Simply put, planned giving is giving wisely. Just like anything else, there is more than one method of reaching a goal. If a goal is to be attained, success is more certain with careful planning. In the case of a gift, the gift can be maximized or attained quicker with a planned and concerted effort.
Planned Giving Opportunities
For those wanting to make a lasting gift to a charity, a bequest is a simple way to accomplish the gift. Naming a particular Fund or organization as a beneficiary in a will is quick and easy. A specific amount can be designated but a common practice is to designate a percentage of the estate as a bequest to the Fund. Besides cash, you can also give appreciated stocks and other assets. Click here for simple bequest language.
Types of Trusts
- CRAT – charitable remainder annuity trust
- CRUT - charitable remainder unitrust
- NICRUT –net income unitrust
- NIMCRUT-net income CRUT with makeup provision
- FLIPCRUT-CRUT that begins as a NICRUT or NIMCRUT but changes to a standard unitrust upon occurrence of specific event.
The ideal solution for those with the desire to set up a planned gift but also needing financial security is a charitable gift annuity. A gift annuity works well for persons over 65 and ranges between $10,000 and $50,000. Once the amount of the gift is determined, a fixed stream of income is calculated combined with a deferred charitable gift. The donor also receives an immediate tax deduction for the charitable portion of the gift. Payments are received to the donor quarterly. Upon death, the charity can be designated to receive a gift.
With a gift annuity, the percent of interest is determined on a sliding scale which factors the age of the donor. Persons older than 85 years old can realize interest rates in the 8% to 9% range.
Appreciated stock can also be used to establish the gift annuity.
A donor can name a charity as the beneficiary of a life insurance policy. This can be a paid-up policy or a policy requiring continued premiums. A tax deduction for the approximate cost or fair market value, whichever is less, will be received. If the policy is paid up, the tax deduction can be immediate. If not, continued tax deductions can be claimed on premium payments made directly or through gifts to a Fund set up at the Community Foundation.
This giving tool works especially well for couples that may have purchased policies years ago with children in mind. Now, with those children as self-supporting adults, the policy may no longer have its original purpose. The purpose can be redirected and benefit a charity.
Real Estate can be a means of fulfilling a goal to give a substantial gift to a charity. In some cases a gift of real estate can help avoid estate taxes and minimize or eliminate burden placed on heirs. Charitable gifts of real estate range from personal residences and vacation homes to rental properties, farmland and commercially developed land. The Gaston Community Foundation has a real estate acceptance policy. Once the gift is deemed acceptable, the gift can be directed to a charity or to a separate fund at the Community Foundation.
A very tax-efficient way to give to a charity is to designate the charity as the beneficiary of your retirement plan. In the case of a 401 (k), 403 (b) or IRA, tax rates upon death could be very high and heirs may have to pay estate tax on income earned. For these reasons, retirement plan assets are many times the first to be designated as a bequest.