Full Transcript for Philanthropy and the Advantages of Advised Funds

already have existing, is that the best option for you? Really, it's an education process when a donor walks in the door.   Dan Martel 3:08 What are some of the other types of funds that the foundation guides its donors to consider?   Joe Carter 3:13 Depending on what a donor's trying to accomplish, let's say we were starting with just a simple estate plan and somebody was looking for an opportunity to support an individual charity for a period of time. Then, we could either use the legacy fund or if they were not necessarily zeroed in on a particular charity, but more a cause area, then we could use a field of interest fund. For instance, animal welfare. Somebody was interested in pet adoption. They were interested in spay and neutering. They were interested in no kill shelter. There may not be one charitable organization that meets all of those. However, it's a cause area, so if they wanted to support that, then we could shotgun grants out to a variety of organizations.   We are the nation's largest provider of Charitable Organization Endowment Funds. We've got over 380 organizations for which have a permanent endowment here but many of our donors like to come in and establish a fund that's restricted to a specific purpose at that charity. It could be the Boys and Girls Club, for instance that has an endowment fund with us. Then there may be an individual donor that comes in and says, “Hey, really, I like the afterschool tutoring program. I would like to restrict this gift specifically for tutoring.” We could actually set up a gift underneath the auspice of Boys and Girls Club to make that happen. If you've got a high net worth family that wants to ensure that they have multiple generational contacts to that fund, then we might use a supporting organization, which really is a kissing cousin of the private foundation. It looks and smells a lot like a private foundation it just doesn't have the complexities or some of the reporting that's required out of private foundations. Many times it's a great opportunity to come in.   Then, probably one of our biggest areas right now, where a lot of donors are coming in is our scholarship funds. There again, a donor can come in and we'll work with them on the criteria and what does that mean? Is it geographical? Is it merit based? Is it athletics? Is it orchestra? What is it you're trying to support or what are you passionate about? Then, we have another whole subset of funds for people that may have IRAs or something of that nature, for which a Donor Advised Fund is not an appropriate vehicle. Then we can use what are called Donor Designated Funds, which they can use retirement planned assets and things of that nature to really zero in and direct funding to a particular organization or organizations depending, there again on a short-term basis or long term. It's just what is right for that particular donor and we're going to position them to the best fund for them.   Dan Martel 5:48 So, Joe, I know you work a lot with professional advisors, attorneys, folks like that. How do you work with these groups? Where do you find them and how do you guys get in touch?   Joe Carter 5:57 Part of that is just longevity here, right? I mean, I've been here almost 20 years. My initial job coming in was outreach amongst professional advisors. That network has built up. We try to do a lot of things as a foundation to provide continuing education for the advisor group. For instance, we host the Oklahoma City Estate Planning Council, here we'll host the Oklahoma Gift Planners Association. We'll usually do an annual CLE event for all advisors, bring in specialty speakers that'll address estate planning, or gift planning, as it may relate to either tax planning or estate planning in their general practices. Then we've just recently hired Julie Dais, who it is now, her job to go out and basically door knock, if you will, and really get the word out and continuing the awareness of the Community Foundation amongst the advisor community. We've positioned ourself as a really good resource in town, a trusted partner, so that when those attorneys in the past, many of those meetings, I would get called into the attorney's office. Now many of them just refer their client directly over to us. They've got a comfort level now to know that they don't have to be in every single meeting with us but we're still happy to be there in a house with them, if needed.   Dan Martel 7:11 Can you talk about some of the types of gifts you all accept? I know it's just not always a cash deal.   Joe Carter 7:16 Really, especially when it comes to the Community Foundation. I think that's one of our greatest advantages over many of the charities because there's only three things that we don't typically take. We won't take cemetery plots, timeshares or cars, unless it's a vintage car. The rest of the time, we've really positioned ourselves to be able to accept all types of non-cash gifts. That would include crypto currency, real estate, oil, and gas interest, even believe it or not, we can accept cattle, anything that's hoofed. Anything that has a deed that goes along with it can essentially be granted over or gifted over. The other thing that people don't think about as well is maybe art and collectibles.   Dan Martel 7:58 That's interesting. I'm just curious now, just through the years, anything really unusual that you may have received, that was a little out of the ordinary?   Joe Carter 8:06 One of the most interesting things was a herd of cattle. At the end of the day, what we learned through that process is that depreciation of cattle works a little bit differently than other things. It didn't work out for the donor by the time we dove into the IRS code and worked with the CPA. It just made more sense for him to sell the cattle and then gift us the proceeds rather than us going down to the stock yards. We've taken entire estates where somebody has left absolutely everything to us.   Probably

