Give / Legacy Impact Giving
Legacy Impact Giving
Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver.
2 Corinthians 9:7
LEGACy Impact Giving
The Joy Of Giving
God owns everything. As his managers, we are called to steward well what he’s entrusted to us. By being generous, we are demonstrating God’s love and showing our willingness to let go of what God has given to us. The joy of giving freely lasts for eternity.
Gift Planning
We’d like to help you understand how you can use a kingdom-focused lens to steward your resources—whether you’re ready to give an asset now or are planning gifts for the future. The gift options outlined here are ways you can give that are mutually beneficial to you as the giver and to the charity of your choosing.
If you’d like to pursue any of these gifts, please reach out to our gift planner.
LEGACY IMPACT GIVING
Gifts That Help Now
Assets that can be given immediately
Outright Gift of a Non-Cash Assets
You may wish to make an outright gift of a non-cash asset, which includes real estate, business interests, appreciated securities, and personal property. In most instances, outright gifts of non-cash assets qualify for an immediate tax deduction, eliminate capital gains tax, and remove an asset from their estate—reducing estate taxes.
Giving from your IRA
There are two ways you can give from your Individual Retirement Account (IRA). First, if you are at least 70.5 years old, you can make a gift to the church of up to $100,000 per year through a Qualified Charitable Distribution (QCD). Your QCD will count toward your Required Minimum Distribution. Second, if you are at least 72 years old, you can assign your Required Minimum Distribution (RMD) directly to the church. You will not receive a tax deduction for this gift, but you also won’t have to pay ordinary income tax on it.
Donor Funds & Endowments
A Donor Fund is held by the church for the benefit of a specific ministry. It is governed by a giver agreement stipulating how the fund is to be used. Essentially, the Donor Fund works like an endowment where the gift is not immediately available and is disbursed over time. As the donor, you can establish the fund from cash or assets. You’ll receive a tax deduction and avoid capital gains tax if the Donor Fund is funded by an appreciated asset.
Donor Advised Funds
A Donor Advised Fund is like a charitable investment account that is created for the sole purpose of supporting the charitable organizations you care about. The giver may issue grants from the fund to multiple charities. When funded with cash or non-cash assets through a public charity, you are generally eligible to receive an immediate tax deduction. Funds are invested for tax free growth.
A Giving Story:
Creating a lifetime cash flow
Richard and Kathy, age 70 and 69, want to retire and spend more time traveling. To meet these goals, they decide to sell an apartment building they purchased 20 years ago for $2,000,000, which was recently appraised for $6,000,000. After claiming $750,000 of depreciation, their current basis is $1,250,000. They are concerned about the effect of capital gain tax on the remaining $4,750,000, which they think would leave them with only $5,107,000 to invest toward their retirement and travel goals.
Unfortunately, the Bates’ CPA explains that depreciated real property is subject to a higher capital gain tax rate (25%) for the portion of the capital gain attributable to depreciation. If they sell the property, the Bates will pay a higher capital gain tax on a portion of the property. This extra capital gain tax is an extra $47,000, which means they would only have $5,060,000 to invest toward their retirement and travel goals.
On their financial planner’s advice, Richard and Kathy create a 6% charitable remainder trust (CRT) to sell the apartment building to avoid paying capital gain tax, pay them a lifetime cash flow, gain an immediate income tax charitable deduction and leave a significant gift to their church at their death.
Gifts That Produce Income
Assets that you can give AND receive income on which to live
Split interest gifts
In this case, you can exchange an asset for income—giving the asset and retaining the interest on the asset contributed. You would receive a current charitable income tax deduction for the remainder portion to the non-profit. The giver may avoid capital gains taxes on the contributed assets. The giver may realize estate tax deduction on remaining assets distributed to the non-profit.
