Ozarks Philanthropy Project Donors Stories and Guide to Charitable Giving

Transcription

1 Donors Stories and Guide to Charitable Giving Ozarks Philanthropy Project Donors Stories and Guide to Charitable Giving Ozarks Philanthropy Project Community Foundation of the Ozarks

2 Bootheel Regional Planning Commission P.O. Box 397, Malden, MO (573) Harry S. Truman Coordinating Council DeMott, P.O. Box 388, Webb City, MO (417) Kaysinger Basic Regional Planning Commission 213 S. Washington, Clinton, MO (660) Lake of the Ozarks Council of Local Governments P.O. Box 786, Camdenton, MO (573) Meramec Regional Planning Commission #4 Industrial Drive, St. James, MO (573) Mid-Missouri Regional Planning Commission 206 E. Broadway, P.O. Box 140, Ashland, MO (573) Ozark Foothills Regional Planning Commission 3019 Fair Street, Popular Bluff, MO (573) South Central Ozark Council of Governments P.O. Box 100, Pomona, MO (417) Southeast Missouri Regional Planning & Economic Development Commission P.O. Box 366, Perryville, MO (573) Southwest Missouri Council of Governments 901 S. National Ave., Springfield, MO (417) Community Foundation of the Ozarks 901 St. Louis Street, Springfield, MO Toll free number for information on the Ozark Philanthropy Project:

3 PARTIAL TRANSFER OF FOUNDATION INCOME Prior to committing all their assets with a community foundation, trustees of private foundations may establish funds with community foundations by contributing part or all of the current year s income to their funds. This can go on indefinitely until they are ready to commit their remaining assets. CORPORATE FUNDS Executives responsible for corporate giving may establish discretionary funds under their corporate names with community foundations. Grants will be made and publicized under the corporate name to the most current demonstrated community needs using a community foundation s grantmaking procedures. OPP personnel will help businesses and corporations establish giving programs. DEFUNCT ORGANIZATIONS Charitable organizations deciding to close operations may create a fund named after their organization with proceeds from the sale of their assets. Grants may be specified for that particular field of interest to continue the missions for those organizations. ESTATE OR TRUST GIFTS As executors or trustees of a will allocating money to charities, donors may establish funds with the community foundation under the name of the deceased. This relieves them of the burden of carrying out the charitable provisions of the will and places it with the community foundation. With court approval, if necessary, the charitable portion of the estate is paid to their named funds. Numerous other public charities can benefit from this type of giving. ASSIGNMENT OF TRUST FUND INCOME Donors paying income taxes on money received from trusts may irrevocably assign a portion of this income to their named funds. This eliminates taxes on assigned amounts and may provide substantial deductions at the time of assignment. The mission of the Ozarks Philanthropy Project (OPP) is to develop and build a charitable giving infrastructure throughout the Missouri Ozarks. A joint effort of the Ozark Foothills Development Association and the Community Foundation of the Ozarks, OPP works through ten regional planning councils to educate donors, nonprofit organizations and communities on the importance of endowments, grantmaking, leadership, and collaboration. OPP works in conjunction with the national New Ventures in Philanthropy program. 3

4 LIFE INSURANCE Donors no longer needing the protection of life insurance may donate policies to their named funds and receive immediate tax deductions, usually in the amount equal to the policy s cash surrender value. Donors may also buy low-cost life insurance polices to establish funds for the future. REAL ESTATE Outright Donors properties that have appreciated, are marketable and meet community foundation criteria for acceptance may be gifted to the community foundation. Since capital gains taxes are no longer applicable, Outright Funds may be established in larger amounts. Real estate also can be used as a base to start a private foundation. Life Estate Residential or rental properties may be placed in a Life Estate Trust while continuing to provide for donors. They continue to pay costs of ownership knowing their properties will eventually establish funds at the community foundation for their chosen charitable causes. CHARITABLE GIFT ANNUITY Donors seeking a life income may establish a Charitable Gift Annuity. The amount of the life income is based on the age of the donor and the size of the gift. Donors may even choose to benefit someone else during their life and designate a successor beneficiary. The residual amount may be placed in an existing fund, or be used to establish a new fund. The Martin Family CHARITABLE LEAD TRUST Donors concerned about estate taxes passed through their children to their grandchildren can establish a Charitable Lead Trust from a portion of their estates. Income from these trusts go to donors named funds for a set number of years. Estate taxes are reduced and properties are not taxed to donors children. When grandchildren reach maturity, the trust terminates and the assets go to them. Charities benefit during those years and grandchildren receive more than they would otherwise. IRAS Donors can avoid capital gains taxes by gifting IRA assets to their charitable funds. 21