the most common gift for us is working through attorneys on liquidity events, through business transactions. Somebody's getting ready to sell their business. They want to support charity. They'd also like to utilize a charitable deduction, then they'll gift a portion if not all of their business to us, which is a great tax planning tool. We've gotten all types of different businesses. I mean, from real estate companies that dealt with trailer parks to oil and gas companies, to insurance companies, I mean, you name it, there's been a variety of different types of businesses that we've been able to accept.   Dan Martel 9:10 Interesting. Are you seeing an uptick in this type of trend?   Joe Carter 9:14 Well, I think you're always going to have the majority of cash gifts are going to be out there because that's the traditional way of giving. I mean, most people think about supporting charity. In many cases, it's transactional. They just get their checkbook out and they write a check. The second most popular is appreciated stock. There again, that's been publicized and marketed time and time again, but where we really see those impactful gifts that are really sustainable and create lots of opportunity in the community, it really does come from real estate, closely held businesses and those non-cash assets. Only about, oh, I would say roughly 5% of the nation's wealth is held in cash. The other 95% is in non-cash assets. For us to be there and have the ability to accept those kind of gifts are really what separates us from the typical charities in town. That's how we partner with many of those non-profits to be honest, and bring donors in with us.   Dan Martel 10:05 I want to kind of stay on that for a little bit, Joe. Tell me a little bit about the advantages. Why would somebody want to work with you all here at the Foundation versus another entity out there?   Joe Carter 10:14 Well, that's a great question. You know, we've got about $1.6 billion under management here, which are all charitable dollars, for the most part here in central Oklahoma. The question that I always ask is why are all those dollars coming here? I think that the number one point is that donors have confidence when we say that this is going to be a permanent fund and it's here in perpetuity and your legacy will live on, they understand that here because so much of what we do is endowment-based. We're always going to utilize those funds to make sure that generations after generation are supported with that one donor's gift. Our donor base has been informed and educated I think, to the point where they realize that we are going to keep them as the hero in the story.   Dan Martel 11:03 You know, Joe, one of the things I've noticed is you can actually talk to real people here. What's the best way for people to get in touch with you?   Joe Carter 11:10 Well, certainly calling the Foundation, my direct line is (405) 606-2914. They can certainly call the main line; (405) 235-5603 is the

direct line. There again, depending on what somebody's interested in – whether it's a scholarship, a donor fund, a Charitable Organization Endowment Fund – our receptionist will get you in line with the best person to talk to.   Dan Martel 11:30 Well, Joe, thanks for being on the podcast today. We always appreciate your expertise. All of you out there, if you're listening, if you're thinking about establishing a fund, if you want to know how you can create some kind of an impact within your community, Joe Carter and his team have been working with donors to make sure their wishes are fulfilled today and well into perpetuity. Thanks for being with us today, Joe.   Joe Carter 11:50 Thanks, Dan. I would just say you don't have to be a multi-millionaire to make a difference in the community. Many of our permanent funds start at $20,000. You can really make a difference over the long haul with a relatively small entryway.   Dan Martel 12:08 Next up on the pod is Jeri Holmes. Jeri is an attorney in Oklahoma City who founded Nonprofit Solutions back in 2004. She's been giving and providing legal advice to tax-exempt entities ever since then. Jeri, welcome to Creating Impact Through Giving.   Jeri Holmes 12:23 Thank you.   Dan Martel 12:24 So, let's just jump right into some questions. Tell us about the work you do and why did you decide that this area was something that you were so passionate about?   Jeri Holmes 12:31 Well, I grew up volunteering and raising money. I had a severely disabled sister, and so my mother dragged us all over the state raising money for the Opportunity Center in Ponca City, Oklahoma. After I got my law degree, I was doing mergers and acquisitions work scrubbing companies and sitting on boards of nonprofits, because that's how I grew up. I wondered, Hmm. I wonder if we could pierce the corporate veil of a nonprofit organization. I looked into how a lot of them were managed, and I realized that we could. I was very interested in shoring up governance and protecting those board members. Then in 2004 I started Nonprofit Solutions and I've been at it ever since. We've worked with more than 800 nonprofits now.   Dan Martel 13:14 Outstanding. What's different about working with a tax-exempt organization versus one that's not?   