Donations and Endowments


Planned Giving

Summary Overview

Planned giving is a creative way of supporting non-profits and charitable organizations that enables philanthropic donors to make larger gifts than they could make from their annual disposable income


Three Types of Planned Gifts

  1. A substitute for outright cash gifts, donors can use appreciated assets (stocks, real estate, artwork, personal property, life insurance and retirement plan.)
  2. Gifts that provide a lifelong income to the donor in exchange for making the gift.
  3. Gifts payable upon the donor’s death using estate and tax planning techniques.

Tax Benefits of Planned Gifts

  • By contributing appreciated property, like securities or real estate, a donor is eligible to receive a charitable deduction for the full market value of the donated asset, and would pay no capital gains tax.
  • By establishing a life-income gift a donor would receive a tax deduction for the full fair market value of the assets contributed, minus the present value of the income interest retained; if the donor funded the gift with appreciated property they would pay no upfront capital gains tax.
  • A bequest or a beneficiary designation in a life insurance policy or retirement account, payable to a charity upon the donor’s death, does not generate a lifetime income tax deduction for the donor, nut is exempt from estate tax.

Planned Giving Vehicles

Bequest Intention

  • Donors include a provision in their will directing that a gift be paid to a non-profit organization upon their death or the death of one of their survivors.
  • Donors can give an organization either a specific amount of money or item or property (“specific” bequest), or a percentage of the balance remaining in their estate after taxes, expenses, and specific bequests have been paid (“residual” bequest).
  • Donors can instruct a non-profit to use their bequest for a particular program or activity at the organization, or allow them to use it at their discretion (“restricted” and “unrestricted” bequests).

Life Insurance

The death benefit of a life insurance policy can be paid to a non-profit organization as a charitable gift.

  • Donor can contribute a fully paid-up policy or transfer ownership of a paid-up life insurance policy to a non-profit.
  • Donor can claim a charitable deduction for the value of the donated policy, and the organization can “cash in” the policy in advance of the donor’s death.
  • Donor receives a gift credit and an immediate income tax deduction for the cash surrender value of the policy.
  • Donor can (revocably) name an organization as the beneficiary of a life insurance policy that they continue to own and maintain.
  • Donor can name the organization the owner and beneficiary of a new life insurance policy, and make ongoing gifts that offset the premiums the non-profit will pay to maintain the policy. There is no charitable deduction available for taking out a new life insurance policy, even if the donor makes the non-profit the irrevocable owner.

Retirement Plans

  • Donors can name a non-profit organization the successor beneficiary of all or a portion of their IRA, 401(k), or other qualified retirement accounts. The designation is revocable and does not generate a charitable income tax deduction.
  • Distributions from retirement accounts to surviving family members can be subject to both income and estate tax. Directing the balance of a retirement plan to charity removes the most taxed asset from the donor’s estate, freeing up other, more favorably taxed assets to give to family and heirs.
  • Donors have the reassurance that they can continue to take withdrawals from the plan during their lifetime, as well as flexibility to change the designation of the charitable beneficiary if their or their family’s circumstances change.