24 Oct Variety is the spice of … giving
If you’ve been working with the McPherson County Community Foundation (MCCF) for a while, you certainly know that it’s easy to make a contribution to your fund. And by now, you likely know not to automatically reach for your checkbook! Our team is happy to work with you and your tax advisors to review the options for types of gifts. Here’s food for thought:
Marketable securities
Gifts of long-term appreciated stock to a donor-advised or other type of fund at the Foundation is always one of the most tax-savvy ways to support favorite charitable causes because capital gains tax can be avoided. Gifts of publicly-traded stock, for example, are easy to transfer to a fund. Our team provides transfer instructions to make the process simple.
As is the case with a cash gift, MCCF will provide a receipt for tax purposes, and the gift of stock will be valued at the shares’ fair market value on the date of transfer. When the Foundation sells the shares, the proceeds flow into your fund without any reduction for capital gains taxes. This is because MCCF is a 501(c)(3) charitable organization and therefore does not pay income tax. That would not have been the case, however, if you had sold the stock first and then transferred the proceeds to your fund; you would owe capital gains tax on the sale. Especially in cases where you have held the stock a long time and it’s gone up significantly in value, the capital gains hit can be big.
Closely-held business interests
Our team is happy to work with you and your advisors to explore how you might give shares of a closely-held business to a fund at MCCF. Not only will transfers be eligible for a charitable deduction during the year of transfer (and at fair market value if the shares are held for more than one year), but also these gifts could potentially reduce income tax burdens triggered upon a future sale of the business. Be sure to talk with our team well before any potential sale is in the works; otherwise, you could lose out on tax benefits. Gifts of closely-held business interests are powerful but can be tricky to administer.
QCDs from IRAs
As always, keep in mind that the Qualified Charitable Distribution (“QCD”) is a very smart way to support charitable causes. If you are over 70 ½, you can direct up to $105,000 from your IRA to certain charities, including a field-of-interest, designated, unrestricted, or scholarship fund at MCCF. If you are subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. That means you avoid income tax on the funds distributed to charity. Plus, keep in mind that leaving your IRA to your fund through a beneficiary designation is a very tax savvy move, so be sure to discuss this option with our team and your tax advisors.
Real estate
You can give a tax-deductible gift of real estate, such as farmland or commercial property, to your fund in a variety of ways. An outright gift is always an option; lifetime gifts of real estate held for more than one year are deductible for income tax purposes at 100% of the fair market value of the property on the date of the gift, which also avoids capital gains tax and reduces the value of your taxable estate. Other ways to give real estate include a bargain sale or a transfer to a charitable remainder trust which produces lifetime income for you and your family.
Life insurance
Don’t overlook life insurance as an effective charitable giving tool, whether by naming your fund at MCCF as the beneficiary or, in the case of whole life policies, naming the fund as beneficiary and transferring the policy itself. If you transfer a policy, you may be able to make annual, tax-deductible contributions to the Foundation to cover the premiums.
Other “alternative” assets
We are happy to discuss your options for giving other non-cash assets to your fund at the McPherson County Community Foundation, including oil and gas interests, negotiable instruments, cryptocurrency, artwork, and collectibles.
We look forward to working with you to explore all the options!