Jeri Holmes 13:20 Well, first of all, the people in the for-profit industry, and my law firm is in the for-profit industry, we don't have to follow all of the regulations that tax-exempt organizations follow because we pay our taxes. If you don't want to pay income tax, there's additional rules that you have to follow. That's obviously the biggest issue. One of the issues that I run into with other for-profit attorneys is they will tell an organization to never put anything in the minutes. Don't ever put anything in the minutes, you can be held accountable for that. But with nonprofits, we have these wonderful state statutes that say, you literally have to be doing something bad or turning a blind eye before you get in trouble. And so, we went in those minutes, just how is the board fulfilling those fiduciary duties? That's probably two of the biggest differences.   Dan Martel 14:09 All right. Well, good to know. The Oklahoma City Community Foundation has been helping charitable organizations for more than 50 years here in the community. Why would you send one of your clients to the OCCF?   Jeri Holmes 14:20 Because I know they're going to get taken care of here. I have a little bit of a horror story where I was president of a board where a donor gave us a house, and then the family turned around and sued the organization. I ended up being named and ended up having to be the representative on the estate for a short period of time. Had we had a fund at Oklahoma City Community Foundation, which you can be assured that we do now, that would not have happened because the Oklahoma City Community Foundation would've helped us manage that process.   Dan Martel 14:54 Excellent. Well, I know Joe and his team do a great job, and I know they love working with organizations and clients that you send over, which is fantastic. What's the biggest advantage of having your clients work with the Community Foundation perhaps versus another organization?   Jeri Holmes 15:09 Well, you're the safety net, right? You're the backstop, is how I look at it. When I'm talking to people about starting a private foundation or starting a public charity, we talk about how complicated it really is. If I can talk a family into not doing a private foundation, but doing a Donor Advised Fund that they want to turn over to their children. Now you've got a backstop because the Community Foundation is going to step in and say, no, we can't send 25 people in your family to Tahiti for a board meeting, right? No, we can't do things that are going to get you in trouble. You are that protection that is ongoing for my clients, that they may not necessarily call me and ask the questions. If their funds are with the Community Foundation, then the Community Foundation provides that additional layer of support and information for them.   Dan Martel 16:02 Absolutely. Jeri, one of the things I read in your bio is that you teach a class called the Law and Nonprofit Organizations, correct, over at OCU. Is that OCU, correct?   Jeri Holmes 16:12 Yes.   Dan Martel 16:13 Okay. Are you seeing more and more folks kind of coming up in this type of field, that's doing law the way you're doing it? Are you seeing more and more people interested in this?   Jeri Holmes 16:23 I see more and more people interested in it, but I think they still do it a little bit differently than I do. I'm a lot more hands on. It's not like, “Hey, I want to start a nonprofit” and I say, “I'll help you fill out the form.” I'm going to train the boards. I'm going to train the staff. I'm going to let them know where the pitfalls are. One of the people I talked to today, she had an attorney teller. It was perfectly fine in the state of

Oklahoma to only have one board member, and she could be on the board and pay herself out of a public charity. That came from an attorney. It's that holistic approach that I take that a lot of organizations or a lot of law firms do not. There's also a lot of online help. I've seen people try to set up public charities and private foundations through these online filings, and I hate to be crude about it, but I make a lot of money off those right now because there's lot cleanup work that has to be done.   Dan Martel  Sure. Well, I can rest assured that I will never do any of my work online. That's a guarantee. Jeri one of the things that's interesting is this new thing that's been introduced called the ACE Act. Can you talk a little bit about that and tell us what that means.   Jeri Holmes 17:43 Yeah, that is legislation that was proposed in 2021. A group of people started getting together in 2020 and saying, “Hey, there's a lot of wealth that is being housed that is not being spent.” They're trying to figure out how to get that wealth out of Community Foundations and back into communities. What they don't understand is Community Foundations are supposed to acquire as much wealth as possible because that's a safety net for their communities. So, I'm against the legislation, but the things that are going to really impact our private foundations are, they're not going to be able to do their 5% payouts to a DAF if indeed this legislation is passed. They’re also not going to be able to if a family member is paid or a staff related to them is paid they're not going to be able to count that as a portion of their expenses that will meet their 5% distribution requirements. The IRS and Congress is looking at really tightening up on these private foundations. There are tons of smaller private foundations out there that may not be able to withstand the scrutiny. I worry for those because the penalties associated, if you don't do this right, are astronomical.   