So it goes without saying – when donor advised funds are housed at a community foundation, rather than a national financial organization, gifts directed from those funds are inevitably more impactful.
“In today’s circumstances, these funds – deeply rooted in their communities – are analogous to having hundreds, if not thousands, of local foundations available for support of the projected torrent of emergency needs,” an article from the Chronicle of Philanthropy said.
“Our local knowledge and expertise becomes even more valuable and important during times of unprecedented need like we’re seeing today. Because we have a pulse on our community’s needs, we’re able to connect our donors with truly meaningful giving opportunities, amplifying their gift to help drive significant social impact and create positive change throughout our area.”
It was Dec. 19, 2018, when a fire broke out at Our Lady of Guadalupe Church in east-central Sioux Falls. Officials said candles on a shrine established for a feast day likely sparked the fire, which quickly climbed a wall and stretched into the ceiling. Firefighters responded quickly, soaking the nearly 90-year-old church with water, ripping apart plaster and dousing insulation to extinguish the fire in record time.
When it was over, the church remained intact, but its sanctuary was badly damaged.
Shortly thereafter, the Lynches transferred a gift from their donor advised fund to the church to help with restoration efforts.
“Later, we got a letter from Father Cowles thanking us,” Lynch said. “The letter said Our Lady of Guadalupe now considers us a member of their family. That made us feel so good. That’s the joy of giving.”
In March, as the coronavirus pandemic swept across the globe, the Lynches again felt called to help.
They transferred a gift from their donor advised fund to the Corona Help Sioux Falls Fund, which a coalition of local churches established to provide food and basic necessities to those impacted by COVID-19.
“My mom always said, ‘When you kiss a dollar, it doesn’t kiss you back,’ ” Lynch said. “I was the 10th of 11 kids. We lived in a three-bedroom house with a dirt-floor basement. We grew up poor but never knew it because my parents were incredibly giving. They inspired me so much, and everything I am today, everything I’ve done, I attribute to them.”
“I’ve always looked at it like this: Everything I have is a gift, so I might as well share it,” Lynch said.
‘I knew I wanted to act’
Earlier this year, as the economic and social effects of the coronavirus pandemic began unfolding throughout the region, the Community Foundation moved quickly to partner with the city of Sioux Falls and local businesses to create the One Sioux Falls Fund, an emergency fund designed to help avoid eviction for those in the Sioux Falls MSA who are unable to work because of COVID-19.
Mayor Paul TenHaken made the announcement of the One Sioux Falls Fund in mid-March. His words made an impact on Marlene Rance, an active community and civic volunteer who also holds a donor advised fund at the Community Foundation.
“I knew I wanted to act,” Rance said. “I just feel like the coronavirus has affected everyone in our community. As an elderly person, there aren’t a lot of ways I can help through volunteerism right now. So I saw this as a way I could help people right here in our community.”
Rance used her donor advised fund at the Community Foundation to direct gifts to the One Sioux Falls Fund, as well as the Corona Help Sioux Falls Fund.
“This pandemic is something that’s impacting everyone,” Rance said. “It’s something we’ve never experienced. But giving is a wonderful way for our community to come together. We’ll come through this and, I’m grateful that I’ll be able to say I helped in some way.”
Help, indeed. Thanks to Rance’s generosity, along with gifts and pledges from hundreds of other individuals, families and local businesses, today the One Sioux Falls Fund stands at more than $3.3 million. To date, the fund has helped more than 2,500 individuals and families right here in our community remain housed.
Local knowledge, local impact
As the impacts of COVID-19 continue to evolve, economic experts have said the role of local philanthropy has never been more important.
That’s true in Sioux Falls as well.
“Our knowledge and understanding of this community gives us a powerful lens through which we can identify needs and opportunities – especially during challenging times like these,” Kolsrud said.
“We’re able to offer those insights to our donors, offering them strategic and meaningful giving opportunities that not only enable them to experience the joy of giving, but also to play a part in creating positive change throughout our area.
“The reality is you can establish a donor advised fund anywhere. But if you really want your giving to make an impact on the community you call home, if you really want to make a difference in the lives of people right here in the Sioux Falls area, the Community Foundation offers unmatched resources to help you achieve those kinds of charitable giving goals.”
This approach to charitable giving is a win-win — combining a tax advantage with flexibility for donors to give back when it means the most.