welcome everyone to another abundance group trusted advisor call. Ben what week are we? Week 12. Yay for us. And today is Tuesday, September 13 2022. Okay, so who said before I start the recording?
That was me. I was saying you could cut we could call Dennis, do you want me to try? And Maxwell?
Ah,
yeah, go ahead. That'd be fun.
I think he might be in a meeting with Dave Phillips though. So, I was supposed to get some people here to do foundation case studies. And I forgot. But here's what I have done. I have worked on the business trust written instructions, they are in much better shape than they were originally. So that's a good thing. I've set out steps. Step one is strategic planning, figure out what structure you're going to use. I have to do one more flowchart for this one, which is when you're using an LLC for only one purpose, and that is for payroll. Ah, I walked them through, you know how to figure out which structure to use. I have them take a look at who will be the interest holders, or beneficiaries of the business trust, I have them look at what divisions are going to be needed, tell them how to figure out whether to do a DBA or not. I then have them execute their trust, open a business Trust Bank account. And then they get into fun stuff like creating the purchase of assets and liabilities spreadsheet if they have not done so already. Lots of instructions on that. Then conveying business property assets and liabilities to either the business trust or the personal trust depending upon what structure that section I think I can do a little better on because I just realized right before the call that I forgot to put in things like doing equipment and IP leases, doing professional services, agreements, things like that. So I will go back and add that then operating out of the business trust or a division of the business trust is all fleshed out in a little bit more detail, what to do if you've got payroll what to do if you've got sales tax coming out of an LLC. What to do if you have licensing stuff to deal with. And this last section, starting where it says individual personal license required, or receives a form 1099 That part I have not finished. But other than that, the rest of it is drastically improved. Over the last time you guys saw this. So please do take time to go find it and read it. I would print it out so that when you're working with clients that have business just you've got a handy dandy cheat sheet to walk them through the steps. You'll find it in the conveyances folder. Within conveyances, it's in accounting only because the personal trust instructions are also in accounting. I will be making a copy of it to the business trust folder once it is complete and put into PDF. So know that that exists for you guys there right now. Last week, I signed a contract with sales for us. That is going to make trusted advisors roles so much easier. At the end of the year. We are we hired a team to build out the team side of the Financial Services Portal, as well as the client side of the Financial Services Portal. And early next year they will build out a referral partner section to the Financial Services Portal.
As you meet with and communicate with any of our clients as a trusted advisor, you're going to want to hang out in Salesforce. You can go into the CRM, pull up a call client record, it's going to show you every single thing for that client, including the share file folder. So you'll see their trust, right on the same screen. In Salesforce, you'll see their new client questionnaire, you'll see their tax ID letter, and any other documents that they have uploaded for us to have access to like tax returns, for example, it is going to make it so nice for us to have a place to take notes, keep up with what's going on with clients. And we will have some assessments and surveys that will be built out that you can send clients to anytime you want. So there will be a risk assessment, there will be a wealth building survey, so that they can constantly give us updates as their family expands as their business expands, their wealth expands. And based on those themes that are in the assessments and surveys, you'll be able to individually set up triggers for what you want to get notified about. I'm not gonna set all of the triggers up for you, I'll let you guys decide what you want to know versus what you don't want to know. I am so excited about this, this is not a minor commitment on our part, it's $170,000 between Salesforce and the contractor. But the level of service that will provide for clients will be so much better than what we have now. It will replace the Freshdesk system, the whole knowledge base will be imported into it. Clients will be able to search in there interact with one another and an even better way than what we have in the forum right now. So that'll be really cool. I'm just super excited about it. I know Ben is super excited about it as well, the whole team is really, but we really need to have that level of service available. If we're going to be able to scale to the levels I know are possible. We just can't keep doing everything as manually as we are now, which is pretty manual. So
do you see the documentation of all your conveyances of the zooms, going to the Salesforce environment as well?
Absolutely. All of it, the trainings will be in there, the q&a calls will be in there. They'll all be in video, audio and text formats like they are now all of it will be in one place. Won't that be handy?
Say well, I worry about the links that I've saved.
Oh, don't worry about your links, they're not going away. So if you've got the links, great, you'll still be able to access my call yield links. But you'll also be able to
argue about a net just to give this to give him some bearings on
who is that that's talking? Oh, Andrew. Thanks, Ben. So you'll be able to use the old lines, but you'll also be able to just go to abundance group.com forward slash support, which gets you into the client portal and everything will be in one place. Even for training for trusted advisors, all of your trainings will be on the team side of it. So I can't wait for this to happen. It's something we've needed since we opened our doors, but we had to grow a little bit to get our cause as a major, major financial commitment. But I think in the end, it's going to be so well worth it. Once we have something up and running and usable, we will schedule another trusted advisor training so that we can walk you through how to use it. I'm probably not even going to have the team, do that training out bring our contractor in and have them do the trainings for you. It'll all get recorded and kept in the portal. So if you ever needed to get in, you'll be able to go through it. But that will be exciting. Ben got anything to add about the upcoming platform
I don't but the the Mile High view that they gave us through some of the presentations. I mean it looks it's very impressive. So excited to have it rolled out.
I think so too. And as they build things, it's gonna be as good the outcome will be as good as the input we give up So I may have them come to some of you that are actively acting as just advisors, just to have conversations with you about your needs. So Kevin, Tim, Julie, Dave, all of you are probably going to have calls with the team that we hired, so that we really give you exactly what you need and not what I think you need. So Ben, would be the one setting that up with you. Okay, so what we want to talk about today on foundation is, what do we do to implement foundations. And since Joe wanted to come sit in, I am going to make Joel our guinea pig. If you recall, Joel was here on another one of our case study days. And he has a personal trust, a business trust, and a private family foundation. He's in a unique situation, because he has two brothers that are partners of his, in his business, or in parts of the businesses a better way to say it. So the Jeep brothers also have personal trusts. And all three of them are making use of a single private family foundation. Joel, anything to add about that?
Um, well, what I can add is we've had this for, like, eight months now. And we haven't even had our first family meeting, I continued to strike out with everybody having too much fun in life. And no time to have a Family Foundation meeting. Oh, nuts. Yeah. So it in in the training. And in the documentation, this meeting is really important to, to identify a mission and put some words behind it. So Have at it, guys, what I what I know so far is that that mission statement should be very broad, so that as we undertake ventures in the future, they're all allowed. They're not ruled out but tight mission statement.
