AFSA’s Planned Giving Programs enables donors to make substantial gifts in ways that can complement their personal financial planning.
A planned gift to AFSA can also bring financial benefits to donors. These planned gift options can generate lifelong income; convert low-yielding assets into a higher income stream at a reduced capital gains cost; obtain significant income tax deductions; and reduce or eliminate estate taxes.
Donors often find that a combination of planned gifts produces the best results. We are happy to talk with donors and their financial advisors to design the most advantageous ways of giving.
Gifts made by will are one of AFSA's most common and important sources of individual support. Bequests can be made in the form of a specific gift of cash or property, or a percentage of the remainder of an estate. The latter allows more flexibility in planning.
The following language has been approved by AFSA's counsel as an effective bequest.
“I give to the AFSA Scholarship Fund, the sum of $_______ (or _____%) of my estate; or the property described herein for its general purposes.”
Owners of appreciated assets can obtain substantial tax benefits by transferring those stocks and bonds directly to AFSA. First, donors will receive an income tax deduction equal to the fair market value of the effective on the date of sale of their gift. In addition, they avoid capital gains tax on the transfer.
Five years ago, a donor bought 100 shares of Universal International Co. at $50 per share. The current fair market value of the shares is $100 per share. The donor decides to dispose of the stock and make a gift of the proceeds to the AFSA Scholarship Fund.
If donor sells the stock directly, the donor will pay a capital gains tax on the difference between the purchase price and the current market value. If the donor transfers the stock directly to the AFSA Scholarship Fund, no capital gains tax will be due on the transfer and the donor will receive an income tax charitable deduction equal to the full fair market value of the stock no matter what the donor paid for it.
AFSA accepts gifts of real property from donors. Real estate gifts can be in the form of undeveloped property, a personal residence or farm, rental property or commercial property. The owner of the property is entitled to an income tax deduction based on the appraised value of the property. The owner will need to obtain an independent appraisal and philanthropy title report which the IRS requires to establish the fair market value of the property. AFSA carefully examines each piece of real estate prior to its acceptance of the gift in order to evaluate the condition and marketability of the property.
Careful planning for the disposition of retirement plan assets can help to avoid undesirable tax costs. In certain situations, gifts to AFSA of retirement account balances can improve the donor's overall tax consequences, increase the amounts passing to heirs and reduce income and estate taxes.
If you are 70½ or older, temporary legislation allows you to make cash gifts totaling up to $100,000 from your traditional or Roth IRA to the AFSA Scholarship Fund only for the year 2011.
Life Insurance Gifts
The large cash value resulting from a relatively small premium makes a life insurance policy an attractive planned gift. An individual can donate a fully paid up policy, naming the AFSA Scholarship Fund as the irrevocable owner and beneficiary. The donor is entitled to receive a gift credit and an immediate income tax deduction for the cash surrender value of the policy.
Charitable Gift Annuity
The simplest gift arrangement, this is a contract between the AFSA Scholarship Fund and the donor, providing for the payment of life income at a fixed rate. The donor receives an immediate income tax deduction for a portion of his/her gift.
The annuity has an attractive provision for the taxation of the income: The donor annuity payments may be treated as part ordinary income, part capital gains income (15%), and part tax-free income, depending on the assets used to fund the annuity.
The donor may contribute cash or securities to establish a gift annuity. The annuity may have no more than two income beneficiaries. The minimum contribution for a gift annuity is $25,000.
- Lori Dec, Scholarship Director, (202) 944-5504