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Featured Article
Think Outside the Box with Gifts of Noncash Assets—Part Two These days more and more institutions are involved in capital campaigns at unprecedented levels. In this new generation of campaign, more often than not the major gifts come from nontraditional assets. As you read about the campaign, you may be contemplating how you can step up and make that campaign gift that will include you in the ever-growing roster of our major donors. We have explored giving techniques that permit a certain degree of control after you have made your gift, such as retaining income from your donated asset by means of a charitable trust, or making a gift of your home while continuing to live in it for life. These and other techniques allow you to make a much larger gift than you may have thought possible. And of course, your first step in planning such a gift is a review of your suitable assets. The gift-planning process is not done in a vacuum the way writing a check or picking up the phone to make a gift by credit card would be. Gifts of nontraditional assets take more time, since consultation with financial advisors, with tax and legal professionals, and with our development staff are involved. Issues such as how your asset is titled, how you acquired it, whether there are restrictions on transferring it—or even whether you should give the asset during your lifetime or at death—need to be addressed well in advance. In order for your gift of a nontraditional asset to provide optimal benefits for all concerned, a certain degree of planning with our staff and your advisors is critical. Perhaps you wish to consider a gift of your personal residence or farm but you need to recoup some of its value. Real estate provides the flexibility to accomplish this through the use of a strategy known as a bargain sale. For example, the Taylors own a vacation lake house that they rarely use now that their children are grown. They would like to make a substantial gift to support 's work, and they think the lake house would be an ideal asset to use to fund their gift. Their home is now worth about $250,000, and the Taylors would be happy to use it to make their gift if they could recover their original $100,000 investment. After some discussion, we enter into an agreement with them to purchase their house for $100,000. They are entitled to a charitable deduction of $150,000 as a result of this bargain sale. Also, the Taylors have to recognize and report capital gain of $60,000 attributable to the sale element of the bargain sale. This is arrived at by multiplying the sale price by the appreciation and dividing the product by the fair-market value of the property:
Of course, the capital gain the Taylors have to report is more than offset by their charitable deduction. Allow Us to Assist You If 2008 is the year you decide to think outside the box and make that major gift, now, not next December, is the time to begin your planning process. Our gift planning staff stands ready to work with you and your advisors to make your dream gift a reality. It will be our privilege to assist you. Please contact us for our assistance with your gift plans.
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