Yes. And they've set it up so that within the foundation, there are three separate bank accounts, Joel is putting money in one, each of his brothers are putting money in their own individual accounts. That way, the sub families within the family will be able to have funds that they use on their projects and their fringe benefits without me and ask the question. Okay, how much did I contribute to the hole versus how much the other one contributed to the hole? That's gonna help a ton. So once you've got your binder for your foundation, the very first thing that needs to happen, is executing it. So you're executing the Charitable Trust, you're executing the bank resolution. Has that already happened, Joel?
Yep, we've executed for the bank, and we've executed it for the foundation as well.
And once those two things are done, next step is open the bank accounts. Have you done that as well.
We've opened one with it with the EIN, and it's a blink of an eye to open additional ones haven't done that yet, because brothers have not. They know this thing's gonna happen. But they've not secured some funds to put into it.
Gotcha. Well, you know, even if they start with 100 bucks, it's better than zero. And they'll be prepared when it comes time that they have funds to put into it. So I would push them on, make a small deposit, just to get the accounts open. I think that's a really good thing to do. So execute the trust in the bank resolution, open the bank account. Next step is figure out what your mission is going to be. So that you can work with Charles Hooper, to complete your application for a determination letter, which is needed in order to receive donations from anyone other than the family. I would expect that if you haven't written your mission statement, you probably haven't filed the application for determination letter. That's your form 1923
Is that correct? That's correct. Have not.
So in your binder, there is a copy of what form 1920 The three looks like and what questions it's going to ask you for. If I were in your shoes, and my brothers were kind of keeping me from moving this forward, and I really want to move it forward, here's what I would do. I would think about what you know about your brothers, their passions, their purpose, their legacy, they want to leave. And see if you can't take a stab at writing a mission statement that you then put into a letter to your brothers. And say, Guys, we really got to get this off the ground, I've taken a stab at writing our mission. How can you improve upon it, modify it, edit it, et cetera, and goes so far as to scan in the form that's in your binder, and tell them how you will fill that out and complete it in this letter you're sending to them, let them then come back to you in an email to give you the answers, you need to move it forward. Because filing for the determination letter that application, it's really the last piece you need to really go out and operate the foundation. I would like to see that done this year, not next. And even if you did a meeting say early October. If I know you and your family well, I have a feeling you won't get that determination letter applied for before the end of the year, unless you take the lead on it. By getting it done before the end of the year, you have until March 5 to make any donations that you need to make so you get a tax liability for 2020 to reduced and you'll be able to start soliciting donations from other people, other grants etc. By the end of the year, so that would be good as well.
So form 1923 is necessary to make donations into the trust
not for your family to make donations and for anyone outside of your family to make donations and receive a charitable gift receipt you have to have that filed that's what the application for determination letter lets you do talking about the 1023 1023 Thank you Ben whatever that form is in the binder my binders in the other room fact let me see if I can find one I can show you on screen it's not terribly difficult to fill out
so as you may recall, we've got a matching fund program with our employees for a portion of the donation that will make so that they can designate we're going to we're going to the second half will be matching $1,000 of their donation I need to have this 1023 in place before they donate into it
you should have at least applied for it
okay is this the right form?
Nope it's not
so hard to type in talking about that.
Let me see if I can find looking forward to
Oh, I just found a really great link on the IRS website. Check this out guys. So before I show you this, me put this into chat
and then I will show you It is.
So, lifecycle of a private family foundation on the IRS website. So we have private operating foundations, that is not us. This is grant making foundation. That's what we are. And a private foundation that is neither a private operating foundation nor an exempt operating foundation is sometimes referred to as a grant making organization or a private non operating foundation to exactly what we are. So, that's good to know, organizing documents. So, private foundation cannot be tax exempt and contributions to it will not be deductible as charitable contributions, unless its organizing document contains special provisions. In addition to those that generally applied to Section 501 C three organizations, these special provisions generally must require or prohibit, as the case might be the foundation to act or refrain from acting, so that it will not be liable for the private foundation excise taxes imposed in the Internal Revenue Code. Okay, are our trust instrument does that they private foundations organizing document will be considered to have been amended to conform with this requirement, if valid provisions of state law have been enacted that bla bla bla bla bla apart from these required provisions state law governs filing requirements for and the contents of organizing documents, that's kind of interesting. I didn't know that. Then sample organizing documents
doesn't mention the 1023 Interesting
on that there. Here it is applying to the IRS. applet application forms exemption application to apply for exemption a foundation should complete and submit form 1023 or 1023. Easy, which is a streamlined application.
There is so in order to submit what what Charles does, and I'm going to try to get with him on this but the 1023 form that he's filing, you actually have to do off of pay.gov
I'm aware. Okay, so to submit form 1023 Easy, you must read the instructions, if eligible to file Form 1023 Easy register for an account on pay.gov and attend 23 Dash easy in the search box, complete the form.
Okay.
If form 1023 appears compressed, blah, blah, okay, form 1023
Can you paste the link to 1020 that form in the chat, just go
to the link that I did paste in the chat and get down to the section from the IRS.
So, okay,
let's go look at the instructions.
Okay.
Form 1023 Easy is the streamlined version of form 1023 application for recognition of exemption under 501 C three of the IRC, any organization may file Form 1023 to apply for recognition of exemption from federal income tax. Under Section 501 C three, only certain organizations are eligible to file 1023 Easy. So who can file this form? To determine if you are eligible fill out a worksheet. Okay, let's go look at a worksheet. So I'm pretty sure we are all eligible for this.
This what Charles soup is will help us step through
it well, but I'm pretty sure all of us are eligible for 1023 Easy instead of 1023. Do you project that your annual gross receipts will exceed 50,000 in any of the next three years. gross receipts are the total amounts for the organization received from all sources during the annual accounting period, without subtracting any Costs or expenses. For those who are going to donate more than 50,000 to their organization, you probably won't be able to be done. 23 easy. Do you have total assets? The fair market value of which is in excess of 250,000? Were you formed under the laws of a foreign country? No, that doesn't apply? Is your mailing address in a foreign country that doesn't apply? Are you a successor to or controlled by an entity suspended under 501? P, those apply. So if you have receipts of greater than 50,000, or assets in excess of 250,000, they can't file the easy version, you're gonna have to file the full version. That's basically what that's telling ya. So let's go back.
