Planned giving tips for the business community

For many local business leaders, investing in institutions such as hospitals, universities and performing arts centers is a priority for promoting quality of life. Many of these institutions rely on planned giving to sustain their operations.

A flexible form of donation that involves some form of financial planning, planned giving can include gifts in the form of stocks and real estate, as well as donations left in a will, estate plan or life insurance policy.

These planned gifts not only help fund nonprofits’ operations but also often benefit the donors’ financial interests.

Here are some tips to help plan gifts:

Planned gifts that make you income

Some forms of planned giving can provide revenue to a deserving nonprofit while making income for the donor. This can be helpful for retirement and estate planning.

A few of these options include:

• A charitable gift annuity. By making a cash or securities donation through a contract, the donor receives fixed payments for life. The charity uses the interest and part of the principal to make these payments.

• A charitable remainder trust. This establishes the donor or another individual to receive an income stream for a fixed period, with the balance passed on to the recipient organization.

• A charitable lead trust. This pays income to a recipient organization for a set number of years, with the balance going to the donor’s heirs.

Defer gifts after your lifetime

Some professionals want to make a community impact but may not have enough assets or resources to make charitable gifts immediately.

Various options, such as designating donations in a will or trust, or listing a nonprofit as a beneficiary for a life insurance policy, allow individuals to pledge a gift for a future date. This way, they can name an organization as the beneficiary of a gift upon their death, or at the termination of a trust. Some donors consider this an opportunity to leave a legacy.

Tax breaks

It is now possible every year for people age 70 1/2 or older to make tax-free, charitable gifts up to $100,000 directly from their Individual Retirement Accounts to eligible charities. This allowance, once dependent on an annual extension by the federal government, was recently made permanent. The benefit for donors is that they can reduce the gift amount from their gross yearly income, earning a tax deduction.

Learn more

Planned giving can be tailored to age and financial needs. The Smith Center for the Performing Arts offers a Financial Advisors Network to provide guidance at no cost.

Tim Hanlon is vice president of development for the Smith Center for the Performing Arts.