Endowments

Section Highlights

Outright Gifts

Outright Gifts or "current gifts"generate the most immediate return from your contributions to DRAA. They provide immediate assistance to DRAA, while planned or deferred gifts impart benefit at a future date. Outright gifts qualify for the greatest tax benefit and savings, which significantly reduce the actual cost of making a gift. There are many types of outright gifts:

Gifts of Cash or Checks
Gifts of Real Estate
Gifts of Securities
Gifts of Retirement Plan Assets
Gifts of Life Insurance

Gifts of Cash or Checks
This is the easiest way in which to give to DRAA. You do need to remember, however, that you can deduct a cash gift for income tax purposes only in the year in which you contribute it. Your cash gifts are deductible up to 50 percent of your adjusted gross income for the taxable year, but any excess is deductible over the next five years.

If you itemize deductions on your tax returns, in most cases the first tangible benefit of making a gift of cash to DRAA is an income tax charitable deduction for the full fair market value of the gift. The resulting reduction in income taxes payable lowers the net cost of the gift. If you are subject to state and/or local income taxes as well as federal, the combined marginal rate (after the federal deduction for those income taxes paid) should be taken into consideration in determining the gift's net cost.

If you don't usually itemize deductions, you may want to consider it for any tax year in which you make a sizable charitable donation. One technique used by people who have few itemized deductions is to alternate between years in which they take the standard deduction and make few charitable gifts, and the years in which they give double their desired annual philanthropic support and shift to itemizing.

The annual limitation on the use of charitable deductions claimed for gifts to public charitable organizations for any specific year is 50 percent of your adjusted gross income (AGI) for cash gifts. Any unused deductible amounts can be carried over and used for as many as five additional years, if necessary.

If you predict that your estate will be subject to estate tax at your death, keep in mind that you receive a federal gift tax charitable deduction for the value of gifts of cash made during your lifetime. Since the value also is removed from your future estate, it completely avoids the unified federal estate and gift tax. This savings reduces the net cost of your charitable gifts.

A cash gift by check is one of the most common methods for making an outright charitable contribution. For cash gifts of $250 and more, donors must have written confirmation from the charitable donee, as canceled checks are no longer sufficient proof of a deductible gift.
For additional information, please call DRAA at (925) 932-1731 or send e-mail to info@draa.org.

Gifts of Real Estate
If you own property that is fully paid off and has appreciated in value, an outright gift may be the simplest solution. You can deduct the fair market value of your gift, avoid all capital gains taxes and remove that asset from your taxable estate. You can transfer the deed of your home or farm to DRAA now and keep the right to use the property for your lifetime and that of your spouse.

Your property opens the door to a unique giving opportunity: donate the property to DRAA, either now or whenever you no longer need it. You can give the property outright, place it in trust, retain the use of it for life or give it by will. All of these methods will enable you to enjoy personal financial benefits while supporting our work in a meaningful way.

If you've owned your home or other real estate for a long time, no doubt it has increased in value significantly. If you sell the property the sale is subject to capital gains tax on the property's appreciation. If the property has been your main home for at least two of the past five years, you can exclude up to $250,000 of gain ($500,000 for married couples). However, this opportunity to avoid capital gains tax doesn't apply if the property is a vacation home, land or any real estate other than your primary residence.

A charitable gift of real estate is advantageous for many reasons.

Either an outright gift or a remainder interest results in valuable income and estate tax deductions, and tax on the capital gain can be avoided.
A gift in your will assures that the value of the property will qualify for a charitable deduction for estate tax purposes.
Giving DRAA outright use of the property now will free you from the responsibilities and costs of looking after it.

You create a tangible and enduring testimonial of your interest in DRAA’s goals when you give your home or other real property. It's one of the most fitting contributions you can make. Your personal satisfaction is complemented by significant tax benefits.

For additional information, please call DRAA at (925) 932-1731 or send e-mail to info@draa.org.

Gifts of Securities
The best stocks to donate are those that have increased greatly in value, particularly those producing a low yield. Even if it is stock you wish to keep in your portfolio, by giving the stock to DRAA and using cash to buy the same stock through your broker, you will have received the same income tax deduction but will have a new, higher basis in the stock.

A stock portfolio is often among the most valuable assets you own, and one that carries substantial capital gain—appreciation in value. The downside to assets that have increased in value over the years is that the federal government is prepared to levy taxes of up to 28 percent on your capital gain. With careful planning, you can reduce or even avoid federal capital gains tax.

As stock prices increase, so do the taxes you owe on the capital gain, which are generally charged at a rate of 20 percent (10 percent if you are in the 10 percent tax bracket). But when you donate publicly traded stocks held long term (owned for more than one year) to a qualified charitable organization such as the DRAA, you avoid all capital gains taxes. Plus, you may take the full fair market value of the stock gift as a charitable deduction on your income taxes. The maximum deduction you may take within a given tax year is 30 percent of your adjusted gross income. If you are unable to take the entire deduction in one year, you may carry the excess deduction forward for five additional years.