I missed it. 1023 is an annual filing? No,
it's the initial filing. And the question is, can you file 1023? Easy? Or do you have to file the full 1023?
On the first year, we're not going to be at those thresholds. But in later years,
if within three years, if during any tax year, in the next three years, you anticipate raising more than 50,000, then you can't do the easy form.
refile at that? Yes.
Well, no, it doesn't work that way. You do this once you don't do this every year. So
So I filed it now, we're under the thresholds. And case a two years from now we're over the thresholds case be 10 years now we're over the thresholds. I never have to refile In either case,
correct. It's a one time filing
29 So it looks like this is the actual form No, it's not done in anyhow. Yeah, I have to do it on pay that cup. I don't know that I'm even gonna be able to find the form unless Ron pay that go. See if this doesn't, yeah, here we go. Now we got somewhere. Okay, it's filed electron ugly, only on pay.gov. So go to blah, blah, blah, blah, blah, for additional filing instructions. But this is essentially what is in your binder. When you have a foundation. They want to know the full line name of the organization as listed in the organizing document, which in our case is a charitable trust wants to know a care of name if applicable, mailing address, the EIN number city state towns that month, the annual accounting period ends for all of us it will be December primary they contact
this one we want to use the administrative address correct.
Your Charitable Trust only has one address it doesn't have multiple. And this is the address of the charitable trust not your personal or business trust.
Yes. But um, I'm just saying in that case, the choice for the Charitable Trust would be then a situs type address to where it's a it doesn't necessarily have to be South Dakota. In this particular case, it's the grantor the
foundation's because of the nature of the foundation. It does not need an address other than where you live. Have an office then use the office address. Question seven. Are you represented by an authorized representative such as an attorney or accountant? The answer would be no. You're doing this yourself. Number eight was a person who is not one of your officers, directors, trustees employees are an authorized representative listed in line seven, the answer would be no. If you have an organization website, you should put that in nine a and an email address in nine B. So let's talk about that for a minute. If any of our clients hope to get grants So it doesn't matter what kind of grants an advertising grant from Google YouTube, Facebook, Instagram, grants from government and governmental entities, grants from corporations, grants from other public charities, any kind of grant that absolutely positively must have a website. No one will treat them seriously. For purposes of issuing a grant, if they don't have a website, it is a good idea to put up a simple one page website, like a business card, just so that it's listed when you get a determination letter. So encourage clients to set something like that up, I have Jack working on getting us a resource that will allow someone to set up a foundation website, set up their social media pages for their foundation, get some press releases, written and distributed for somewhere between 3005 1000 is my goal. I know he's found a couple of organizations already. He's looking to see if there's anything else better out there. That would include hosting of the website as well. So hopefully we get that answer in the next couple of weeks. And as soon as we do, I will let you guys know, so you can share it with clients. But I think if they really want their foundation to be taken seriously, outside of the family, that it is imperative that they have at least a domain name with a website on it. Then number 10, certain organizations are not required to file an information return. If you are granted tax exemption, are you claiming to be excused from filing Form? 990? No, that's the annual tax return. So the answer would be no, you are not excused from filing that.
Next
date incorporated if a corporation or formed if other than a corporation. That would be the inception date of the Charitable Trust, which is usually the date the EIN number was pulled. So that's where you point the client to to find that info. Number 12. Were you formed under the laws of a foreign country? That would be no for everybody. Next, organizational structures? Are you a corporation? The answer would be no. Are you a limited liability LLC? The answer would be no. Are you in unincorporated association? The answer would be yes. So attach a copy of your Articles of Association constitution or similar organizing document? Actually, it would be for a not three. So three would be no, you would have for a if yes, attached to signed and dated copy of your trust agreement, indicate signed and dated copies of any amendments. So that would mean a copy of the trust agreement, which is maybe six or seven pages long, I think. And then it says have you been funded? If you have a bank account, you have been funded, even if it's just $100 in the bank account. So everyone should have a bank account by the time they file for the form 1023. So they would answer yes. Number five, have you adopted bylaws? In most cases, the answer is going to be no. If now explain how your officers directors or trustees are selected. And then you would say see attached Charitable Trust, because it does talk about that right in the trust instrument itself. Require provisions in your organizing document. All of those required provisions are present in the document. So you can tell it yes, they're all present.
narrative description of your activities, using an attachment describe your past present and planned activities in a narrative fashion. If you believe that you have already provided some of the information and response to other parts of this application, you may summarize that information. So basically, what you're gonna do is in a document, you're gonna put down what your mission statement is. See what your vision is. And think about the next three years, at the end of three years. What do you want your foundation to have accomplished, and in a story type of fashion, write that out in this document and attach it to your form 1023. Your mission statement should be broadly written, your vision statement can be more specific. The vision statement could be a vision for the long term of the foundation, it can be the vision for just the next few years, that's up to the founders and trustees of your foundation is what to tell a client then lists the names, titles and mailing addresses of all of your officers, directors and trustees. So anyone that is a trustee gets listed there. If you need more room, you use another sheet. lists the names, titles and mailing addresses of each of your five is compensated employees who receive or will receive compensation of more than 50,000 per year, you can put none because I'm not planning on any of our clients getting salaries, that creates taxable income that they shouldn't need. Then lists the names, names of businesses and mailing addresses of your five highest compensated independent contractors that receive or will receive compensation of more than 50,000 per year. I can't think of any of our foundations with that, but apply either the following yes or no questions relate to past present or plan relationships, transactions, or agreements with your officers, or any of your trustees related to each other through family or business relationships. In Joel's case the answer would be yes. And then you say brothers, or brothers and sister in laws or something along those lines,
once again as time moves along, if we pull others in, don't have to refile. Yeah, correct.
