Planned Giving

Leave a Cooperative Legacy: Planned Giving to CDF

Direct giving

This is done by check or donation of appreciated stock or goods. It allows you to deduct the fair market value of your gift. Instead of selling an asset and paying capital gains tax on the profit, you can deduct the entire selling price. If your donations exceed 20% of your adjusted gross income, your deduction for that year may be limited. You could, however, carry over the excess to the next year.

The advantages are that the organization you choose will benefit right away and so will you, as you will get an immediate deduction and possibly avoid capital gains tax if you donate appreciated assets. The drawback is that this is a one-time thing. You can deduct only the amount of the gift, and it is up to the recipient to make that gift grow.

Bequest

The easiest and lowest-cost way to make a deferred gift is to include the recipient organization in your will or revocable trust. You can give almost any kind of asset to an organization through a bequest, including cash, securities, and annuities. You can ask your attorney about bequest options. A bequest is deductible for federal estate tax purposes, and there is no limit on the amount of the estate tax charitable deduction your estate can take. In addition, bequests generally are not subject to state inheritance or estate taxes. A bequest can be made by creating a new will, adding a codicil to your existing will, or including the recipient organization in your revocable trust. The following examples can be tailored to your interests. Be sure to consult your attorney for assistance in making a bequest.

Unrestricted bequest: “I give ( ____ dollars) (a specific asset) or ( ____ percent of the rest, residue, and remainder of my estate) to the Cooperative Development Foundation, located in Washington, DC, for its general purposes.”

Bequest for a specific purpose: “I give ( ____ dollars) (a specific asset) or ( ____ percent of the rest, residue, and remainder of my estate) to the Cooperative Development Foundation, located in Washington, DC, to be used for the following purpose: (purpose). If, in the future, it is the opinion of the Board of Directors of CDF that all or part of the income of this fund cannot be usefully applied to such purpose, it may be used for any related purpose which in the opinion of the Board of Directors will most nearly accomplish my wishes.”

Charitable trust

This is an independent vehicle for making a donation that will also generate income for you. These trusts are usually associated with estate planning and they allow you to shelter a large chunk of assets so long as a portion goes to charity. There are two basic kinds: remainder and lead.

With a charitable remainder trust, you donate stocks, real estate, or other assets to a charity by way of the trust. The trust provides for annual payments based on 5% to 50% percent of the trust’s assets as valued each year. Not only can you take a deduction in the year of the gift, but you will also get to determine the amount of your annual income for the length of your (or another beneficiary’s) lifetime or a maximum of 20 years. These trusts must be structured so that when the owner dies or when the trust expires, at least 10% of the trust’s value at the time you made your contribution goes to charity.

The charitable lead trust is basically the reverse of a charitable remainder trust. With this trust, the charity collects a fixed-income stream for a set period. When that period expires, you or our heirs get the money remaining in the trust. If the trust doesn’t generate enough income, the trustee can invade the principal to pay the charity the set amount. Some of these trusts are structured so that you won’t be taxed on the income of the trust, but you can’t take a deduction either.

The advantages of these trusts are that they leave your heirs well off while still donating to charity. In addition, they can save you or your heirs more than just estate taxes. You’ll save a lot in capital gains tax if you donate appreciated assets to a charitable remainder trust, and since trusts generally don’t have to pay income tax, they are a great way to pass on a tax-deferred account, such as an IRA. The drawback is that these trusts are complicated. Any income you or your heirs receive from the trust will probably be subject to tax. And the $1500 or so in start-up legal fees and the $1000 or so in annual fees make them costly to run.

Charitable Gift Annuity

This is an agreement between the donor and the recipient organization whereby individuals can receive payments for life. The recipient organization is guided by gift annuity rates recommended by the American Council on Gift Annuities in determining the maximum annuity rates.

There is also a Deferred Charitable Gift Annuity agreement in which payments begin at a specified time in the future. By deferring the beginning of the payments, the amount of the charitable deduction is increased as well as the rate of payment.

Gifts of Life Insurance Benefits

Giving life insurance benefits to CDF is one way to make a significant contribution to your community and establish your legacy of giving. You can make a gift when life insurance is no longer needed for personal financial wealth replacement. You may receive a number of tax benefits, including reduced income taxes and estate taxes. CDF world be the owner and irrevocable beneficiary of your life insurance policy — you can either give a paid-up policy or continue to pay premiums. You receive a tax deduction for the approximate cost or fair market value, whichever is less. If the policy is paid up, you may receive an immediate tax deduction. If it is not, you can claim continuing tax deductions on premium payments you make directly or through gifts to CDF. Upon your passing, CDF can set up a special fund in your name or in the name of your choosing, or we can add your gift to one of our existing funds.