Step 3
How Should You Give?
Many of us choose to make a gift through an outright gift: cash,
a check, or through a credit card. Below are a few more ideas to
consider.
 Attorneys, accountants, financial planners, and others can offer
help in selecting the appropriate instrument for your charitable
giving and ensuring that your choices meet all legal requirements. |
DO YOU NEED A FINANCIAL ADVISOR?
"The number-one reason people seek help is that they want
to do some good, but they don't know how to implement their charitable
intentions," says Ed Slott, of Rockville Centre, New York,
CPA and the editor of Ed Slott's IRA Advisor. A qualified advisor
can explain all the available methods for giving to charity and
see which one fits you best. You will also probably want to get
professional advice in one of these situations:
- You want to set up a foundation.
- You want to start a giving circle.
- You want to set up a charitable remainder trust.
- You want to donate real estate, retirement accounts, shares of a private company and other legally complicated assets.
- You and your spouse have a conflict about your charitable
giving goals.
FIND HELP IN YOUR AREA OF WEST VIRGINIA
Find a nearby Certified Public Accountant
Find a tax or estate attorney
Your local community foundation also will have a list of financial planners and estate attorneys who are active in your area. Search for your local Community Foundation
GIFTS OF ASSETS
Stocks, real estate, and other items of value, such as cars, art, and jewelry can be a very meaningful gift to charity. With these gifts, it's important to work with a charity well in advance of making your gift to be sure that the charity is equipped to accept your gift and to complete important paperwork. Most charities will work to sell or liquidate your gift as soon as the donation is completed. For gifts of tangible personal property with an estimated value of $5,000 or more, an appraisal of the asset must be done (usually paid for by the donor) and special forms completed for tax purposes. For gifts of real estate, an environmental review is often conducted before a the gift is accepted.
PLANNED GIFTS
Planned giving is a term meant to indicate that the gift is carefully thought out, and detailed in writing in some fashion. Planned gifts involve specialized technical support from a tax attorney and financial advisor, who will help you calculate the best planned-gift instrument to use. There are a number of charitable gifts that you can make that also generate life income for you or members of your family. Be sure to consult and work closely with your legal and financial advisors to decide what planned giving avenue is best for you:
Gift Annuities
A charitable gift annuity provides you with a fixed amount of lifetime income. To establish a gift annuity, you contribute funds or assets to a nonprofit organization, and that nonprofit in turn makes fixed annuity payments to you from its general assets for the rest of your life or you and your spouse's lives. You receive an immediate income tax deduction for a portion of the gift, and a portion of each annuity payment is treated as a tax-free return of the investment.
The portion of the gift not used for payments — typically 50% of the
original gift — is intended to benefit the nonprofit organization.
Charitable Remainder Trusts
A charitable remainder trust allows you and/or other designated beneficiaries to receive income from a trust for your lifetime(s), or for a period of years not to exceed 20. At the end of that time, the balance of the trust is transferred to a charity that you have selected. You can take a charitable deduction for a portion of the gift you make to the trust in the year the trust is formed. (In some cases, additional funds may be added in later years.) The two most common types of charitable remainder trusts are annuity trusts
and unitrusts, which differ in how the income you receive from the trust is calculated and distributed.
Charitable Lead Trusts
A charitable lead trust allows you to designate a charity to receive a regular, fixed amount from a trust for a specified time period or the lifetime of a designated person. At the end of that time period, the remainder of the trust passes to your designated heirs or other non-charitable beneficiaries.
Charitable Bequests
The term "charitable bequest" is used to describe anything you give or leave to charity from your estate through a will or a revocable living trust. You many bequeath any property, money, or personal belongings that you may have at the time of your death. Even an individual with a small estate can arrange to leave a charitable bequest.
You can arrange to bequeath a gift from your estate in several different ways. You can (a) set aside a specific dollar amount, (b) leave a percentage of your estate, or, (c) make a residual bequest, leaving assets available after your family or other bequests are completed. In addition to gifts of outright cash, some people use a bequest to give a charity something they own, such as a car, home, art or jewelry. Others leave a paid life insurance policy or other financial investments, such as stocks, bonds or CDs.
Life Insurance Beneficiary Designation
By designating a charity as the beneficiary of your life insurance or retirement assets, you can enjoy some flexibility in your charitable giving as well as certain tax advantages. The designated charity will receive the specified assets upon your death.
LEVERAGING YOUR GIFT
Many companies will match your gift — often doubling its value — made to a charitable organization. However, you must take the initiative with your company. Typically, a company's human relations department will handle matching gift programs; seek them out for important guidelines and information.
You might also talk with your organization of choice to discuss making your gift a "challenge gift." In other words, you pledge to make a gift if the organization can find other donors who will meet or exceed the amount of your contribution, essentially doubling the value of your original pledge.
Charitable organizations often welcome such thoughtful giving, since it allows them to turn to past-year donors, board members, and corporate and foundation
funders to catalyze new and renewed giving.
| For Your Tax Records: You'll need records of your contributions if you plan to claim tax deductions for gift of $250 or greater. Be sure you receive a receipt or letter acknowledging your contribution from the charitable organization you choose that clearly states that all or some portion of your gift is tax deductible. |
A canceled check is all you need for gifts of $249 or less. If you buy a ticket
to a fund-raiser (or a similar contribution in which you receive a dinner or something
else of tangible value) only part of your donation may be tax-deductible —
the amount that exceeds the cost of whatever you receive in return. The tax-deductible
portion of your donation should be printed on your receipt. If your gift is tangible
personal property valued at $5,000 or more, an independent appraisal, usually
paid for by the donor, will be necessary to generate IRS forms to substantiate
your gift.
Step 4: Where Should You Give?
Plan Your Personal Giving | Why Give to a Community Foundation
Find Your Local Community Foundation
| For Professional Advisors
Create a WV Nonprofit | Information
for Grant Seekers
West Virgina Statistics | Grantmakers
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