Using planned giving to benefit both the donor as well as charitable organizations

Stephen Trefts, President

As a former planned giving officer for a college as well as a chairman of a private school foundation, I have witnessed firsthand the effectiveness of planned giving programs.  I have often shared my experiences with charitable organizations across the Northwest. Although the charitable causes have been diverse, they often have a common goal—to provide income to support their cause in perpetuity.  Planned giving is a powerful tool which can help them achieve those goals.

So what, exactly, is planned giving? 

A planned charitable gift is one which the charity will receive assets at a future date through a bequest, charitable remainder trust, pooled income fund or charitable gift annuity as opposed to an outright or “current” gift.  Planned or “deferred” gifts are often utilized for large or complex estates or assets and are frequently used to build endowment because of their future orientation.  They also tend to be much larger than current cash gifts. 

What are some examples of planned giving? 

The simplest “planned gift” is a bequest.  As an example, a donor bequeathed a large and profitable commercial building to a private school ten years ago.  The gift significantly moved the school toward its $40 million endowment goal.  Of course a bequest is always revocable during the donor’s lifetime, but with appropriate donor relationships, the gift will very likely come to fruition.

Charitable trusts, gift annuities and pooled income funds are more complex but they offer the donor appealing tax benefits and an income stream during the donor’s lifetime.   Further, they are irrevocable because ownership of the asset actually passes from the donor to a Trustee or an Administrator.

For example, a widow with a modest income wanted to support the college, but had very limited resources.  However, she had unused family property valued over $300,000 with a $10,000 basis.  Selling the land would have triggered prohibitive capital gain tax liability.  Instead, she placed the land into a charitable trust to benefit the college.  The trustee sold the land without realizing capital gain, and invested the proceeds from the sale.  The donor received an immediate charitable deduction and income from the trust for her lifetime. After her lifetime, the college’s endowment fund received the balance of the trust which had grown significantly over the years. 

The widow desired to make a gift to the college, but her resources were limited.  Instead of looking to her for an immediate gift, which would have been modest, the college staff was willing to help her make a significant planned gift that would benefit her immediately and the college after her lifetime. It was a win-win situation.

As professional trustees, we administer charitable trusts to benefit many charitable organizations.

Just this past year, we were pleased to distribute sizeable gifts to two schools and a church.  For me, this is one of the most satisfying parts of my job, as I see the generosity of our clients translate into real service to society.

Print Date:  Spring 2008