Starting and Managing a Nonprofit Organization: A Legal Guide

By Bruce R. Hopkins | Go to book overview

CHAPTER NINETEEN
Wonderful World
of Planned Giving

One of the great mysteries in the world of charity is why so few nonprofit organizations take advantage of the most remunerative fundraising technique there is— planned giving. Those that do venture into the realm of planned giving are inevitably successful if they have given the attempt even half a chance. The managers of nonprofit organizations, of course, talk to one another. Why then is planned giving not commonplace throughout the charitable community?

One reason is that over the years, planned giving has been seen as mysterious and complicated. Management, at many organizations, has grown fearful of it. The other reason is a consequence of the nonprofit mentality—the frequent tendency of the management of nonprofit organizations to think small and to see short sightedly. These two reasons are actually tightly interwoven. Most organizations think about planned giving from time to time but put off implementing a planned giving program to another day—a tomorrow that never comes. Perhaps this is why the old term— deferred giving—is more accurate!


APPRECIATED PROPERTY GIFTS—A REPRISE

One of the chief principles undergirding the advantages of charitable gifts of securities, real estate, and other property is that the deductible amount is generally equal to the full fair market value of the property at the time of the gift (see Chapter 11). The amount of appreciation in the property (the amount exceeding the donor’s basis), which would be taxed if sold, escapes income taxation. For this favorable result to occur, the property must constitute long-term capital gain property.

Consequently, the key to wise charitable giving is to give property that is longterm capital gain property and has substantially appreciated in value. The greater the appreciation, the greater the charitable deduction and other income tax savings. The appreciated property gift is, therefore, a core concept of planned giving.


PLANNED GIFTS—AN INTRODUCTION

There are two basic types of planned gifts. One type is a legacy: under a will, a gift comes out of a decedent’s estate (as a bequest or devise). The other type is a gift made during a donor’s lifetime, using a trust or other agreement.

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