Making charitable contributions can be an art, a creative process that adapts to the changing needs and wishes of the donor. Planned giving enables a donor to arrange charitable contributions in ways that maximize his or her personal objectives while minimizing the after-tax cost. Depending on the asset given and the gift arrangement selected, a donor can generally expect to obtain some or all of the following benefits:
- Fulfill philanthropic goals
- Reduce income tax through a deduction for the gift
- Avoid capital- gains tax on gifts of long term appreciated property
- Retain a stream of income for life for the donor
- Increase spendable income
- Eliminate potential federal estate tax on property passing to charity upon a donors death
- Reduce the cost and time in estate settlement
You should consult with your own tax and legal advisors for a full discussion of the tax implications of particular gift plans.
Cash — Cash is the simplest, most direct, and most popular type of charitable gift. A gift of cash is considered made on the date it is hand-delivered or mailed, and because of the charitable deduction, the net cost to a donor is much less than the actual amount of the gift.
Securities and Real Estate — A rising popular alternative to cash gifts are gifts of appreciated property such as securities (stocks, stock options, bonds, etc.) and real estate. Such gifts are generally a so-called “double tax benefit”. In addition to receiving the current full market value of the property, the donor escapes any potential tax on the capital-gain element of the gifted property.
Gifts in Kind and Personal Property — As with gifts of securities and real estate, a donor is entitled to a charitable tax donation for tangible personal property such as art, rare books, stamps, coins, automobiles, boats, etc. Personal business donations such as plumbing, electrical, masonry, dry walling, etc., or any service that relates to the school operations is also a charitable tax deduction.