Charitable Giving
Maximizing the impact of your contributions
Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York,
products are issued by Securian Life Insurance Company, a New York authorized insurer. Both companies are
headquartered in Saint Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible
for the financial obligations under the policies or contracts it issues.
Agenda
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Deciding how to give
Tax treatment of charitable gifts
Life insurance: an important asset for charities
Trusts and advanced giving strategies
Strategies for increasing involvement
Center on Philanthropy at Indiana University, “ Bank of
America 2012 Study of High Net Worth Philanthropy.”
8 The
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Deciding how to give
Deciding how to give
Benefits of lifetime gifts
• Typically qualify for an immediate income tax deduction
• Give the donor the satisfaction of supporting the charity
while alive
Deciding how to give
Benefits of testamentary bequests
• Unlimited estate tax deduction
• Donor has access to property or assets during their lifetime
• Potential income tax deduction, depending on type of
donation
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Tax treatment of charitable gifts
Tax treatment of charitable gifts
Income tax deduction
• Deductions for gifts to qualifying charities
• Rules do not allow deductions for
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Services
Gifts to specific individuals
Charitable loans
Quid pro quo
• Deduction limited to 50% of donor’s Adjusted Gross
Income
– Value in excess is deducted over subsequent years
Tax treatment of charitable gifts
Gift
Adjusted Gross
Income (AGI)
deduction limit
Value of asset
Cash
50%
Fair market value
Long-term securities and
real estate holdings
30%
50% election4 available
Fair market value
Short-term securities and 50%
real estate holdings
Cost basis
Ordinary income
property
50%
Cost basis
Personal property
Related – 30%
Unrelated – 50%5
Fair market value
Realized gain
Donors of these gifts may take an election permitting the donor to deduct all “30%” gifts at cost basis, and then take the reduced gifts
as a charitable deduction subject to the “50%” limitation.
5 When tangible property is donated to a charity, it is treated differently when it is unrelated. For example, artworks donated to an art
institute are “related.” If the art was donated to a food bank, it would be “unrelated.”
4
Tax treatment of charitable gifts
• Gift tax charitable deduction
– Unlimited gift tax charitable deduction for lifetime gifts
– May not impost conditions, restrictions or contingencies
• Estate tax charitable deduction
– Estate may take charitable deduction for testamentary
transfer
– Limited to the total amount included in the decedent’s estate
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Life insurance: An important asset for
charities
Life insurance: An important asset for
charities
Benefits
• Large gift with small
premium
• No trusts or trust admin
• Minimizes the risk that gift
will be contested
Considerations
• Cost of life insurance
• Donor may change mind
• Insured may not qualify for
insurance
Life insurance products contain fees, such as mortality and expense charges, and may contain
restrictions, such as surrender periods. Policyholders could lose money in this product.
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Trusts and advanced giving strategies
Trusts and advanced giving strategies
Charitable remainder trusts (CRT)
• The donor avoids capital gains taxes
• The donor receives an immediate charitable income tax
deduction
• The donor potentially receives an estate tax deduction.
• Trust assets qualify for an offsetting estate tax deduction.
• Trustees can invest the trust asset in a tax-free
environment.
Trusts and advanced giving strategies
• Charitable lead trusts
• Pooled income fund
• Charitable gift annuity
Strategies for increasing involvement
• Donor advised funds
• Private foundations
• Supporting organizations
Comparing donor-advised funds, private
foundations and supporting organizations
Features
Donor-advised funds
Private foundations
Supporting organizations
Structure
Written agreement between
charity and donor
Corporation or trust
Corporation or trust
Cost to establish
$0-500, depending on
charity
Significant legal and
accounting fees
Significant legal and
accounting fees
Cost to run
Flat fee
Annual administrative and
operating expenses
Annual administrative and
operating expenses
Minimum donation
Approximately $10,000,
depending on charity
Approximately $1-2 million
Approximately $1-2 million
Donor’s deduction limits
Cash: 50%
Appreciated assets: 30%
Cash: 30%
Appreciated assets: 20%
Cash: 50%
Appreciated assets: 30%
Five-year carryover?
Yes
Yes
Yes
When to use
Donor would like some
control over how the
charitable donation is spent
Wealthy donors not
concerned about overhead
costs who wish to create a
permanent endowment
aligned with their own
charitable goals
Wealthy donors who are
willing to give up some
degree of control to avoid
the restrictions imposed on
a private foundation
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Partnering with you to give back to your
community
This information is a general discussion of the relevant federal tax
laws. It is not intended for, nor can it be used by any taxpayer for
the
purpose of avoiding federal tax penalties. This information is
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provided to support the promotion or marketing of ideas that may
benefit a taxpayer.
Taxpayers should seek the advice of their own tax and legal advisors
regarding any tax and legal issues applicable to their specific circumstances.
Securian Financial Group, Inc.
www.securian.com
Insurance products offered by Minnesota Life Insurance Company, 400 Robert Street North, St.
Paul, MN 55101-2098 • 1-800-820-4205
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