Dan Martel 19:09 Well, if you are a small foundation, what's the best thing for them to do.   Jeri Holmes 19:11 I recommend that they get with their family and they talk about, is this really something that generations are going to want to do? A lot of times at private foundations, the first generation is happy. The second generation is not quite as happy by the time they get to the third generation the great grandkids, the grandkids don't want to have anything to do with it. They really need to get with their families and discuss how they want to manage their philanthropic intent. They may want to consider dissolving those private foundations, starting Donor Advised Funds. If they've got five grandchildren, they can split that up into five different Donor Advised Funds. Each grandchild can then be an advisor on a Donor Advised Fund. As we talked about before, the reason why I like that strategy is because then the Oklahoma City Community Foundation can be their backstop and their safety net to make sure they don't get into trouble.   Dan Martel 20:05 Absolutely. do we know anything about a timeline for this particular Senate bill?   Jeri Holmes 20:12 We do not. We do know that they tried to get it passed in 2021, and there was no interest. Too many organizations came out and said, there are just too many unintended consequences, but the 5% payout requirement and a couple of the others are still circulating. I believe at some point that this legislation will get passed because the IRS is really pushing it.   Dan Martel 20:39 That's unfortunate. I'm with you. I hope that this is something that people take a stand on and say, this is not in the best interest for everybody, especially if you're a small foundation. You've been working and helping clients for several years now who are in the nonprofit space. What's the best way for folks to find you?   Jeri Holmes 20:56 Well, I'm pretty easy to find online. I have a lot of people find me through LinkedIn. I have a website nonprofitsolutionslaw.com, a lot of people find me through there, but probably 95% of the people who find me, find me through referral sources. Someone that I've already worked with. That's where the majority of my clients come from.   Dan Martel 21:19 All right. Jeri Holmes is with Nonprofit Solutions. Is that correct? Nonprofit Solutions. You can look that up online if you're interested in talking to Jeri or one of her staff members. Jeri, again, thanks for being with us today. The work you do is important. I know that Oklahoma City Community Foundation enjoys the unique relationship you have with them. The fact that they're able to work with clients that you send over to them has got to be a win-win for all parties involved. Thanks for being with us today. We appreciate you being on the podcast.   Jeri Holmes 21:46 Thank you for having me.   Dan Martel 24:50 Finally, I want to bring in Kayla Cawood, who is a transactional attorney with Robben Law in Oklahoma City, whose practice is primarily focused on estate planning and corporate transactions. Welcome to the show.   Kayla Cawood 22:00 Thank you, Dan.   Dan Martel 22:01 So Kayla, I want to start by asking you a little bit about the work you do at Robben Law. Tell me about that.   Kayla Cawood 22:06 Sure. I really like what I do with Robben Law. I work with clients and whether it's on the estate planning side or the transactional side, I work with clients planning for their future and helping them manage their assets. I do a lot of forming new businesses and hearing about people's business ideas and what kind of ventures they're going to be going through and helping them with transitions as they grow or decide to retire with their businesses and writing contracts and that sort of thing on the business side, which is really fun and interesting. You get to learn about everything from mining, to artist work. That part is really cool.   Dan Martel 22:52 Oh, I can imagine. We just went through the great resignation here, over the

last couple years, with people coming up with very philanthropic and entrepreneurial ideas on starting companies. That's really interesting.   Kayla Cawood 23:04 Yes. I think Oklahomans for sure still have some of that cowboy entrepreneurial spirit and there's lots of great ideas floating around in there.   Dan Martel 23:11 Oh, absolutely. Kayla, you recently earned your CAP designation, which stands for Chartered Advisor in Philanthropy, correct?   Kayla Cawood 23:18 Yes, that's correct.   Dan Martel 23:19 Okay. Tell us a little bit about that. What does that allow you to do?   Kayla Cawood 23:22 The CAP class is designed for professionals of all different types, and it gives you a background in charitable giving that comes from all sorts of different perspectives. It was really interesting for me as an attorney who oftentimes I'm just thinking about the technical aspect of giving, but it gave me a good background on where people are coming from, whether they be fundraisers or the people who were actually giving the funds to support the community. It runs the gambit of everything from psychological factors to technical aspects. It was just a really interesting program.   Dan Martel 24:03 Sure. You had mentioned working with all different types of people. What are some of the clients you're seeing today and what kind of legacy are they trying to leave in the community? What are you hearing?   