GIFTS-IN-KIND...
by Ken McGowan, CFP
Explore The
Possibilities
The most common form of a
Planned Gift received by charities is bequests through wills. This type of
deferred gift is critically important for funding the mission of the
recipient organization. What most people overlook is exploring the
possibility of a current planned gift and the related benefits.
Current gifts can take
various forms, provide immediate tax benefits and satisfy your
philanthropic goals. Current gifts go beyond the usual gift of cash.
Gifts-in-kind are often welcomed by various organizations or charities.
Outlined below are some types of gifts-in-kind for you to explore.
Gift of Life
Insurance: This
can take several forms and generally involves whole life policies. The
life insured assigns the policy to the charity and makes the charity the
beneficiary. The policy remains on the life of the original life insured.
A donation receipt is issued on the cash surrender value of the policy and
future premium payments can also be receipted for tax purposes.
Gifts of Listed
Securities: When listed securities (primarily stocks and mutual funds)
are transferred in kind to the charity, a donation receipt will be issued
based on the sale of the security by the charity. Additional tax benefits
accrue to the donor as capital gains are given preferential treatment. The
tax credit offsets the tax liability incurred be the capital gains.
Gifts of
Property: Real estate can be gifted to the charity and a tax receipt
issued. Capital gains from the sale of the property and the possibility of
recaptured capital cost allowance must also be considered.
Gift of Private
Residence: A
residence can also be donated to the charity and a donation receipt
issued. The donation receipt valve is calculated based on a number of
factors including the fair market value of the residence, current interest
rates and your life expectancy. The charity becomes the registered owner
of your residence however, arrangements can be made so you have a life
interest in the residence and continue living in the residence.
This is just a quick
overview of a few samples of different types of gifts-in-kind. Each gift
needs to be evaluated as to appropriateness for all parties, the mechanics
of making the gift and the financial implications for the donor.
Independent professionals, like accountants and lawyers, might also come
into play in arranging these types of gifts.
When a gift-in- kind is
proposed, an in depth analysis of the gift takes place by the charity to
ensure that the gift is suitable and that the donor is aware of the
benefits and consequences, of that gift. While this can be extremely
rewarding for all parties involved, full disclosure and openness is
maintained to ensure the integrity of the gift.
Please take some time to
consider a gift- in- kind to charities and how this might meet your
philanthropic and estate planning goals.
Ken McGowan,
BA, CFP
Estate and Financial
Planning
Community of Christ
1-877-526-7526
