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|Making a Lasting Difference|
Given the opportunity, most people like to feel they made a lasting contribution toward a better world, that they have touched the lives of others — perhaps for generations to come. That small but generous touch, the quiet satisfaction of helping perpetuate something meaningful, can be a rich reward enjoyed by many friends of the Oley Foundation through a planned gift. Small or large, planned gifts like those from Bruce Groeber’s family, William Hoyt and Alfred Haas, go a long way toward supporting Oley programs.
What is Planned Giving?
Planned giving involves integrating a donor’s charitable gift into his or her overall financial, tax, and estate planning objectives so as to maximize benefits for both the donor and the Oley Foundation. Planned gifts typically come from a donor’s assets rather than income, and can be either outright or deferred. Although substantial financial benefits are associated with planned giving, the primary motivation for the donor should be philanthropic. Also, it is highly recommended that donors consult with their own tax or legal advisors prior to making a planned gift. Summarized below are the different types of planned gifts.
1. Outright Gifts
The donor makes an outright gift of cash, real estate, personal property, or securities and receives an income tax deduction for the value of the gift, subject to certain limitation. Capital gains taxes are avoided on the appreciation of donated property.
The donor sells property to the Oley Foundation for less than its full market value, and deducts the difference as a charitable contribution.
2. Deferred, Revocable Gifts
One of the most common planned gifts. The donor includes a provision in his or her will or living trust directing that the Oley Foundation receive a designated gift upon death. Bequests may be stated as a percentage of the estate, as the residual of the estate, or for a specific dollar amount. Since a will can be changed, no income tax benefits are associated with a bequest. However, the donor’s estate is reduced by the amount of the bequest for tax purposes.
Life Insurance Policies
Three different giving opportunities are available with life insurance. First, a donor can contribute a "paid up" policy to the Oley Foundation and a receive tax deduction equal to the policy’s cash/replacement value. Second, a donor can name the Oley Foundation as primary beneficiary of the policy. This results in estate tax savings, but no income tax deduction. Third, a donor can name the Oley Foundation as owner and beneficiary of a new policy and receive an income tax deduction for the amount of the premiums paid. (Read about two donors who’ve made these types of gifts: Dr. Howard, and Dr. Kelly)
3. Deferred, Irrevocable Life Income Gifts
Charitable Remainder Unitrust
The donor transfers cash, real estate, or securities to an irrevocable trust that provides yearly, fluctuating income to the donor or other beneficiaries for a term of years or the life, based on a fixed percentage of the trust principal. Trust assets are revalued annually, allowing potential growth in income to the beneficiaries. Additional contributions can be made to the trust. Upon the death of the final beneficiary, the Oley Foundation, receives the principal and distributes it according to the donor’s wishes. An income tax deduction is allowed for an amount equal to the present value of the Oley Foundation’s remainder interest in the trust.
Charitable Gift Annuity
The charitable gift annuity is not a trust, but is a contract between the Oley Foundation and the donor whereby the Oley Foundation promises to pay a fixed amount of income to a maximum of two beneficiaries, in exchange for the irrevocable transfer of assets by the donor to the Oley Foundation. Income payments are bases on the initial market value of the assets contributed and the ages of the income beneficiaries. A portion of the income is considered a tax-free return of principal. An income tax deduction is allowed for the difference between the value of the gift and the present value of the annuity.
Pooled Income Fund
The donor irrevocably transfers cash, securities, or both to an investment pool that combines all donor contributions. Assets are invested together, with each donor receiving a pro-rata share of the Fund’s net income over his or her lifetime. Income payouts will fluctuate annually. The Oley Foundation receives the principal upon the death of the final beneficiary. The tax deduction is allowed for an amount equal to the present value of the Oley Foundation’s remainder interest in the fund.
4. Other Irrevocable Gifts
Charitable Lead Trust
This type of planned gift is the reverse of the charitable remainder trust. The donor transfers cash, real estate, or securities to an irrevocable trust whereby the Oley Foundation is paid the income generated by the trust. The trust principal reverts to the donor or other named beneficiaries after a stated time period. The donor is not entitled to an income tax deduction unless the principal reverts to him or her. In this situation, the donor is also taxed on the trust’s income. This type of trust allows for the transfer of the assets to family members at a reduced transfer tax cost, and locks in the value of the assets.
Contact us if you would like more information on making a charitable contribution to the Oley Foundation, or call (800) 776-OLEY.