Planned Giving
Vehicles and more…
Caroline J. Punches, CFRE
Director of Development
San Jose State University Library
408.924.2807 voice; 408.924.2800 fax
cpunches@sjsu.edu
What is Planned Giving?
“Planned giving is the integration of sound
personal, financial, and estate planning
concepts with the individual donor’s plan
for lifetime or testamentary giving.”
- AFP Glossary

Donor-centered fundraising
 Gifts to be received “later”
Four Classes of Vehicles

Give it outright
 Give it later (after donor is deceased)
 Give the asset now, keep the income
 Give the income now, keep the asset
Planned Giving Prospects

Age 55 or older
 Long-time member/supporter
 Few or no dependents
 Unusual generosity for OUR work
 Appreciated assets
Cash Gifts

Appropriate for: Everyone
 Tax Treatment: Fully deductible for
itemizers (up to 50% of adjusted gross
income). Excess may be carried forward for
five additional years.
 Potential Issues: Certain high-income
taxpayers may have this deduction phased
out.
Appreciated Assets

Appropriate for: People with high appreciated
securities, real estate or closely held stock.
 Tax Treatment: Full fair market value of asset is
deductible (up to 30% of adjusted gross income).
Excess can be carried forward five more years. No
capital gains tax paid on appreciation.
 Potential Issues: Gift MUST be made to charity
prior to sale of asset.
Other Non Cash Gifts

Appropriate for: People wishing to donate real and
personal property.
 Tax Treatment: Fully deductible up to appraised
value (form 8283 filed with return). Items valued
at over $5000 MUST have an independent
appraisal.
 Potential Issues: If asset is sold within two years
of receipt by institution, form 8282 must be filed.
Potential problem for donor if sold under
appraised value.
Bequests

Appropriate for: Anyone with a will or trust
 Tax Treatment: Gifts identified are excluded
from federal estate and state inheritance
taxes.
 Potential Issues: Recipients MUST be
qualified charities and gifts fully
discernable.
Charitable Gift Annuities

Appropriate for: Older individuals wishing
“higher rate” of return on investments.
 Tax Treatment: Current charitable deduction
received for portion of gift based on life
expectancy of donor. No capital gain on transfer of
assets.
 Potential Issues: Gifted asset value must be
segregated. Tax free income ends when donor
attains life expectancy.
Pooled Income Funds
Appropriate for: Individuals wanting “higher rate”
of return on investments but do not have the assets
required for a CGA.
 Tax Treatment: Current income tax deduction
received for portion of gift based on life
expectancy of donor. No capital gain on transfer of
assets.
 Potential Issues: Limitations on investment
opportunities.

Life Insurance

Appropriate for: People with existing policies
which are no longer required to meet planning
needs OR people wishing to take out a new policy
which will result in a significant gift at death.
 Tax Treatment: Current deductions provided for
“cash surrender value” of existing policies or
premium payments for new policies.
 Potential Issues: Make sure state recognizes
“charity” as “insurable interest.”
Charitable Remainder Trusts

Appropriate for: Individuals with large taxable
estates wishing to preserve an income stream to
someone for life or term of years with remainder
of trust passing to organization.
 Tax Treatment: Charitable deduction based on
term of the life interest AND percentage passing to
income beneficiaries.
 Potential Issues: Trusts are considered separate
taxpayers and must be managed and invested
individually.
Charitable Lead Trusts

Appropriate for: Individuals who want their estate
to go to heirs but want to support their charitable
organization with annual income.
 Tax Treatment: Charitable deduction based on
number of years payments are made to
organization and whether trust reverts back to
donor.
 Potential Issues: Trusts are considered separate
taxpayers and must be managed and invested
individually.
Tax Deferred
or Retirement Assets
Appropriate for: Individuals with IRA’s, Keoghs,
pension plans, annuities, etc.
 Tax Treatment: Gift is excluded from estate,
inheritance and deferred income tax liabilities.
 Potential Issues: Favorable tax treatment is
available ONLY in an estate. Many people are
unaware that the combination of taxes on tax
deferred assets may easily exceed 70%

Donor Motivations
for Making Planned Gifts

To help provide future funding for
organization
 Ability to restrict funds
 Recognition for a loved one
When Donors Consider
Making Planned Gifts








Personal timing/circumstances determine need
Need to create a valid will
Need to review and revise a will
Death of a spouse
Choosing executor, trustee and guardian
Need for estate liquidity
Health
Value of old policies no longer needed
What to do
when the Prospect says…





I need all the income my assets produce to live on
I can’t give away capital assets; I intent to pass
them on to my children and grandchildren
I must put my kids through college!
Your institution is not my only charity
I need all my income. Most of my assets are nonincome producing real estate so I am cash poor.
Or when s/he says…

I hesitate to part with any assets; I worry about a
long term illness and having enough to take care
of myself.
 Our oriental rug collection is our pride and joy, but
our children don’t want the hassle of caring for
them and insuring them.
 This year’s been very bad for me; my tax situation
is awful and I am going to owe a huge capital
gains tax. Maybe some other year.