There are many gift opportunities, from the simple to the complex.
MAKING A DIFFERENCE
Are you interested in leaving a lasting legacy of support for The Village Foundation and other organizations that are meaningful to you? By making a gift, you can:
Help shape the future, perhaps for generations to come
Take advantage of the financial and estate planning benefits associated with the gift
Experience the joy and satisfaction that come from giving back
There are many gift opportunities, from the simple to the complex. As you consider ways to support our mission, let us help you discover the strategies that fit best with your personal circumstances and philanthropic goals.
Ways to Give
Gifts of Cash
Cash is the simplest and most popular way to make a gift. Cash is immediately available to support our programs, and every dollar you give is deductible in the year you make the gift (if you itemize). The income tax charitable deduction cannot exceed 60% of your adjusted gross income (AGI) in the year of the gift, but any excess can be carried over for up to five years.
Gifts of Marketable Securities
A gift of appreciated stock (held for more than one year) can play an important role in financial and philanthropic planning. Under the right circumstances, giving appreciated stock can let you make a significant contribution without affecting cash flow. Gifts of securities can be made quickly and easily, and the tax benefits affecting both income and capital gains dramatically increase the impact of these gifts. Any gift of stock qualifies for an immediate income tax deduction for the full fair market value, even if the stock was purchased for substantially less. In a sale of appreciated stock, such a gain would incur the capital gains tax, but by gifting the stock, no tax is due, no matter the amount of the appreciation. If you itemize, the charitable deduction for a gift of long-term appreciated securities cannot exceed 30% of AGI for the year of the gift, but any excess can be carried over for up to five years.
Gifts of Real Estate
If you own real estate that you are no longer utilizing, consider gifting it to The Village Foundation. When you make an outright gift of appreciated real estate to charity, you completely bypass capital gains taxes while deducting the full fair market value of the property (based upon a qualified appraisal) as a charitable contribution (assuming that the real estate has been held long term and you are not in the business of buying and selling real estate).
Gifts of Closely Held Stock
A charitable gift of closely held stock presents a unique opportunity, especially if the closely held corporation has substantial accumulated profits. After the gift is complete, the corporation can offer to buy back the stock and retire it, provided that the charity is not obligated to sell it back to the corporation. Of course, the donor qualifies for a charitable deduction for the fair market value of the closely held stock, and there is no capital gains tax, no matter how much the stock has appreciated in value. For more information about gifts of closely held stock, please contact us.
Gifts That Pay Income
You can also make a gift that will pay you a lifetime income. Under a well-planned life income arrangement, you can reduce taxes, increase spendable income and, at the same time, make a gift that will have a substantial impact on our future.
Charitable Remainder Trusts (CRTs)
Another method of generating income and reducing income tax is to make a gift using a charitable remainder trust, which provides remarkable flexibility and important benefits: • Income for you and/or your beneficiaries for life or a period of up to 20 years • An immediate and substantial charitable income tax deduction if you itemize (subject to AGI limitations) • The potential to bypass immediate capital gains tax when you fund the trust with long-term appreciated property • A reduction in the estate value, which may minimize or even eliminate transfer taxes • A reduction of probate fees, settlement costs, and taxes You qualify for an immediate income tax deduction for a gift to a charitable remainder trust (subject to AGI limitations), even though income will be paid to you (and/or other beneficiaries) for life. The exact amount of the deduction depends on: • The value of the property transferred to the trust • The amount of income benefits payable each year to individual beneficiaries • The length of time income benefits will be paid (or are expected to be paid) • The prevailing interest rates at the time of the gift EXAMPLE: Elena wants to make a gift to us and supplement her income when she retires. She transfers stock worth $100,000 to a charitable remainder trust and elects that an annual income of 5% of the trust’s value be paid to her for as long as she lives. The trustee holds and invests the property during Elena’s lifetime and makes the required payments to her each year. When Elena dies, the trustee pays the remaining trust property to us.*
Gifts that Make an Immediate Impact and Help with Personal Planning
Charitable Lead Trusts (CLTs)
A charitable lead trust is essentially a mirror image of a charitable remainder trust. A charitable lead trust pays an annual income to a qualified organization like ours for a specified period of years, then pays all remaining assets to non-charitable beneficiaries (often children or grandchildren). A lead trust can help meet important planning goals, as it reduces transfer taxes while ultimately passing ownership to family members—particularly useful for assets that are expected to appreciate significantly while held in trust. EXAMPLE: In his will, John establishes a lead trust with $500,000 of stock in a company that he expects will continue to grow significantly. The trust directs that $25,000 be paid to his favorite charity each year for 10 years after his death, at which point the trustee will transfer the remaining trust assets to Leslie, John’s daughter. Mei’s estate can claim an estate tax charitable deduction for the present value of the charity’s interest even though Leslie is likely to ultimately receive a significant sum of money (especially if the stock appreciates as expected while held in the trust). Mei has the personal satisfaction of providing $250,000 over 10 years to help support a mission he believes in.*
Giving Through Your IRA
If you are 70½ or older and own an IRA, you can make a charitable gift using a qualified charitable distribution (QCD).
