Ways to Give
Being creative in the way you think about supporting a charity that is near and dear to your heart can allow you to make a gift larger than you ever thought possible. The tax benefits might also surprise you.
The simplest method of giving is an outright gift by personal check or credit card.
A gift of long-term appreciated securities not only receives an income tax deduction equal to the market value of the securities, but also avoids capital gains taxes on the transfer.
Real and Personal Property
A residence or other real property may be given as an outright gift with a tax deduction equal to the value of the property. If a donor gives a residence or vacation home, they can retain the right to occupy it for life.
Bequests and Retirement Plans
Provisions in a will allow a donor to make a contribution without diminishing the assets during their lifetime. Since bequests are deductible from the taxable estate, significant estate tax savings are possible. Naming a charity as a beneficiary of a retirement plan also avoids income tax when the charity receives its distribution from the plan.
Charitable Gift Annuity
In exchange for a gift of money or securities, a charity will pay the donor and/or a loved one a fixed amount annually for the rest of their life. A portion of this income is not taxed. The donor also receives a charitable deduction for part of the gift as calculated with IRS tables.
Charitable Remainder Trusts
A donor can use an irrevocable trust to provide themselves and/or a loved one with a fixed annual income or an income which varies with the value of the trust. Part of the gift qualifies for an income tax deduction, as calculated with IRS tables. At the death of the last income beneficiary, the corpus of the trust is distributed to the charity.
Charitable Lead Trusts
A donor can support a charity for a term of years or for the life of an individual by creating a charitable lead trust. Income will be paid to the charity of the donor’s choice each year during the term of the trust. When the trust terminates, the assets in the trust revert to the donor or to individuals the donor wish to benefit.
When a life insurance policy is given to a charity, the cash surrender value of the policy is deductible as a charitable contribution. If the donor continues to pay premiums after their gift, these premiums are also deductible.