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Strategies for Giving
Strategies
There are many ways to give; the key is to find the best strategy for
you. Issues to consider include:
- Your desired level of control over assets and decision-making
- Time commitment you want to make to your giving
- Desired scope and length of your giving
- Interest in involving family members
- Size of giving and tax benefits
The table below summarizes key points about major options for giving.
This information will not be all-inclusive because you have unique, specific
interests and circumstances that must be considered. Look to more detailed
information within each giving category in this section to give you a better
understanding of each option you are exploring. We encourage you to discuss
details with your legal and financial advisors.
Community Foundations
| Private/Family Foundations
| Public Foundations
Operating Foundations |
Supporting Organizations |
Giving Circles
Direct Gifts |
Planned Giving |
New Forms of Giving
Comparing Giving Strategies
|
Giving Strategies |
|
Factors |
Gifts to
Charities/ Public Foundations |
Giving
Circles |
Community
Foundations |
Supporting
Organizations |
Private/Family Foundations |
Operating
Foundations |
| Donor can control
assets |
No |
Limited1 |
No |
Limited |
Yes |
Yes |
| Donor can control
giving priorities |
Yes2 |
Limited1 |
Limited3 |
Limited |
Yes |
Yes |
| How Likely tobe
Perpetual |
Low4 |
Low |
High |
High |
High |
High |
| Donor or Family
Member May Sit on Governing Board |
No5 |
Yes |
No5 |
Yes |
Yes |
Yes |
| Requires Donor Time
and Effort, Plus Expense of Staff and Management |
No |
Yes6 |
No7 |
Yes |
Yes |
Yes |
| Minimum Payout
Required |
No |
Yes |
No |
No |
Yes |
Yes |
| Must Pay Tax on
Investment |
No |
No |
No |
No |
Yes (1-2%) |
Yes (1-2%) |
| Tax Deduction for
Gifts of Cash(% of adjusted gross income) |
50%8 |
50%8 |
50%8 |
50%8 |
30%8 |
50%8 |
| Tax Deduction for
Gifts of Securities or Real Property (% of adjusted gross income) |
30%8 |
30%8 |
30%8 |
30%8 |
20%8 |
30%8 |
- Legal structures of giving circles vary, resulting in
different levels of donor control. Pooling resources with others
also limits direct personal control.
- Charity and donor can agree on how contribution is
spent.
- A restricted gift can be confined to the stated purpose,
but the donor relinquishes control of the investments and its disposition.
A donor advised fund permits the donor to make recommendations subject
to the ultimate control of the community foundation.
- Except when you create an endowment.
- Any citizen may be elected or appointed to the board of
any public charity. The donor gift does not guarantee such an outcome
except in the case of supporting organizations.
- Giving Circles vary in requirements for involvement and
in management structure and cost.
- Community Foundations often assess a management or
administrative fee.
- Excess in any year's donations can be carried forward
for five years.
- Except for gifts of publicly traded securities, the
deductible value of lifetime gifts of closely held stock or real property
is limited to tax basis, which is generally cost.
Reviewed August, 1999 by LaVerne Woods of Davis Wright Tremaine,
Seattle and by Frank Minton and Bill Zook of Planned Giving Services,
Seattle.
With the various giving options outlined above, your contribution may
consist of almost any property, tangible or intangible. Frequent gifts
include cash, marketable securities (quotations usually must be available on
an established securities market), stock in a closely held corporation, life
insurance policies, income from trust funds, art work, and real property
(with values determined by independent appraisal).
A Look at Gifts of Appreciated Stock
Increasingly popular alternatives to cash are gifts of appreciated property,
such as securities. In many (if not most) situations, the full, fair market
value of gifts of appreciated property is deductible. Additionally, taxes on
capital gains are often avoided. Example: A donor owns stock currently
valued at $50,000 which she purchased years ago for $120. Because she is in a
28% tax bracket, the gift of securities produces a $50,000 charitable tax
deduction that saves her $14,000 in income tax. In addition, she avoids
capital-gains tax on the $49,880 of "paper" profit, which saves an
additional $13,966. The net cost of the $50,000 gift is only $22,034
($50,000 less $14,000 less $13,966). Source: The Collins Group, Seattle and
Portland.
See the chart below for more specific examples of giving stock acquired
through company stock plans.
|
Giving Stock Acquired Through Company Stock Plans* |
| Options |
Incentive Stock Options
(ISOs) |
Non-Qualified Stock Options
(NQs) |
Employee Stock Purchase Plan
(ESPP) |
| Can You Give It To a
Charity**? |
After exercise - see holding periods
below |
After exercise - see holding periods
below |
After acquisition of stock - see holding
periods below |
| Holding Period for Most
Favorable Tax Treatment (Before Giving Stock to a Charity) |
>2 years after grant AND
>1 year after exercise |
>1year after exercise |
>2 years after grant AND
>1 year after acquisition |
| Tax Treatment of
Exercise |
Subject to AMT, but no ordinary income
tax due |
Ordinary income tax due |
At acquisition - no tax |
| Tax Treatment of
Contribution |
Receive FMV income tax deduction; no
capital gains tax; subject to 30% AGI limit; but consider AMT effect |
Receive FMV income tax deduction; no
capital gains tax subject to 30% AGI limit |
Receive FMV income tax deduction***; no
capital gains tax; subject to 30% AGI limit |
| Makes Sense to Give? |
In certain circumstances |
In certain circumstances |
Yes, after holding period |
| Worth Consulting Your
Tax Advisor? |
YES |
YES |
YES |
 |
AGI is "Adjusted Gross Income"
AMT is "Alternative Minimum Tax"
FMV is "Fair Market Value"
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* |
Company plans may
differ in their requirements. Consult your company's Plan Administrator
to confirm requirements. |
| |
** |
Somewhat different
rules apply when giving stock to your own private foundation. Please
check with your financial advisor. |
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*** |
The original
discount may be treated as ordinary income, which would reduce the FMV
deduction by that amount. |
This chart was produced by The Oregon Community Foundation in
consultation with Bruce P. Frederick, CPA, of Gunderson and Frederick, P.C.,
and Christopher Zander of US Trust Co. for the Northwest Giving Project,
April 2000. The information on this chart is not intended to constitute
legal or financial advice. Rather, it is intended to stimulate helpful
questions and discussion between donors, their company Plan Administrator,
and professional advisors on this topic.
Endowed Giving
Many individuals and families are choosing to use assets, such as stock
and real estate, to endow their charitable giving so that it continues for a
period of time.
When properly designed, such a charitable giving program can achieve a
range of goals for you--the donor. Endowed charitable giving can:
- establish a legacy for others to continue. You can help to ensure a
tradition and a sense of value for caring in your children, friends, and
colleagues.
- provide for the long-term needs of the organizations and the people
you want to help. By making an endowed gift, the donor's influence
continues to make an impact for generations to come.
- provide for your needs now and the future needs of your family through
a planned gift, while supporting organizations you believe in.
- be an individual and corporate response to human needs; an opportunity
to give is an opportunity to be involved. It is caring and serving.
Explore each giving option in the Strategies for Giving section, such as
community foundations,
private foundations,
giving circles, etc (a full list is above), to
understand what makes each option different. In these sections you will find
resources for additional information.
We recommend that you act with the help of qualified legal and
financial counsel.
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