The Traditional Annual Option
You can transfer up to $100,000 (annual aggregate limit) from your IRA directly to us. There is no deduction available for this gift, but no income tax is due on the distribution, and it counts toward your required minimum distribution (RMD). Note that contributions to your IRA after age 70½ count against the allowable QCD amount.
The New One-Time Option
Beginning in 2023, you can take a distribution of up to $50,000 to fund a new charitable remainder trust to benefit The Village Foundation. The tax-free distribution counts toward your RMD and lets you establish a lifetime income stream for yourself and/or your spouse. Spouses may combine their distributions from their separate IRAs, up to $100,000 total, to fund a single CRT.
Gifts in Your Will or Trust
You can also make a gift in your will or living trust that will support The Village Foundation. It allows you to make an impact, while at the same time allowing you to retain full use of the property during your lifetime. There is no immediate out-of-pocket cost—you simply direct that at your passing, a portion of your estate or trust will go to The Village Foundation (and any other of your favorite charities). You have complete control—if your goals or circumstances change, it’s easy to change the gift. Since a gift in your will can take many forms, you have considerable flexibility, too. You can leave a specific asset, a specific sum of money, a percentage of your estate, or what remains of your estate ir trust after you have provided for other beneficiaries. You can designate exactly how you want your gift to be used (for example, to honor or remember a friend or loved one or to support a particular program), or you can leave your gift unrestricted so that we can meet our most pressing needs. Making a commitment through your will or living trust also qualifies you as a member of The Village Legacy Society. To learn more about deferred giving, please contact us.
Giving Through Beneficiary Designations
Similar to a making a gift through your will or trust, using the beneficiary designation of your IRA, 401(K) or Life Insurance policy is another easy way to make a meaningful and flexible charitable gift. With a simple Change of Beneficiary form, you can name us as the sole or partial beneficiary of these type of accounts and assets. You can even name us as a contingent beneficiary to receive assets only if the primary beneficiary cannot.
Retirement account assets left to heirs are highly taxed—once in the estate and then again as income to the beneficiaries. Stocks, bonds, mutual funds, and real estate are not subject to income tax when they transfer to heirs (although they will eventually be taxed when they are sold). By using retirement account assets to make gifts (and leaving other estate assets to family members), you minimize the income tax burden on your heirs, leaving more to intended beneficiaries.
Many people own life insurance policies they no longer need—for example, a policy acquired to ensure a child’s education or pay off a mortgage, but now the child is out of school and the mortgage is paid off. Consider making The Village Foundation the beneficiary of the policy (or one of the beneficiaries).
Endowments are permanent funds that can provide annual support to The Village Foundation. An endowment gift is a powerful way to support our mission on a long-term (often permanent) basis. When you transfer money or property to an existing endowment fund (or make a gift to the endowment fund in your will), you are helping sustain a specific part of our mission that is close to your heart. The endowment fund combines your gift with the gifts of others and only uses the income (or a stated percentage of the income) from the fund each year. This means your support becomes perpetual, increasing your impact far into the future. You qualify for a charitable income tax deduction (subject to AGI limitations) in the year of the gift. Contributing to an existing endowment fund is an easy and meaningful way to make a lasting impact—but it’s not the only way. If you would like to make a legacy-creating gift with a current donation of cash, stock or real estate, you can create your own endowment fund. You can also create your own fund through a gift in your will, trust of through a beneficiary designation in your IRA, 401(K) or life insurance. This gives you the freedom to support and sustain the area that means the most to you. EXAMPLE: Thomas and Elizabeth are annual supporters of The Village Foundation Rock Star program. They are interested in making their gift perpetual, so they made a provision in their Will that upon the passing of the survivor of them, a gift will create an endowment fund whose earnings will be directed each year to The Village Foundation for Rock Star. If this idea interests you, please reach out to us so we can start a conversation about how to best meet your charitable goals.
A Final Word
There are many ways to give, and strategic planning can help you do more for your favorite charities. Contact us to explore how various giving options could fit within your financial and estate plans. We would be pleased to assist you as you plan a gift that provides tax and financial benefits along with the satisfaction of supporting The Village Foundation for generations to come.
*All examples are for illustrative purposes only.
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