Okay, B, do you have a business relationship with any of your trustees, other than through their position as an officer, director or trustee? In your case, John? Joelle, it would be yes. You are partners in a partnership basically. Then Are any of your trustees related to your highest compensated employees or highest compensated independent contractors, that would be no. Three a for each of your officers, directors, trustees, higher compensated employees hired compensated independent contractors attach a list showing their name, qualifications, average hours worked and duties. So, this just relates to the foundation not to any other business that you have going on with them. Then do any of your officers directors, trustees, compensated employees compensated independent contractors receive compensation from any other organizations? Whether tax exempt or taxable, that are related to you through common control? So that control piece is key here? The answer would actually be No. Even though your partner's Joel
which line are we on here? Sorry,
this would be what's listed as three B on the screen okay. Because they have no control, you control it off their limited partners, not full general partners
in business, not the
correct. In establishing the compensation for your trustees, the following practices are recommended, although they are not required. Do you or will the individuals that approved compensation arrangements follow conflict of interest policy? I would just answer yes to all of these A, B and C are number four. Right? Right. It's just good practice right.
Then we have more questions related to all of that stuff. I would answer yes to D, E and F as well. Ah,
washing British,
I would note this is formed easy and we're repeating this is
not easy. This is just 1023. Because I have a feeling in many cases, it's not going to be an easy situation, you're gonna have more than 250,000 By the end of three years. And from all three families together, you probably will draw, then you're not eligible to file the easy form, you'd have to file this longer form.
Will Charles also be a consultant on that choice? Easy? Or
the full? Yeah, he will. And I mean, it's a long form, check out how long this is. I'm just scrolling through it. Yes. Is this part eight your specific activities, part nine financial data. I'm sorry, part nine continued. Part 10. public charity status? Well, you're not a public charity. So that section, you don't have to complete and part 11 user fee information and signature. So that's how long it is. Whew. Now, you're not a church. So you don't have to do Schedule A, you're not a school, college or university. So you don't have to do scheduled to do establishment of racially non discriminatory policy, which you probably should do. But I think this still only applies if your school, college or university. So maybe you don't have to do that. hospitals and medical research organizations doesn't apply.
501 C, or sorry, 509, a three supporting organizations, that doesn't apply.
So we explore it says supporting organizations and then it says support dead organizations.
Yes. So this applies if your 501 C three is treated as a 509, a three supporting organization, it is not. Okay. So you don't need to fill out that schedule. This is scheduled D continuance of that doesn't apply. Now, here's a good one, scheduled E. Organizations not filing Form 1023 within 27 months of formation. So don't let it go beyond December of this year. You get bonus points with the IRS for doing it in a timely manner. Otherwise, you have to do a lot more hoop jumping. Schedule up homes for the elderly or handicapped in low income housing. We do have a few clients who are going to have to file Schedule F. Not all of them like Joel's font. But many of loose students will have to file Schedule F scheduled G successors to other organizations. You're not a successor to a another nonprofit. Also, that one doesn't apply. Schedule H organizations providing scholarships, fellowships, educational loans, or other educational grants to individuals and private foundations requesting advanced approval of individual grant procedures. That might be something you want to take a look at. certainly talk to Charles about it. And this is a continuation of that. And now at the end the form 1023 checklist, assemble the application and materials in this order. Your checklist your form 2848, which is a power of attorney and declaration of representative if filing, you're probably not going to use that form 8821 tax information authorization if you're filing for that expedited request, if you're requesting that application form, that's the whole 1023 and all the usual schedules, Articles of Organization. Well, in your case, it's not Articles of Organization. It's your charitable trust document. Documentation of non discriminatory policy if you're a school that probably doesn't apply to you. This one doesn't apply any other attachments. Use the theme pick C payments placed in an envelope on top of the checklist, do not stapler, otherwise attach your check or money order. Include your EIN number and your SS four letter gives the map completed parts one through 11 of the application, including any requested information in any required schedules. Then on the checklist, you have to check if you're including any schedules, an exact copy of your complete articles of organization, or you're creating document, which in this case would be the Charitable Trust, have to include that location of purpose clause from Part Three, what paragraph number of the Charitable Trust is that location of dissolution clause, what paragraph number is that, make sure you have a signature of a trustee, your name on the application must be the same as your legal name as it appears in your governing instrument and send it all through Pay docs, or mail it to their either one. So that is your form 1023. That's a lot to pull together. But it's really I mean, they're real, it really is not hard, it's very easy. Just get your copies of your documents is gonna take you about half an hour to 45 minutes to pull it all together. Now once that's done, client is ready to go. Now let's operating your foundation. It's a good idea every time you meet with a client that has a foundation to ask them. So what projects is your foundation working on? What things is your foundation doing? Are you looking for grants or yet helping people?
It is a good idea to have at least one thing that the foundation does every single tax year. Otherwise, it's gonna look like you just set the foundation up as a tax mitigation strategy. The IRS doesn't love that. Can you do that with a private family foundation? Yeah, you could. But at some point, they're going to want to know what good is the foundation doing? Are you honoring your mission statement? Are you keeping to your vision. So at least once a year plans something that your foundation is going to do to do good in the world.
In my case, if we had just this steady employer employee benefit, and that would meet the requirement you think,
I think it would, for sure. That's what I loved about the idea when you came up with jewel gives you something that your foundation is going to do on an ongoing basis because of that program. And just remind everyone else of what that is.
Um, so we have just five employees and some regular contractors. And as part of their compensation package, we've told each of them that they just need to point the gun and shoot and our foundation will donate to the cause it need not be a 501 C three, it has to be something that is in their heart, I've asked them to stay local if they can in their communities. And we will we will send a check for $1,000 to that entity. And and we will give them a and then secondly if they choose to go another 1000 out of their pockets will match that second 1000. So this is for employees and regular contractors. So budget wise, it's about it's going to be about 15,000 A year is the way I see it
and which is awesome job and the business trust
will make the contribution into whether mark to fund into our foundation to make those payments so the business trust gets a write off for that piece.
And if they contribute 1000 of their own money, then your foundation gets to give them a charitable contribution receipt so that they can deduct that 1000 on their tax returns.
See that, again?
If they contribute $1,000 out of their own pocket,
then yes,
to your foundation, your foundation gives them a receipt for that so that they can deduct it on their tax returns.
And so we're in that realm, we're documenting that we're already receiving donations as a line item that might look good to the government that we're on the road.
