Maximize Your Charitable Giving

By: Laurie Valentine- COO & Trust Counsel 

Maximize your giving impact by:

* Determining if the causes you want to support are qualified charities---the IRS Website (www.irs.gov/charities/index.html) can tell you if they are “qualified” 501(c)(3) organizations (NOTE:  churches are qualified charitable organizations but don’t have to register with the IRS).

* Determining if the charity will be a good steward of your gift---talk to the organization’s leadership; check out website databases that report on the activities and finances of charities such as www.give.org (Better Business Bureau’s database on charities that solicit nationally with links to local BBB sites); www.guidestar.org; and www.charitynavigator.org.

Maximize your tax savings by:

* Giving appreciated assets (stocks, bonds, mutual fund shares, or real estate) rather than cash---the after-tax cost of your charitable gift will be lower than the same size cash gift when you consider both the income tax savings and the capital gains savings you may realize from using the appreciated asset to make your gift.

* Selling depreciated long-term capital gain assets and giving the cash sale proceeds---you’ll get a charitable income tax deduction if you itemize and a deduction for the capital loss.

* Establishing a Donor Advised Fund (DAF).  DAF’s allow you to make your gift in a year when the deduction can save taxes, but defer the decision about what charities will benefit from your gift until later years.

*Maximize your income by:

* Setting up a “life income” gift such as a charitable gift annuity or charitable remainder trust.  Life income gifts provide an opportunity to set up an irrevocable future gift for charity with the potential to increase current cash flow to you and/or others for life or a term of years.  Not only may your cash flow increase, you’ll have tax savings from the deduction of the value of the charity’s interest in the year you set up the life income gift, if you itemize deductions.

For more information, please call us at (502) 489-3533 or toll free in KY at 1-(866) 489-3533.

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.

Charitable Gift Annuities

By: Laurie Valentine, COO & Trust Counsel
Would you like to provide support to your church or another favorite Baptist cause while benefiting from lifetime payments, management of assets and tax savings? If your answer is yes, a charitable gift annuity may be just what you are looking for.

A charitable gift annuity is a contract between you and the Kentucky Baptist Foundation under which you agree to make a gift of cash or appreciated stocks, bonds or mutual fund shares and, in exchange for your gift, the Kentucky Baptist Foundation agrees to pay you a fixed amount each year for your lifetime. The lifetime payments to you are backed by the general assets of the cause(s) that will ultimately benefit from your gift.

The annual payment to you depends upon the value of your gift and your age at the time you make the gift. The older you are the higher the payment rate. The payment amount is not dependent on what your gift earns.

Establishing a charitable gift annuity during your lifetime allows you to provide for your financial needs and those of your family, while at the same time assuring vital future support to the causes you designate to ultimately benefit from your gift.

Tax savings may be available from the charitable income tax deduction that is allowable and also from the fact that part of each payment you receive is tax-free. These benefits can make the cost of establishing a charitable gift annuity very reasonable.

Using appreciated stocks, bonds or mutual fund shares to establish a charitable gift annuity can also provide capital gains tax savings.

For more information, please call us at (502) 489-3533 or toll free in KY at 1-(866) 489-3533

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.

E-Devotional- Week 29

 Creative Giving Ideas- Week 3

Appreciated Asset Gifts 

The churches, associations, institutions and agencies of the Kentucky Baptist Convention and Southern Baptist Convention are making a difference for the Kingdom of God in our state, nation and around the world.  They are worthy of significant and sacrificial support that will enhance and undergird their missions and ministries.

Perhaps you would like to make gifts above what you give out of income as tithes and offerings to provide on-going support to one or more of these causes, but you may be concerned that such gifts could affect your financial security and that of your family.  This lesson focuses on using assets that have appreciated in value for making “above and beyond” gifts to support the ministries that are important to you.

Scripture References:  Luke 16:10-12; 1 Timothy 6:9.

Please read these passages in your Bible now.

What are the Benefits of Using Appreciated Assets to Make Charitable Gifts?

Using appreciated assets such as stocks, bonds, mutual fund shares, or real estate to make gifts to charity during your lifetime provides multiple advantages---a charitable income tax deduction based on the current market value of the asset (assuming you have owned it for at least a year) and avoidance of all or a portion of the capital gains tax that would be incurred if you sold the asset.

How Does Giving An Appreciated Asset Compare to Using Cash for My Gift?

Using an appreciated asset to make your gift to charity can result in a lower after-tax cost to make your gift than if you use the same amount of cash to make your gift.  In essence, the amount coming out of your pocket may be less if you use an appreciated asset.

Example:  Martha wants to make a gift of $10,000 to her church’s building program.  She is trying to decide if she should use some stock that she purchased several years ago for $5,000, which has a current market value of $10,000 or her $10,000 certificate of deposit, which matures soon.  The value of her charitable gift, whether she uses the stock or the cash, is $10,000 that will save $1,500 in income taxes (IF she is in the 15% income tax bracket).  If Martha uses the stock to make her gift, she also saves $750 in capital gains taxes that she would incur if she sells the stock (15% of the $5,000 of capital gains that would be incurred if she sold the sold).  Therefore, the after-tax (out of pocket) cost of making the stock gift is only $7,750 vs. $8,500 if she uses the cash.  See the example below.

                                    Gift of Stock               vs.                   Gift of Cash

Value of Gift               $10,000                                               $10,000

Income Tax Savings    ($1,500)                                             ($1,500)

Capital Gains Savings ($  750)                                                   ---

After-Tax Cost           $  7,750                                               $  8,500

Prayer Focus: Take time now to ask God if you should consider making an appreciated asset gift to your church or other Baptist cause.

Next Week:  Life Income Gifts

For more information, please call us at (502) 489-3533 or toll free in KY at 1-(866) 489-3533

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.