Support the Center
How to Donate
Planning Your Gift to
the Grange Insurance Audubon Center
gift is to some extent the result of planning. At the very
least, it is the result of a decision on the part of the donor
to support an organization. The term “planned giving,”
however, is generally applied to relatively large gifts which
involve detailed planning by the donor and his/her attorney,
tax accountant, or other advisors. This process includes a
- The donor’s objectives in making the gift
- The various methods available for making the gift
- The impact of the gift on the donor’s financial
and estate planning
Tax laws encourage contributions to charitable
organizations. The tax advantages vary with the nature of
the gift and the donor’s financial circumstances. Although
tax savings to the donor or his/her estate are not usually
the primary reason for making a contribution, they can be
a factor in determining the size of the gift and the method
It is always prudent, therefore, to consult
with your financial advisors. Audubon Ohio welcomes the opportunity
to work with you and your advisors in planning your gift.
To determine the precise tax benefits
of a particular gift, you should consult with your tax advisor
or attorney. Some general guidelines, however, are worth noting.
Tax benefits are based on the donor’s
tax bracket. For example: Assuming a donor makes a $10,000
contribution, the federal income tax savings in the year of
the gift, and therefore its net cost, would be:
||Net Cost to Donor
|* Tax rates shown
are federal income taxes only. Donors may also benefit
from charitable deductions from state and local income
Multi-Year Pledge Period
A pledge payment period of three years
has been established for this campaign. This allows donors
to realize recurring tax benefits by spreading their pledge
payments over an extended period. In this way, a donor can
generally make a much more significant investment than he/she
could make through a one-time cash gift. A pledge payment
qualifies as a fully deductible contribution in the year it
WAYS OF GIVING
There are two basic methods of making
a contribution: through a current gift or a deferred
gift. For either of these methods, any of the vehicles
described below may be used.
Gifts of Cash
The most common type of gift is conveyed by cash, money order
or draft. A cash contribution qualifies for a charitable tax
deduction in the year it is made. The deduction is limited
to 50 percent of the donor’s adjusted gross income for
the year. Any amount in excess of 50 percent, however, can
be carried over for up to five years.
Gifts Other Than Cash
Gifts may also be made using any type of asset other than
cash. Gifts of property (e.g., securities, real property,
and personal property) are usually deductible at their fair
market value when given, rather than the original cost
to the donor. Because the deduction is based not on cost,
but on worth, this type of gift is very popular.
If a gift of personal property is valued
at $5,000 or more, a donor who wishes to claim a deduction
must obtain an appraisal from a qualified practitioner. Even
if the value does not exceed $5,000, the donor must keep written
records regarding the property.
For appreciated gifts of securities or
personal property, the tax deduction is limited to 30 percent
of adjusted gross income (rather than the 50 percent limit
which applies to cash contributions).
Gifts may be made in the form of common stock or other securities
-- including closely-held corporate stock, bonds, limited
partnership interests, and mutual fund shares, especially
those which have appreciated.
Publicly-traded securities do not have
to be appraised. Nor do privately-held securities valued at
less than $10,000. If the value of the latter exceeds $5,000,
however, a partially completed appraisal summary must be attached
to the tax return on which the deduction is claimed.
The Benefits of Giving Appreciated
Assuming a cost basis of $20,000, a gift of $100,000 in highly
appreciated stock will produce the following immediate savings:
Potential income tax savings (in highest
federal tax bracket) $35,000
Avoidance of capital gain tax of 20%
(on long-term property) 16,000
Avoidance of donor’s cost to sell
stock (brokerage commission) 500
Total immediate savings $51,500
Gifts of real property may include farms, personal residences,
and vacation homes, as well as commercial and rental properties.
One attractive option may be a life tenancy agreement
-- to donate your personal residence or farm, while retaining
the right to live there for the rest of your life. The financial
benefits will vary with the way the gift is structured.