Yeah, I think it will. I'm very excited about that.
was really exciting to our employees. It's cool the way they responded on this. Yeah.
Given who I would expect you to want to hire, that does not surprise me in the least. Young people as a whole are 20 and 30 year olds, they absolutely are interested in making a difference in the world. And if their employer is going to help make that a reality, oh, my gosh, that would be really, really exciting for most 20 and 30 year olds today. I would absolutely love every single one of our foundations to find a way to do that same kind of thing within their organization, if they don't have employees use their contractors.
So just
a checkpoint on that. Five said, there are no restrictions. It doesn't have to be a 501 C. Am I right? You are, but
it has to fit within your mission statement. Can't go outside of your mission statement. In the narrative that you provide with your 1023 if you describe the audience, your foundation will serve. And you do that broadly. Then, as long as what they want to do fits within the audience your foundation wants to serve or fits within your mission statement, or both. You're golden.
So keep it broad enough to embrace people who have different points of giving.
Yeah, absolutely. Absolutely. Okay, so any questions about any of the things we've discussed so far?
recommended to have a broad Board of Trustees with foundation.
Not necessarily. The more trustees you have, the harder it will be to manage. And the more difficult it will be to herd cats do do annual meetings, quarterly meetings and get projects off the ground. So if you were a public charity, which is treated by the IRS as an operating Association, meaning you're actually doing projects, then you don't have a choice. You have to have governance that is broad. But that's not what we have. We are grant making organizations. And grant making organizations are private. So I don't even think it's a great idea to go outside of your family, for your board of trustees. Now, in my case, Shelby's like family, even though she isn't family, she has been with me for 18 years. So she'll be being a co trustee and my foundation. That just makes good sense. So the trustees for mine are me, Ben and Shelby are keeping it small, we all have very similar ideals and visions. So I think we will all do very well together in a singular foundation. But if you've got a big family and you put 12 or 13 people in as trustees, it's gonna get difficult to manage at some point. You see how hard it's been to just get three of you together for a family meeting? Right? Imagine doing that with six or seven.
Dr. Gina Can I jump in just for a second? Sure. You just tweak something in my mind And if we're not used to being trustees or on a board, then find your local Rotary Club or Lions Club volunteer, and then the chances are, if you're a new body and you breed, they're going to want you on the board, because that's something nobody really wants to do. And that would give you a year of really good experience dealing with the board. Because usually like, in the rotary club that I was president of, we had, I think, seven people on the board. And it was like pulling teeth to get them all to agree to something. So what you're saying about being small, as opposed to a large board is really, really true. The more people the more complex relationships, and the harder it is to get a decision.
Completely agree. And this is why I love private family foundations that are non operating associations so much in a public charity. Let's say, we decided we were going to offer public charities to our clients instead of the private family foundation model. That public charity, you would be the founder, you could be a trustee, but you need to have a board of directors, it's a mandatory thing. And that board of directors could oust you anytime you want it anytime they wanted to. So here you are founder of this foundation, and they oust you, and now you can't do anything with it. That cannot happen within a private family foundation, because it doesn't have a board of directors. It's a big part of why I don't think it's a good idea to have a board other than the Board of Trustees. Make sure
that we had that situation in the news in the last month, there were two sisters. I wish I could remember who it was but two sisters that were suing the board.
It's not uncommon, it happens quite often.
Everybody, first of all,
I'm sure you guys can see my screen here me.
Whatever that is that has a video going on or a webinar going on. If you could mute, I'd appreciate it. Thank you. And that is a really important thing to understand public charities, you actually get a higher amount that you can donate on your 1040 return, it's double what you can donate to a private family foundation. So instead of 30% of AGI, you can donate up to 60% of AGI for those who have large retirement accounts that they want to take out of retirement accounts, and get some tax mitigation, maybe a public charity might be a good way to go. But personally, if it was me, just because I don't want to have the governing board the board of directors that could take the money in run, so to speak. If I went that route, put the money into it, I would then also set up a private family foundation. And while the board is very small, and people you really know, get them to make a grant to a private family foundation. And at some point, shut down the public charity and only keep thriving charity. That's how I would do it, I have to keep it for three years. But just to eliminate the issue of the board of directors, ousting the founders, and now the money you donate, it can't be used in anything you want to do with it. That's why we do the other way. Our trust can still donate up to 100% of the income in Mali, whether it's the personal trust or the business trust, so you can still get tax breaks, making donations your own foundation. And your foundation can still joint venture with your for profit business. So especially for real estate investors, making a loan for them to go and get more properties out of the foundation. There's so many different leverage points in a private family foundation that don't exist with a public charity, which is why we do it through a non operating Association. Any other questions or comments?
The the sorry, I'm dominating so much here.
You're supposed to you're the guinea pig for the day. Okay. Squeak
gray. So the the foundation as a beneficiary of the personal trust and our personal trust is how how does that relate to actually the personal trust and donating To the foundation.
So, if it is a beneficiary, I believe the difference is that A, because the foundation has perpetual existence. Even if all your beneficiaries were gone, all their heirs were gone. And the trust protector didn't name more beneficiaries, your trust could continue to exist, with taxes still continuing to be deferred by virtue of the fact that the foundation has perpetual exist. So especially for single individuals like me, that don't have children that aren't ever going to have children. That's a real blessing. In addition, it also makes it possible for distributions from Corpus, because the foundation is a beneficiary. If the foundation is not a beneficiary, they're just a 501 C three, setup as a private family foundation, your trust can make donations from income and get tax deductions for doing so. But not from Corpus, only up to 100% of the income. As a beneficiary, you can distribute from Corpus or income, and it's still a deduction for the trust. So that's significant for many contracts.
And then, so a as far as the tax treatment for the for that distribution from Corpus, it's the same as distribution of income.
Now, the distribution from Corpus would be a distribution to a beneficiary. So it's part of the distributed the DNI distributed net income. It's part of the DNI calculation. So it's treated one way for the distribution. As a beneficiary, it's treated another way as a distribution or donation from income. The donation from income shows up as a charitable gift, therefore, as a charitable gift deduction on the 1041 return from Corpus would be part of DNI.
So the DNI is tax deferred.
No DNI is taxed to the beneficiary, not to the trust. So it's not tax deferred at all, it's a deduction. But because it's a tax exempt organization, it's not going to end up getting taxed to the beneficiary.
