Types of Gifts
There are multiple ways to contribute to the Baraga County Community Foundation.
- Gifts of cash
- Appreciated securities
- Life Insurance
- Bequests in Wills
- Real estate or other tangible assets
- Charitable Remainder Trusts
- Private Foundations
Gifts of Cash
Gifts of cash are the most popular for many people who make smaller contributions to the Foundation. Whether your gift is in honor or in memory of a friend or loved one, or is just something they want to do, the hundreds of cash gifts contributed each year help the Foundation grow and expand its support to the community.
Contributions of appreciated securities are attractive to people who have held stocks of bonds for a long period of time, especially when the appreciation is so great that the capital gains tax would take a substantial portion of the value if they were liquidated. With gifts of appreciated securities, you are able to make a significantly larger contribution to the Foundation than the actual or initial costs of those securities, so both you and the Foundation (and ultimately the community) benefit.
Life Insurance Policy
The gift of a life insurance policy is an inexpensive way to make a substantial contribution to the Foundation, and should be attractive to many donors. By purchasing a life insurance policy that is self-sustaining after a few years, and by assigning ownership to the Foundation, you receive immediate charitable tax deductions for the amount of the premiums that are paid to the Foundation, which, in turn, pays the insurance company. Upon the death of the donor the Foundation receives the face value of the policy. This can be used to establish an unrestricted named fund bearing the family name or can be established anonymously. Since the insurance policy is owned by the Foundation from the day it is purchased, it is not a part of your client’s estate and is not subject to tax. Or you may have a policy for which there is nor further need. This would offer the opportunity for you to name the Baraga County Community Foundation as the beneficiary of the policy.
Bequests Made in Wills
Bequests made in wills are attractive methods of giving, for people who want to minimize estate taxes and who want to continue supporting their community. Many people designate a bequest of an outright cash gift to the Foundation or simply state a percentage of the estate value.
A charitable gift annuity is a contract between the donor and the Baraga County Community Foundation which stipulates that the donor wishes to receive a life income in the form of an annuity. The amount of income will depend on the schedule of rates offered by the Foundation, the donor’s age and the number of lives (1 or 2) over which the income is to be paid.
The income may be paid quarterly, semi-annually, or annually. Some of the income from the annuity will likely be income tax free. If the gift for the annuity is made with appreciated property such as stock or real estate, some of the income may be taxed at capital gains rates – which are sometimes lower than ordinary tax rates.
After the income-paying period, the money held by the Foundation for the annuity will be transferred to an endowment fund within the Foundation, and the interest will be applied to support the projects and causes for which the endowment is designated.
When your client gives real estate or other tangible assets to the Foundation, the Foundation in turn sells the property and establishes or increases the donor’s fund with the proceeds. Many people and businesses contribute estates such as homes or office buildings they have inherited, or for which they have no further use. The Foundation requires an Environmental Audit prior to accepting a gift of real estate. With real estate gifts, your client generally receives a charitable tax deduction equal to the fair market value of the property, and the donor pays no capital gains tax on the sale. The deduction may be carried forward up to five years.
Charitable Remainder Trusts
There are two types of Charitable Remainder Trusts – the Charitable Remainder Unitrust, which will pay a variable income based on a fixed percentage of the annual valuation of the assets, and the Charitable Remainder Annuity Trust, which will pay a fixed income until the death of the beneficiary. With any Charitable Remainder Trust, the remainder of the estate will be transferred to the Baraga County Community Foundation upon the death of the beneficiary. The remaining portions of the trust can be used to establish an unrestricted named fund. The Charitable Lead Trust provides income to a designated charity, such as the Foundation, for a specified period of time. The trust can then be distributed to designated beneficiaries.
Private foundations may transfer assets to the Baraga County Community Foundation to establish a donor advised fund or supporting organization, or become a fund under the umbrella of the Foundation. In either case, the private foundation’s name and philanthropic goals area retained. No tax penalty is assessed on such transfers.