Charitable Remainder Unitrust (CRT)
A CRT pays variable income (fixed % of the annual value) to the non-charitable income beneficiary (you, the giver) for life and/or a period of time not to exceed 20 years. This allows the giver to provide payments to themselves or named beneficiaries while giving to charity. The CRT may avoid capital gains tax if the giver contributes appreciated assets. The remainder value of the trust is distributed to your designated charities. The CRT is tax exempt and does not pay tax on income that is earned in the trust.
Charitable Gift Annuity
The CGA is a contract between the giver and the charity. As the giver, you would distribute cash or assets to the church, and the church pays you an annual defined income amount. A portion of the income payment is considered a tax-free return of principle. You would receive a current tax deduction on a portion of the amount contributed. The pay period ends at the giver’s death, and the church retains any remaining funds.
A Giving Story:
Creating a lifetime cash flow
Richard and Kathy, age 70 and 69, want to retire and spend more time traveling. To meet these goals, they decide to sell an apartment building they purchased 20 years ago for $2,000,000, which was recently appraised for $6,000,000. After claiming $750,000 of depreciation, their current basis is $1,250,000. They are concerned about the effect of capital gain tax on the remaining $4,750,000, which they think would leave them with only $5,107,000 to invest toward their retirement and travel goals.
Unfortunately, the Bates’ CPA explains that depreciated real property is subject to a higher capital gain tax rate (25%) for the portion of the capital gain attributable to depreciation. If they sell the property, the Bates will pay a higher capital gain tax on a portion of the property. This extra capital gain tax is an extra $47,000, which means they would only have $5,060,000 to invest toward their retirement and travel goals.
On their financial planner’s advice, Richard and Kathy create a 6% charitable remainder trust (CRT) to sell the apartment building to avoid paying capital gain tax, pay them a lifetime cash flow, gain an immediate income tax charitable deduction and leave a significant gift to their church at their death.
Gifts That Help Later
Assets that can be given at death that will perpetuate the ministry you care about and personify your legacy
Making a Bequest by Will or by Trust (Revocable)
You can name the church in your will or trust in one of the following ways:
- Allocating an exact amount of funds
- Allocating a percentage of the total estate
- Assigning an heir or charity as the beneficiary
- Allocating the remainder of funds, after all other bequests are distributed
The Estate will receive a federal tax deduction for all charitable bequests.
A Gift from an IRA or Retirement Plan
This may include an outright gift from an IRA during one’s lifetime (age 70.5 and older). (See above for details.) If you choose to designate the church as a beneficiary of an IRA or retirement plan, you can indicate a specific amount or a percentage of the assets, or name the church as a contingent beneficiary, second in line to inherit the assets.
A Gift from Life Insurance
You may designate the church as the beneficiary of all or a portion of the death benefit of a life insurance policy. Alternatively, you may name the church as the irrevocable owner and beneficiary of a life insurance policy. If the policy is given to the non-profit during the giver’s lifetime, the giver may deduct the cash value of the contributed policy. If the death benefit is designated to the non-profit, the contribution may qualify for an estate tax deduction.
A Giving Story:
Using insurance to advance ministry
Dan and Shannon were deeply invested in the ministry of their Church. They desired to make a gift to support the vision and mission of the church but faced a challenge. As they looked toward retirement they discovered they would need additional income to achieve their retirement goal of maintaining their current lifestyle in light of rising inflation.
The couple learned that they could provide a gift of an asset to the church and simultaneously receive a flow of passive income that was guaranteed for life. They chose to invest $200,000 in appreciated securities to fund a Charitable Gift Annuity (CGA). A CGA is an annuity contract between the donor and the charitable organization where the gift is invested by the charity and provides a fixed income for the donor that is guaranteed for life. Upon the death of the donor, the original investment becomes available to the charity to fund ministry.
Dan and Shannon were able to receive a tax deduction for their gift and reduced capital gains taxes. They were also able to remove the taxable asset from their estate. They will now receive the additional income they desired and ultimately make a testamentary gift to the church.
LEGACY IMPACT GIVING
Interested in using your success to create significance?
Reach out to our gift planner.