Gifts of Cash
Gifts of cash are most popular for many people who make smaller contributions to the Community Foundation. The cash gifts contributed each year help the community’s endowment funds grow and allow the Community Foundation to expand our support to the community through grants.
The Community Foundation gratefully accepts gifts of securities. If either public or private securities have appreciated over time, the owner may incur substantial capital gains taxes if the stocks are sold outright. The donation of appreciated securities can offer the donor attractive income tax benefits, including relief from capital gains tax liability.
- Outright Gifts
- If the donor decides to relinquish ownership of the policy by assigning all rights, titles, and interest in the policy to the Community Foundation, the donor may be eligible for a charitable income tax deduction for the present value or future premium payments on the policy. If ownership of the policy is donated to the Community Foundation, even if ownership is retained by the donor, any proceeds received by the Community Foundation will be deductible by the insured estate as a charitable contribution, thus reducing the estate tax.Donors can also contribute insurance even though the policy is not fully paid up. The donor can name the Community Foundation the beneficiary, continue to maintain the policy, and receive a charitable tax deduction for premiums paid to keep the policy in force.
- Deferred Gifts
- Donors can contribute life insurance policies to fund a life income trust. These life income trusts (i.e. charitable remainder annuity trusts or charitable remainder unitrusts) are advantageous giving arrangements for many donors. A donor can make an irrevocable gift of an insurance policy’s present value, yet reserve income for the donor or other beneficiaries for life.
Gifts of real estate can include homes, condominiums, apartments, undeveloped land, farmland, and rental property. Such gifts may help the donor alleviate management costs and responsibilities if the property were held, and capital gains tax and broker’s fee if the property were sold.
When you give gifts of real estate to the Foundation, the Foundation in turn sells the property, and – depending on the amount – contributes the proceeds to an existing fund of your choice or opens (or increases) your own fund with the income from the sale. You receive a charitable tax deduction equal to the fair market value of the property, and you pay no capital gains tax on the sale.
- Outright Gifts
- Trusts – If real estate is used to fund a charitable remainder unitrust or a charitable lead trust, a donor typically avoids the capital gains tax liability on the transfer of the asset to the trust.Bequests – If a donor leaves real property to the Community Foundation by will, estate taxes are substantially reduced as the property is removed from the taxable estate.
- Retained Life Estates – Making an irrevocable donation of real estate while retaining the right to use the property often results in the immediate benefit of a substantial tax deduction. The income tax deduction can mean significant tax savings in the year of the gift and may be carried forward for up to five additional years.
Source: The Essentials of Planned Giving, JOHN BROWN LIMITED, INC; 2nd Edition
CONSULT YOUR TAX ADVISOR FOR THE VALIDITY OF THIS INFORMATION TO YOUR PARTICULAR TAX SITUATION.