5 Ways of Giving CASH Writing a check is still the easiest and most widely used method of charitable giving. Establishing a named fund with a community foundation, regardless of its type, provides donors with the maximum tax deductibility. Donors may make additional contributions at any time to their named fund. APPRECIATED STOCKS AND SECURITIES Appreciated securities, including closely held stocks, donated to a named fund receive maximum tax deductions. If deductions exceed a donor s needs that year, the donor may use the surplus as deductions during the next five years. Proceeds from the sales of stocks gifted to a public charity are also exempt from capital gains taxes. Donors with depreciated securities may want to consider selling their stocks, incurring the loss for tax purposes, then gifting the remainder to their fund. We did not want to have a private foundation, we thought that the Community Foundation was the answer to what we wanted to do. I learned very early that Dad (E. A. Martin, Jr.) was emphatic about us being good stewards in our community since the community was very good to us. This fund is a way for our family to perpetuate our involvement in some of the charitable works that we are interested in. Many generations of the family participate in recommending grants each year. Donald G. Martin, Sr. BEQUEST During preparation of their wills, donors may direct assets to their named funds to reduce taxes otherwise payable by their estates. CHARITABLE REMAINDER TRUSTS Annuity (Fixed, Lifetime Income) By placing assets in Annuity Trusts, donors and their spouses may establish charitable funds while providing assured lifetime incomes, with tax deductions, for up to six years. When one spouse dies, the other receives all the income. Estate taxes are reduced and charity benefits from the remainder, which later becomes a permanent named fund. This can also be provided for in a donor s will and with the charitable deduction, the surviving spouse may receive an even larger income. Unitrust (Variable Lifetime Income) This is the same type of trust as an Annuity, but established as an inflationary hedge with a variable, lifetime annual income specified as a percentage of assets by the donor. This may also be provided for in a will with potentially larger income from remaining assets for the surviving spouse. The Martin Family Fund was established by the Board of Directors of E. A. Martin Machinery Company. It is half donor advised and half fieldof-interest. The donor advisors (members of the Martin Family) recommend grants to the Community Foundation of the Ozarks Board of Directors and are active participants in the grant process. The field-of-interest side of the fund offers grants to programs that promote youth, religion, health/welfare, and the cultural arts. 5

6 UNRESTRICTED Unrestricted Funds are for donors who desire more flexibility in their use. The community foundation identifies, selects and issues grants to meet the most appropriate and urgent community needs from the areas of education, health, arts and culture, human services, community betterment, and social justice. FIELD-OF-INTEREST Donors may establish or leave a bequest for a named Field-of-Interest Fund. The field may be described as broadly or narrowly as desired. The community foundation then identifies the most fitting grant recipients from that particular field. The Kitchen provides quality childcare. DONOR ADVISED There are three types of Donor Advised Funds: Regular, Family and Community, and Grantmaker Group. These funds are for donors wanting more participation by offering suggestions as to which charities receive benefits. To protect tax deductibility, the community foundation reviews each suggested charity to ensure it has been approved by the U.S. Treasury Department. And while donor suggestions are welcome, final decisions regarding distributions from these funds are made by the community foundation. Giving Circles may also be established by groups of concerned citizens in a given community or neighborhood. CAPACITY BUILDING Nonprofit organizations, regional community foundations or organizations striving to meet specific fund raising goals may establish this fund. It is a temporary fund that operates without the restrictions typically placed on Endowment Funds, which makes them ideal for building campaigns, pass through grants or rainy day funds. 19