Beneficiary being the foundation and that it would show on the tax return but with the return of your foundation, but it's not taxed. Right. Correct. Okay.
Okay, I think in our training, that was a question that we had left open.
So I'm glad we brought that up here.
And obviously, the research after the training for the foundation and found the answer
as a beneficiary if the foundation is a beneficiary of the business trust. The business trust can't give cash, can it doesn't it need to give shares of equitable interest? No. So
you're confusing two things. If the foundation is doing a joint venture with a division of the business Trust, the foundation is giving money to the business trust for some purpose. It's done through a joint venture, it's usually done through a loan and to secure the loan the foundation receives units of beneficial interest. Okay, now, second is if the foundation is treated as an interest holder, whether of the overall business trust or of any division. What ever the net income is of the business trust or the business trusts division, that portion that would normally pass through to the personal trust. It can be donated as a charitable gift to the foundation, even if it's not a beneficiary or interest holder in the business trust or the division. Because it's a 501 C three So up to 100% of the profit in the division or the business trust, can be donated to the foundation. My recommendation is don't do the majority of the charitable gift from the business trust. In your case, because of the way you set up the employee benefit structure, I would do whatever is needed to cover that, from the business trust, it's going to be a deduction on the business trusts tax return. But let the balance of the active income pass through to the personal trust, where then gets commingled with all income in the personal trust, all of which gets used to pay for valid trust expenses. And when you get to the net income, the calculation gets done to determine what portion came from active income versus what portion came from capital gains and passive income. That portion that is active income would normally be taxed on a 1099 to the business owner. But with the foundation, you can instead divert that money as a charitable gift to the foundation from the personal trust. And now there is no remaining active income to get taxed on a 1099. Done that way. Rather than donating it from the business Trust, the amount that you would end up donating would be lower because of the fact that it got reduced by the valid just expenses in the personal trust. Does that make sense?
Yes, I think I tracked that whole thing. I'm amazed.
Awesome. Well, I think you're really wrapping your head around this stuff a lot better than I've heard you do in a long time, Joel. So I really commend you for coming to the calls and really thinking it through and re listening and rereading. Because you really get that.
Thank you. So at present we, we were encouraged to have just husband and wife that patent myself as trustees. Yeah. And my thought is to keeping it simple. We'll create a mission statement to two of us.
I think that's a very good idea.
And we can edit and manage this. I know it's a flexible instrument. As time moves along. We can add trustees as time moves along. And my plan is to watch for the interest and engagement of my brothers and add them after seeing the evidence.
I love that job. That's a fantastic plan.
So it was good coaching to just have the two of us as initial trustees actually.
Yeah, really good. Really, really good. It will get rolling by the end of the year. Now I feel much better.
Yeah, me too.
As Awesome. Any other questions, comments?
Do you know I was gonna say for like a lot of nonprofit work, or sounds very similar to how these family Foundation's run, you could also in addition to a mission statement, you could list a few core values. So like, Joel, if you're absolutely or additional evidence as to how you know what your employee chooses matches what you do if you pick broad scheme, core values. And then when you do your kind of press releases or whatever, you pull out those core values, that kind of consistent language. It's more of that evidence. So like, what I'm hearing from you is like community would be a core value. Oh, yes. So it's a it's a broad way to I'm sorry, I think my mic kind of give out. It's a broad way to give evidence, but also kind of customize your your foundation a bit better if you can still hear me my mic. Okay, okay. Yeah, so just something Margaret,
which I agree with me that if you're going to go the route of naming core values, somewhere between three and five, never more than seven is a good number.
Exactly, yeah. Something that you actually can achieve. And that's, you know,
yeah, yeah.
Anyway, just thought of that. So thanks.
Nice. Thanks, Julie. Give us another fun example. Sure. All right. So I've mentioned here and there that I'm engaged with a friend who has a sailboat and we make routine trips maybe three a year to the feral on islands, which is a Science Island, and I preserve for enormous numbers of birds and marine life. And we haul scientists and their gear out to the island. So it's a boat, it's a lot of fun. And I'm going to donate to that cause with the foundation. That's awesome. Joel, we get to broaden, broaden the mission statement enough to address, you know, birds and stuff.
Well, and the donation that you make may just be covering the cost for you to go along on the trip. Right. It's run of it, and it's a grant at the same time. Yeah, love it, but a great idea. And like my buddy, Jack Humphrey, our marketing director, Jack's been on the border of rewilding now for going on 30 years. He's starting his own foundation. And one of the biggest things he wants to support is the work that gets done through rewilding. So it becomes a grant making organization, giving grants to rewilding, which out further, all kinds of wildlife and whatnot, preserving our wolf population is a really big deal for them. Preserving waterways, so that all different types of species have longer existences, helping to get Eagles back to being all throughout the US rather than being almost extinct in certain areas. All of those things are really important work Jack wants to be able to accomplish through his foundation. So I love the way you want to do it. One of the things he's planning on doing is he just bought this off road, motorcycle. And his plan is to use it to go on trips all over the US. And when he does these trips, he's got a, I've gifted him with a helmet, that's an incredible helmet. And it's situated so that you can put a GoPro camera on the front of the helmet. And that way, when he goes on these trips, he can livestream the trips, and have people donating for the cars as he's out doing his thing in the wilderness on his motorcycle, which just sounds so darn cool. I can't wait for him to take me along on a live stream. I'm very excited about it. That's up I could ever do myself with my disability. But to be able to go along with Jack. Oh, wow.
We could be doing this from the Faroe Islands, please, getting on your island is a whole thing. Like absolutely great video content, right on the website. Yes.
If you go look up the Amazon explorer program, Amazon dot coms explorer program.
Yeah, you mentioned this. There are
over 10,000 Explorer programs on Amazon, which just really kind of cool. And the stuff that you can find in there. If you go pay attention to it, you will find that many of the things that are on there aren't from nonprofits, travel the world virtually is the tagline for it. But most of these are put out by nonprofits. So you can go on a tour of a shrine in Japan, and it's put out by the Shrine, which is a nonprofit. So the money that you pay to go on this tour is all considered a charitable donation, which is kind of cool. So Jack very much intends to use his live streams on the Amazon explorer program as well. So that he can reach a whole different group of people who are willingly paying a donation to the nonprofit to go on this trip with Jack, which is kind of neat. There's really cool stuff in here. I mean,
yes, check so many boxes. Incredible.
