Berks County Community Foundation
There are many ways to give through the Community Foundation. Here are some of the most common methods that philanthropists chose. Your financial, tax or estate planner can help you chose the method that is right for you.
Cash
Stocks
Bequests
IRAs and other retirement plans
Life Insurance
Charitable Remainder Trusts
Charitable Gift Annuities
Gifts of Property
Cash is the easiest way to contribute, whether by check, credit card or actual cash. Donors who make gifts of cash are eligible for a charitable deduction in the year the gift was made.
Publicly traded stocks owned for more than one year may be donated to the Community Foundation as a charitable gift. Donors are eligible for a tax deduction for the fair market value of the appreciated stock. By donating appreciated stock to the Community Foundation, you can avoid capital gains taxes that would otherwise occur at the sale of the stock.
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A bequest is the most common form of planned giving. By including a charitable contribution in your will, you are able to make a gift that is simple, and in many cases larger than you could make during their lifetime. The bequest can take the form of a specific item (such as a home) or a specific amount of money, or may serve as a "residual bequest," where the remainder of a donor's assets become a gift after all other specific bequests have been paid out. Gifts made to charity by bequest are deducted from the donor's federal estate tax.
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Individual Retirement Accounts & Other Retirement Plans
Donors can use assets held in an individual retirement account (IRA), 401(k), 403(b) or similar account to start a fund at the Community Foundation at the time of their death. Many donors choose to donate all or part of their retirement plan to the Community Foundation to set up a Donor Advised Fund, naming their children as the advisors. This arrangement allows children to participate in distributing a larger pool of charitable funds than would have been available if the money had been left to them outright. That's because these accounts, while very attractive from a tax standpoint during lifetime, are the most heavily taxed assets in an estate at death.
To make a gift using retirement assets, you need to fill out a form with the plan administrator designating a new beneficiary. There is no cost, and the gift can be changed at any time.
Donors may make a deferred gift of life insurance to the Community Foundation in several ways. For example, a donor may make a gift of a life insurance policy by irrevocably designating the Community Foundation as the owner and beneficiary of the policy. Alternately, a donor may designate the Community Foundation as a percentage beneficiary of a life insurance policy owned by the donor.
When the Community Foundation is named the owner and beneficiary of a policy, it will retain the original policy in its offices. For policies in which premiums are still being paid, donors have the option of either paying the premium directly or making a contribution to the Community Foundation in the amount of the premium at least ten days prior to the premium due date. Each method has different tax consequences and the donor should determine the best method for payment in consultation with his/her financial advisor. At the death of the donor, insurance proceeds, if $10,000 or greater, will be used to establish a permanent named fund. If the donor does not provide recommendations during his/her lifetime as to the eventual purpose of the fund, or if the face value of the policy is less than $10,000, it will be used for unrestricted purposes of the Community Foundation.
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Charitable Remainder Trusts allow you to transfer assets to a trust, take an immediate tax deduction and receive an income for your lifetime. The size of the deduction varies with the age of the income beneficiaries.
Charitable Remainder Trusts are used to guarantee a retirement income while making a significant charitable gift. They usually require a minimum of $100,000 in initial contribution, though many banks have higher minimums if they are serving as a trustee. The donor may serve as the trustee of the trust if they choose, and in some cases, Berks County Community Foundation will be willing to serve as a trustee. For most people, a bank trust department or other corporate trustee is the best choice.
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Charitable Gift Annuities allow a donor to make a substantial gift to charity while retaining the right to a life income. In the case of charitable gift annuities, that income is a fixed amount, based on tables published by the American Council on Gift Annuities, which include an analysis of donor life expectancy.
A donor may also elect to defer the receipt of the income for one or more years, which will increase the ultimate payout. This is known as a deferred gift annuity and is often used as a supplemental retirement plan for individuals who have already contributed the maximum amount to their qualified plan.
Unlike Charitable Remainder Trusts, the income from a Charitable Gift Annuity is guaranteed by the Community Foundation and backed by the Foundation's assets.
Berks County Community Foundation allows donors to establish a charitable gift annuity to benefit any qualifying local public benefit organization. The Community Foundation requires that gift annuity donors be at least 55 years old and allows a maximum contribution of $500,000.
Berks County Community Foundation Properties, Inc.
To help those who wish to give a gift of real estate or property, the Community Foundation has established a subsidiary organization, Berks County Community Foundation Properties, Inc.
When you make a gift of property through BCCF Properties, Inc., you get an immediate tax deduction and can use the proceeds from the sale of the property to:
- establish a charitable fund to support a cause you care about;
- supplement an existing charitable fund;
- help a public benefit agency directly by making a lump-sum gift to them.
Real Estate
Residential property, commercial or industrial sites, and undeveloped land are attractive assets for charitable giving. You can contribute a piece of real estate, or a partial interest in a piece of real estate through BCCF Properties, Inc.. Some donors chose to contribute property through BCCF Properties, Inc. while retaining the right to live there during their lifetime.
Donors are entitled to deduct the value of the asset, though the determination of that value may require independent assistance.
Other Property
Virtually anything of value can be donated to charity. Boats, cars, artwork, even horses have been used to establish philanthropic legacies. There are special rules that apply to the donation of personal property, and you should discuss your plans with the Community Foundation ahead of time.
To learn more about making a gift of property through BCCF Properties, Inc., call the Community Foundation at 610.685.2223 or email us at info@bccf.org.
Building Your Own Plan
The needs of each donor are different, and these are only a few of the many ways that a charitable plan may be established. For more information, including a free consultation about your own planning, please contact Berks County Community Foundation.
To determine the method, or mix of methods, that make the most sense for structuring a gift through Berks County Community Foundation, this information should be reviewed with a competent financial, tax or estate planner.
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© 2001, 2002 Berks County Community Foundation • info@bccf.org