Planning Strategic Gifts

The community foundation can provide strategic opportunities as you consider the best charitable fund program for you. Benefits can include a substantial tax deduction and other forms of reduced taxes, lifetime income, income for a set period of time, or appreciated assets passed on to your heirs at a low tax basis. We encourage you to discuss them with your accountant, attorney and other advisors.

Examples of strategic gifts that provide a benefit to you and your favorite charity are charitable gift annuities, charitable remainder trusts, retained life estates, and charitable lead trusts.

Charitable Gift Annuities provide tax benefits and income to the donor. It is a simple contract between the community foundation and donor. In exchange for cash, stock or other appreciated property, the foundation agrees to pay lifetime income, based on actuarial tables. Payments can be made on a quarterly or annual basis. The donor receives tax benefits, including an immediate tax deduction. Upon the death of the donor or spouse, the remainder goes to an endowment fund created by the donor. Charitable gift annuities are attractive to people because they are easy to understand, simple to create and especially attractive to people living on fixed incomes in their later years.

Charitable Remainder Trusts are created when cash, securities or real estate is transferred to a trust created by the donor. The trust then pays the donor (or designee) an income for life or for a limited number of years. The remainder is then distributed after death or after a set term to the charitable purposes established by the donor.

Through a gift of a Retained Life Estate, a donor can contribute a residence, farm, or land to the Community Foundation with a retained life estate. Donors are able to continue using the property throughout their lifetimes while receiving a tax deduction based on the property’s value. This gift would also lower estate taxes since the property is no longer a part of the donor’s estate.

Charitable Lead Trusts create an opportunity for donors to pass appreciated assets to heirs with substantial estate and gift tax savings. The donor realizes these tax benefits by giving the Community Foundation the beneficial interest of the income for a determined period of time. Then the heirs receive the appreciated assets with no additional capital gain tax liability because taxes were paid at a lower basis at the creation of the trust.