Right? So for the trips that you're taking several times a year, Joel? Oh my gosh, to be able to put that up on Amazon. How much money would you raised for the science community on that island? Just from that.
And that's a working it as a private family foundation. We're working it as the
private family foundation. Yeah,
so there was one that could accept donations and the other one could not. Can you refresh my memory on that?
So both can accept donations. The key with private family foundations is they cannot have more than a certain percentage of income coming from donations outside of the family. I want to say it 60% or 60% of the income can come from outside donations.
Wow. That's a big number. That definitely resolves a question that I had. Would you like to just review our website and see if we're on the right track there? Absolutely. Where
would I find it?
It's on the chat. GED Sanford foundation.org
see that again, Lou.
It's in chat GD Sanford foundation.org
I love this proverb it's one of my favorites
Oh, I love this Lew
needs a call to action. Okay, donate now that's the call to action. Yeah.
This is awesome. This is not only as real estate investing and providing affordable housing throughout America. Supported, provided and taught the GED Sanford Foundation also endeavors to help families in the military, the homeless Native Americans and others. Through its charitable giving. We believe government is only a part of the solution and that local companies and individuals can produce powerful results to others on a grassroots level. Our focus is to change people's lives for the better. Our mission is to support families through hard times as well. War natural disaster fires homelessness, disease, death financial problems, many things put stress on the family. We resolved to work with and support organizations working to lessen strain on families due to a myriad of problems that affect the family life bonds and strength. This is fantastic Lou. Thank you. The Red Cross kiva.org Habitat for Humanity Nathan's house the Atlanta food banks and Fraternal Order of Police are a few of the organizations our foundation has supported no matter what the problem no matter what the disaster in tough times Americans depend on each other. Wow. So I do agree with Joel at the bottom of the homepage either a get involved or a Donate now either one would be a good thing to have you have one up at the top
and we've had one up in the navigation up above but I agree we could add one down at the bottom as well.
I think that would be a very good place to put it
and then when you go to the yeah there you go. So if you want to click on any of those other pages
out there how about that?
So our first project is the yes project or our first project was the yes project that's right. You might want to update that okay
leave donated Whole Enchilada is to the yes network in Portland and began his favorite charity project teaching kids to play Monopoly with real buildings. Oh my god. I love that Lou that is so you You
This program has arrived,
is aimed at teaching real estate to kids, along with how the credit system in our country works. As well as the banking system is started as business training and Junior Achievement. And as a fan of that program, it taught Lou how to think like a businessman, as a result of the his experience in Junior Achievement, looked at providing the education and investing the kids in high school with the goal of reaching the family as well as the kids. Oh, my gosh, that's awesome.
Are you genetically connected to Sanford?
That's my mother. So it was started in honor of she and my stepfather. His name was Gordon Sanford. And so when they got married after I left Charlotte, I just put it in honor them.
This is so cool. It's it gives me a whole new sight of you who you are.
So click on some of the other page
at the bottom of the mission page. Our last project is in honor of Raymond C. Powell of Marshall County, Kentucky.
Yeah, it shouldn't be our last project, that's for sure.
Yeah, it should not be your last, it should be another project. And I would even consider not having our first project, our second project, our third project, but instead saying, past projects include thought that thought, okay, with out putting the number on them, because it makes it seem like it's outdated and not doing anything now.
Okay. All right. Great point.
Remember, your foundation has perpetual existence. And this really needs to make sure that it shows that perpetual existence. I love the community affordable housing provider award given in recognition of the outstanding service your company provides to the community. That's fantastic.
So all of my licensees are in that award every year when they submit their documents to the foundation. And they have to send them in paper form. They can't upload them and download them and nothing like that. They have to actually send them in physically. And then we issue the recognition for them. So that that helps with their credibility. It recognizes they're part of the nationwide network, it recognizes that they're part of helping deserving families end up with homeownership.
So you might even want to have a little directory of award winners on the website.
I do. Let's see, it's there somewhere.
Well, the only thing I saw was at the bottom of this, so you guys have been granted. Ah,
yeah. So there's, oh, yeah, there's punches. You're right, that needs to be updated.
And I would actually have a link to their website. Okay. I would have something that says something like the following companies have one community affordable housing provider or feel free to reach out to one in your community for help. Okay. Right now
that cross linking brings more website hits,
yes. To this website and their website?
Well, very good point.
Yeah. You do have if you'd like to find out, like to become an affordable housing provider. That's good. To find out more about how you can help or to request this program in your area, click here. That's good. But I do think a full blown directory of all of your students that have been award winners would be a good thing to do.
Yeah, you're right, that needs to be updated
charitable giving projects. That's awesome. Monthly projects. That's awesome. I love it. Do you do these every year in January, February, March, April?
Well, we've we've slid in off slid off the wagon so so to speak. That's why I'm excited that you're involved in foundations now so that I can get back my energy.
Absolutely. Is this is this a private family foundation though?
Yeah, it is. And that's fine people Richard exactly the same way.
Yeah, the charitable trusts are working with with you guys are the ones that we worked with in 2004 When we started this,
and just say no, that was a fluke, it's not like we when I sat down and talked about it and decided that we'd work with, I talked to on and out close to 20 organizations that did foundations, decided that this was definitely the one I wanted to work with. Oh, what worked with them? Do? I was shocked?
That's a really, do you know that I think what Lou's done here, and the history he's had is a real, you know, with loose permission, it's a really good way to promote the foundation, part of your Trifecta
couldn't agree more, I will definitely be referring people to the website, check it out. I love that. Really, really love it. The only other thing I think that I would consider doing in today's foundation world, this may not have been true, when you first put this up, it would be a good idea to set up a gtcm foundation page on Facebook, a GED, Sanford foundation page on LinkedIn, and even a GED Sanford foundation channel on YouTube. And when you do that, at the bottom of every page in your footer, put in a connect with us with a link to the Facebook page, a link to the LinkedIn page, I linked to the YouTube channel. And each time you're working on a project, videos go up on Facebook and YouTube. Even putting those videos out on LinkedIn and a post on your page would be a great thing to do. The more content you can put up on LinkedIn, Facebook and YouTube, the better the search engine rankings will be for the GED Sanford foundation.