Even if you own stock you wish to keep in your portfolio, giving DRAA the stock and using cash to buy the same stock through your broker provides the same income tax deduction with a new, higher basis in the stock.

If you have stock losses, sell the stock yourself to realize the loss and take the deduction for tax purposes. Then generate a charitable contribution deduction by donating the cash proceeds of the sale to DRAA.

Income tax charitable contribution deductions have become increasingly significant in reducing taxable income, particularly since tax reform has eliminated many other tax deductions.

When appreciated property held long term (owned more than one year) is used for a charitable gift and the property is otherwise to be sold by the donor for market or other reasons, two tax savings result. 1) The donor is entitled to a charitable deduction for the full fair market value rather than the original cost, and 2) the donor avoids the capital gains tax. A third, smaller savings results from avoidance of any commission cost, which is incurred by charitable trust.

Whenever income tax deductions for gifts to publicly supported charitable organizations are claimed for gifts of long-term capital gain property, the total of such deductions that can be used in a particular year is limited to 30 percent of the donor's adjusted gross income, rather than the 50 percent annual limitation for cash gifts. For most donors, the total deduction is typically all usable, since it can be carried forward for five years.

For additional information, please call DRAA at (925) 932-1731 or send e-mail to info@draa.org.

Gifts of Retirement Plan Assets
Nearly half your retirement plan assets can be eaten away by taxes at your death. It is therefore important to learn how to preserve more of your estate for the people and organizations that matter most in your life.

The accumulation of assets in your retirement plan is the basis for a financially secure future. To preserve your retirement assets after your lifetime, consider the benefits of using them in a totally different way.

Retirement accounts are often exposed to income taxes and estate taxes, at a combined marginal rate that could rise to 75 percent or even higher on large, taxable estates. Yet many of these taxes can be avoided or reduced through a carefully planned charitable gift.

Other considerations come into play when deciding on using retirement plan assets for charitable giving. Your account can pass directly to a charitable organization as your primary beneficiary, or it can be transferred to a deferred giving arrangement that will pay an income for life to a family member, after which the remaining assets pass to the organization. You might even consider a deferred gift that is designed to pay a life income to yourself.

The simplest way to leave the balance of a retirement account to DRAA after your lifetime is to list DRAA as the beneficiary on the beneficiary form provided by your plan administrator. Never make a beneficiary change, however, before discussing your desires with your professional advisor. For an IRA or Keogh plan you administer personally, notify the custodian in writing and keep a copy with your valuable papers.

If you are married, your surviving spouse is entitled by law to receive the entire amount in these qualified plans: money purchase pension, profit-sharing plan, 401(k) plan, stock bonus plan, ESOP or any defined benefit or annuity plan (though not an IRA). In order for the assets to be transferable to DRAA, your spouse must execute a written waiver (even though you may designate a charitable organization as beneficiary on your employer's forms). Your spouse can execute one after your death, if necessary. In that case, the document must also include a qualified disclaimer.

If you prefer to make your spouse the primary beneficiary of the retirement account, you can name DRAA as the secondary beneficiary.

If you want your children to benefit from your retirement account as well, you might designate a specific amount to be paid to DRAA, before the division of the rest among your children.

While donating the balance in a retirement plan account may be the most tax-effective means of supporting our mission, it is also a relatively new area of estate planning. Please seek guidance from an attorney and other professionals who are thoroughly versed in this field of tax law.

For additional information, please call DRAA at (925) 932-1731 or send e-mail to info@draa.org.

Gifts of Life Insurance
You can donate a life insurance policy to DRAA or simply name us as the beneficiary. For the gift of a paid-up policy, you will receive an income tax deduction equal to the lesser of the cash value of the policy or the total premiums paid. To qualify for the federal charitable contribution deduction on a gift of an existing policy, you must name DRAA as owner and beneficiary.

The typical purpose of a life insurance is to help ensure the financial stability of your family if something happen to you or your spouse. However, life insurance can be a tool with many purposes. For example, it can provide liquidity for paying taxes and other expenses at death. In addition, some of the most satisfying uses for life insurance policies are connected with charitable giving.

If you have a life insurance policy you no longer need, you might contribute it to a charitable cause in which you believe, such as DRAA. Purchasing a new policy with DRAA as beneficiary is another possibility. This often makes a significant future gift feasible and affordable, especially for younger donors.

Perhaps you are considering a sizable bequest to DRAA, provided your family's future inheritance is not affected. Life insurance can play a part in meeting this goal, too, by replacing for your heirs the amount donated.

At this level of family and philanthropic distributions, it is especially critical to have a skilled planning team with expertise in finance, law, taxes and insurance.

For additional information please call DRAA at (925) 932-1731 or send e-mail to info@draa.org.

THE INFORMATION PRESENTED ON THIS SITE IS IN SUMMARY FORM. ALL DONORS MUST CONSULT WITH AND RELY EXCLUSIVELY ON THEIR OWN ATTORNEYS OR OTHER FINANCIAL ADVISORS FOR TAX AND LEGAL ADVICE.