Kayla Cawood 24:14 I would say a large section of my clients are thinking about a family legacy of giving. It's fairly common once I explain to them about the different tools that we can offer in partnership with the Oklahoma City Community Foundation. They're often really excited that they can set apart a portion of their estate either when they pass or now and allow their children to become successor advisors on those funds and be able to continue to make annual gifts and learn about being philanthropic through that means. I also have a good amount of clients who are using their charitable intent in conjunction with some big event in their life, such as the sale of a business or retirement of a farmer. Those big liquidity events are great times whenever we can get some tax savings and make a big impact in the community with a cause that they support by using one of the tools that we have available to us.   Dan Martel 25:18 Fantastic. I was talking to Joe Carter earlier in the program, and we were talking about the idea here is that you don't have to be incredibly wealthy to start something philanthropic. One of the things I'd like to ask is when do people start thinking about their estates and what might happen to them when they're gone?   Kayla Cawood 25:39 It seems like it happens at a different time for everybody. We have some people who are looking at their minor children and wondering what would happen to them if they were no longer able to care for them. That's a trigger event. Sometimes people are getting older and they're retiring and kind of looking back on their life and wondering, what is my legacy going to be?   Dan Martel 25:59 I know that you work a lot with the Oklahoma City Community Foundation with Joe and his group here, what is it that they can do to help clients that you refer to them?   Kayla Cawood 26:08 The possibilities of what they can do are astoundingly diverse. As the attorney, oftentimes it's my job just to connect the client with what they want to accomplish with the people who can best help them accomplish that in an efficient manner. Oftentimes the Oklahoma City Community Foundation has a great availability of things that they can do for them. Joe and his team really do a good job of getting to know the clients and talking with them and figuring out how they can best help them. It makes everything very easy on the client side when it comes to documents and formations and actually getting things funded. Then it also lets me as the attorney kind of step back and let them kind of go through and decide how they want their charitable legacy to be carried forward.   Dan Martel 27:05 That's outstanding. What do you think the advantages of working with the Community Foundation would be over perhaps another organization?   Kayla Cawood 27:13 I really enjoy working with OCCF because they are so local and they work with so many local charities. In speaking with them, it seems like the team here really has their thumb on the pulse of central Oklahoma and both what the needs are and what groups are fulfilling those needs as well as helping clients fill holes that maybe aren't being covered in the needs of the local community.   Dan Martel 27:39 I think that's great. When it comes to estate planning, what are some of the parameters that somebody needs to be thinking about when they kind of reach out to you at your firm? When do they need to like start talking about this?   Kayla Cawood 27:52 Usually I say, it's good to at least have an initial conversation if you want to make any sort of plan for the future. There's not really an asset threshold where this becomes important. It's more about the type of assets that you own and what you want to happen with them after you die. Most people don't know that in Oklahoma, if a married couple who has children, if one of them were to pass away and there was absolutely no plan in place that that asset was owned only by the one person who died, without any type of planning in place the Oklahoma statute says that that asset passes half to the spouse, half to the children to be split amongst the children. Most people are surprised by that. Oftentimes what we're doing is implementing the simplest plan possible to change that default and avoid the probate process at the end.   Dan Martel 28:48 Excellent. Well, I mean, Robben, R-O-B-B-E-N Law is the law firm that Kayla Cawood is associated with. If you all out there are listening and you need some advice, this would be a good time to start thinking about it. Kayla, I want to thank you for being with us today. Thanks for all the work you do in estate planning for folks. So many people don't really know where to start and coming to somebody like you can be life changing in so many ways. Thanks again for being here. We appreciate you.   Kayla Cawood 29:16 I enjoyed it. Thank you.   Dan Martel 29:19 Well, it looks like we've got another episode in the books. I want to thank you all for listening today. If you're seeking ideas on creating your own legacy through philanthropic giving, or you need a little help with your estate planning, or if you're a tax-exempt organization looking for a way to create your own impact, the Oklahoma City Community Foundation is here and able to help guide you throughout your decision-making process.    Join us again next month, we'll be talking about the importance and impact of beautification. We'll show you how a single gift can make a difference in perpetuity. I want to thank Joe Carter, the Vice President of Development with the Oklahoma City Community Foundation, Jeri Holmes, with Nonprofit Solutions and Kayla Cawood with Robben Law. Until next time I'm Dan Martel. We hope you join us again next month on Creating Impact Through Giving. Have a great day.