Okay. Excellent.
That would be a very good thing that
I the call to action, as Gina highlighted. Donate now is that's one set of people. Another set, I think was so fit into your attracting people into your other businesses would be get involved. Because a lot of the people in the charities want to do more than just throw money at it.
And I'd even consider having a page called Get involved.
Okay, a page called Get involved. Okay, yeah, instead of contact us.
Correct. The get involved is going to tell them a little about the street smart program and even the trust program and how they can set up their own grant making foundation. Right?
Well, okay.
I have a number of clients who didn't come to me for trusts, they came to me for foundations. And they ended up getting a trifecta package that keeps happening, just because in my past, people have known me for helping pupils become social entrepreneurs. Right. So it's just the way I've been for 25 years. So people will come to me talking about foundations. And then I help them better understand how to better fund their foundations using trust. And it's a total no brainer. So it's just a different direction. The same is true for GT Sanford foundation, you can be getting people coming to GT Sanford foundation to find out about the work that it does and how they can participate. And when they can find that first. And then sure you can donate. But why not start your own grant making organization? Find out more in the street smart program, and send them over the street smart program? Oh my gosh. Oh, my gosh. And anybody interested in that is absolutely a candidate for the trifecta package, not just the streetsmart package. Uh huh.
Well, it makes perfect sense.
It's slightly different in terms of the messaging, but holy cow, especially given what I said earlier to Joel, about our 20 and 30 year olds and how they are so keen to find ways of making a bigger difference in the world making a more positive impact in the world. Given who I've seen your clients be, you don't have a ton of 20 and 30 and 40 year olds, they tend to be 5060 and above. So reach that younger audience, you do it through the foundation
like my boys, the wholesalers out of Kansas City who joined me, they're much younger. And they absolutely were drawn to what we're doing. They're wholesalers, you know, so they like doing only just flipping houses. And I've converted them now. So now they're definitely buying and holding long term. But that was the mission that drew them. You're absolutely right.
Yeah, that younger audience boil boy, if you are not a company that's really out there, doing good in the world. They don't want to do business with you. And especially in the world of education and coaching. There's so few people out there talking about doing good in the world. They're just out there making bunches of money, especially in the very crowded real estate investing education space, it's so crowded. I can't think of anybody else that's leading with the mission.
Yes, and you know, the book doing good while doing well. That was yeah, that was birthed in 2014. And we're on the fourth edition now.
So that putting the book up on the GED Sanford Foundation website would be a very good thing to do. I forgot about the book. Haha. Okay. Uh huh. You give me Latos. Right along with the message right along with the message. And,
you know, it's an international bestseller on amazon.com All that stuff, too. So,
right, which is awesome. It needs to be. Okay, but sorry, go ahead, Samantha.
I was saying I love your marketing ideas, you basically need them to click away. Lou, click, click, click, click click. Right.
Remember, I taught marketing strategy for 25 years. Trust is a new thing for me. Marketing Strategy is what I've been known for. So that's my, that's my jam, as they say. Lou, thank you for giving us an example of exactly what I've been talking about with foundations. If you're just sitting there doing things in private, you're not really gonna have the same kind of impact. But boy, see that website and what you can do with it, and the things you can connect to it. Holy cow, that's exactly what our foundations need to see. Okay. If it's okay with Zulu, on Mondays Foundation's call, can we go over your website again, so that the foundation will get to see it there?
I would love it.
Awesome. Point. Awesome. Awesome. Okay, guys, give me your takeaways today. Well, you know what? That's awesome, Joel. Thank you. I was here. And Lou, your takeaways are all about the website, right? Oh, yeah.
Good stuff.
Awesome. Anybody else?
Foundation. That's our Easy, guys. So I hope you got that today that foundations are easy. Go ahead, Samantha.
No, I was just gonna say it's not a My take was not a word. It's just like a ball. Like mind blowing. It was really good that you went over his website, it gives me ideas. Did you ever I know that? I don't know. Maybe you'll share later that tried to affect the package prices so that I could share with people but I don't know how you advertise that?
Oh, well. An easy way to find that. Let me go show you this.
And I'm going to have to run so thanks, everybody. Appreciate it.
Thank you live care. Okay. Last Thursday, Samantha. We did the abundance group friends and family call. If you go to abundance group.com forward slash F F. This is the opt in page. They put in their name and email address. After they opt in, they go to this page. I think that's right, where they will find the replay of the friends and family and then next step to secure your financial legacy, when they go to the five steps to getting started with your trust, and I'll put this link up in chat for you in a second, they download a PDF. And the PDF helps them see what the trust's are and why they choose one versus another. And they get some really huge discounts. But there's a catch. And the catch is, if they need a console before making a buying decision, they don't get the discount. I'll discount by 5%. But that's it. If they can get started, at least with a $15,000 deposit, they get these discounted price. So the the trifecta package is regularly 90,000, they can get it for 60,000 and save 34%.
Awesome, thank you.
So this is a handout that you can use, in addition to the PDF that drives them to watch the replay. The con one last Thursday was fantastic. I had a blast doing it. I really didn't expect I was gonna go two hours, I apologize for going two hours, but it was a phenomenal QA. So we will work on an excerpt from that. So we can have a shorter version and a longer version. But for you guys to send friends and family to it. If they watch more than half of that video replay, they're gonna want to move forward with the trust is my expectation. So that's available for you guys to use, anytime you want, it will be up permanently from here on out. And we are redoing a version of that for other referral partners. There people are not going to get the drastic discounts that your people are gonna get. They really are friends and family pricing. I don't normally discount 34% on Trifecta package. So just for what it's worth, that is the way it works. Okay, guys, we'll be back tomorrow, and Friday with our personal trust q&a. Hope to see you all then. Have a great rest of your week if I don't see you again. Thank you. Oh, next week is our concise handbook discussion. And we will be inviting our clients to join us for that. So we Same time, same place Tuesday at noon Eastern.
Awesome. Okay.
So get your homework done, guys, if you haven't read that concise handbook yet. Bye for now. Bye