7 Types of Funds DESIGNATED Once donors select their charities, incomes go to those designated charities in the amount or percentage specified. If a designated charity ceases to operate, or otherwise loses its status, community foundations may suggest another charity or redistribute the income. Scholarship Donors may establish the name, level of education and criteria for recipients. Donors may also suggest representatives to serve on a selection committee or they may defer to a community foundation Scholarship Committee. Organizational Endowments Other nonprofit organizations may establish Endowment Funds with a community foundation to invest and manage. Donor organizations will then receive checks for the annual income to use as they wish. Nonprofits also can establish a private foundation. Sister Lorraine began The Kitchen through prayer and sheer determination realizing that the issue of homelessness could no longer be ignored. As The Kitchen grew, it became evident that more stable and consistent funds were required to maintain its ability to serve increasing numbers of homeless families and individuals needing shelter and care. Joyce Blades Marie Prater The Kitchen Benefactors In 1994, with $50,000 acquired through many fundraising efforts, The Kitchen Board was ready to establish The Kitchen Endowment Fund to secure the future of the organization. This fund will ensure that quality services will be available for Springfield s homeless and needy families for years to come. Joyce Blades and Marie Prater 7

8 Background The Community Foundation of the Ozarks (CFO), established in 1973, is one of approximately 670 foundations across the United States. Because of their success, community foundations are the fastest growing segment in philanthropy. Each foundation operates autonomously as it seeks and grants funds within its own community. It does not compete with other charitable organizations, but in many ways enhances their ability to serve the community. CFO serves 25 Ozarks communities through its affiliate program. Community foundations accept endowed funds from individuals and organizations. These funds become part of the total endowment that is invested and managed within the guidelines of a formal investment policy by the Foundation s Investment Advisory Board. The board is comprised of area leaders chosen for their expertise and knowledge of the community. As the invested funds generate interest, earnings are paid out in the form of grants. Private foundations can be established by families, individuals, businesses, or corporations. These allow the donor greater control than possible with a community foundation. Legal counsel or OPP personnel can provide donors with current information on I.R.S. regulations concerning private foundations. Sterling Macer 17

9 Guide to Charitable Giving The best use of life is to invest it in something which will outlast life. William James The following information from the Ozarks Philanthropy Project (OPP) will help prospective donors and their advisors better understand how personal financial goals and charitable interests may best be served. Iestablished this fund as a way to keep contributing to my church for a long time. Needs at the church will continue, and this fund will help to address those needs. Earnings from the fund were just used to improve the parking area, which has been very helpful to the congregation. You can already see the fund s impact. Sterling Macer One-time gifts to charities are usually short-lived, while endowment funds live on indefinitely through returns on investments. These returns provide permanent resources for annual charitable gift giving. There are a variety of endowment funds from which to choose. The purpose of this guide is to aid decision making by providing brief explanations about the various funds currently available. Community foundations and private foundations are both excellent vehicles for establishing endowment funds. Financial Planners should always be consulted in these matters. The Sterling and Delores Macer Fund is an endowment fund established by Sterling Macer to benefit building projects at his church, Washington Avenue Baptist Church. 9

10 endowment fund is like a spring filling a pond. It An continues to fill over and over again and doesn t disappear. My tastes are very eclectic. That is why an unrestricted fund appeals to me. Many different types of grants have been made from the fund Garrett established and I have been happy with them all. Marion Wright John and Nancy Williams The H. Garrett and Marion M. Wright Fund is an unrestricted fund in which earnings are used by the Community Foundation of the Ozarks to meet the most critical needs in the community. Garrett Wright established this fund through a bequest because he was a firm believer in giving a gift in perpetuity. His wife, Marion, later served on the board of the Community Foundation of the Ozarks and added to the fund. 15

11 Upon our death, the house goes into the Carthage Community Foundation to be sold. That money will go into seven designated funds that benefit causes that are really close to us. This way we know now, as we are living, that distributions from those funds will go on for a good many years. That really did strike a good chord with us. Nancy Williams Marion Wright John and Nancy Williams are committed to supporting Carthage nonprofit organizations and other charitable causes through the creation of a life estate. This charitable vehicle allows the Williams to live in their historic residence, while at the same time, receive direct tax benefits. 11

12 Julia Dorothy Coover is a wonderful example of someone who clearly understood how a private foundation can be a powerful tool for enhancing the quality of life of people in the Missouri Ozarks. Friends, colleagues and relatives remember Dorothy as a lovely and caring woman who always had a heart for the needy. Mrs. Coover s planned gift will support worthy projects for years to come. Grants from private foundations support a wide range of programs for children. Today, The Commerce Trust Company serves as trustee and investment manager for the Louis and Dorothy Coover Charitable Foundation. They have formed a partnership with the Community Foundation of the Ozarks in which the Coover Charitable Fund will be used to significantly strengthen grantmaking programs throughout the region. Mrs. Coover