In our series we have discussed how to determine if you can afford to be charitable, and if so, how to consider those things that provide you with your Charitable Aspirations. In this article, we consider how to go about making your charitable gift a reality.
For our discussion, we will assume that you have selected a charity and type of gift you want to make (i.e. a current cash donation, gift of appreciated stock, real estate, or a split interest gift where you retain some current benefit and transfer a benefit to the charity – gift annuity, charitable remainder trust). How do you actually make the transfer happen? Who needs to be involved?
The simpler the gift, the easier it is to accomplish. When making a current gift of cash, you can call the charity or look at its’ website for its’ address, write a check and put it in the mail. You might consider including a letter of explanation as to whether the gift should be used for any purpose the charity chooses, or, provide an indication of the specific purpose for which you want the funds applied.
As one wants to make gifts with more complexity, it will be necessary to include your professional advisors and the charity’s planned giving officer in the conversation about completing the gift. For example, if you want to make a gift of stocks that have appreciated in value over time, (extra tax benefit – generally can deduct full value and inherent gain in stock not subject to capital gain tax), you will need to know the brokerage firm to which the shares need to be delivered. You may also want to talk with your financial advisor about which stocks to select and whether the transfer of those shares might require a change in your remaining portfolio allocation.
If you are interested in entering into a charitable gift annuity agreement with a charity, you would speak with the organization’s planned giving officer as to how they might suggest structuring the annuity, and, you probably would also speak to our financial advisor to determine how the gift and resulting income stream impact your cash flow.
The choice of a split interest gift will most likely require the collaboration among the planned giving officer, financial advisor, estate planning attorney and perhaps your tax return preparer to make sure all aspects of the gift fit into your overall planning.
As you can tell from the above examples, it is important to get each of the appropriate advisors involved in the process as early as possible in order for them to work together to make sure you r particular gift accomplishes your aspirational purpose, provides a gift that the charity can accept and use, and maximizes your personal tax benefits and financial plan. Too often the collaborative team is not assembled until well into the project and, unfortunately, many gifts are
“spoiled” because an important aspect of the gift from either your or the charity’s situation is not properly taken into account.
Of course, you do not get to this point unless you have thoroughly thought through your ability to make a gift and your aspiration for the gift. These considerations may also require the input from members of your advisory team from the very beginning!