Tangible Personal Property
Gifts of tangible personal property may include furniture,
equipment, fixtures, automobiles, books, gems, precious metals,
works of art, stamps, coins, manuscripts, or almost anything
else. Such gifts are often designated for an appropriate use
by the organization.
Gifts in Kind
Finally, a donor may choose to make a gift in kind –
for example, services or materials for use in construction
or for some other capital purpose.
Once again, any of the above methods may
be used to fund either a current gift or a deferred gift.
A deferred gift is created in the present,
often as part of a comprehensive estate-planning process.
It is the benefit of the gift which is deferred. That
is, the recipient’s full interest in the donated assets
is not realized until some point in the future.
A bequest, for example, is legally created
by executing a will. The organization, however, does not receive
the benefits until the death of the donor. Traditionally,
the bequest is the simplest and most popular method of making
a deferred gift. In recent years, several additional options
have become available.
Life Income Plans
By establishing a charitable remainder trust or, a
donor may transfer to an organization cash or other assets
(such as stocks, bonds, or real estate), and at the same time
receive a lifetime income and current income tax benefits
derived from those assets. By establishing a charitable lead
trust, a donor may retain ownership of the assets while generating
current income for the organization.
Charitable Remainder Trust
Through a charitable remainder trust, the donor or other
named beneficiary receives a lifetime income from the assets.
Upon the death of the last named beneficiary, title to the
trust passes to the organization. A charitable remainder
trust can be structured in one of two ways:
- If a fixed income is desired, the trust can be structured
as an annuity, paying a fixed percentage of the assets’
- As a hedge against inflation, the trust can be structured
to pay a fixed percentage of the trust’s assets,
which are revalued annually. In this way, the beneficiary’s
income grows with the value of the assets.
Charitable Lead Trust
A charitable remainder trust, then, pays an income to the
donor or other beneficiary, and the remaining assets go
to the organization. Conversely, the charitable lead trust
pays an income to the organization, and at the end
of a specified period, the remaining assets go to the donor
or other beneficiary.
A charitable lead trust, therefore,
may be advantageous to a donor who is planning the transfer
of assets to succeeding generations. This vehicle may also
be attractive to a donor who is interested in reducing current
taxable income, while retaining ultimate ownership of the
Gifts of life insurance provide a method of making a substantial
gift at a relatively low cost. Such a gift may be made in
one of two ways:
- By assigning ownership of the policy to the organization
- By naming the organization as the beneficiary
Certain gifts of life insurance, such
as a gift of a paid-up policy, may be considered current,
rather than deferred gifts. A donor who makes an outright
gift of a paid-up life insurance policy, and names the organization
as the irrevocable owner and beneficiary, may claim an immediate
tax deduction equal to the replacement value of the
A donor may also contribute a life insurance
policy which is partially paid up, and claim an immediate
tax deduction equal to the cash surrender value of
Finally, a donor may purchase and support
a new policy which names the organization as the irrevocable
owner and beneficiary. In this case, the donor may claim an
immediate tax deduction for the premium payments made.
A bequest is a written direction contained in a will which
disposes of some or all of the property controlled by the
will. Through a will, it is possible to give cash, securities,
life insurance proceeds, real property, and personal property.
It is also possible to create a trust. Bequests are often
used to establish memorials in honor of the donor, family
members, or others.
PLAN YOUR OWN PROGRAM
In addition to the methods described above,
there are ways to give which are not exclusively charitable
in nature, but do have important applications for charitable
giving. The best way for you to give is the method that best
achieves your overall financial objectives, and at the same
time advances the mission and goals of the organization. The
best method for another donor may not be the ideal approach
for you. Once again, it is always a good idea to consult your
personal financial or legal advisors.
FOR MORE INFORMATION
For additional information or guidance,
please feel free to call upon the development office and campaign
staff. We will be happy to work with you to identify ways
of making a contribution to the campaign that can, at the
same time, advance your overall financial objectives.
Grange Insurance Audubon Center
505 W. Whittier Street
Columbus, OH 43215