Gift Planning in Uncertain Times
As the possibility of a recession looms, there has been a lot of uncertainty in virtually every sector of the current economic landscape, including that of philanthropy. Recent market volatility poses concern for many individuals in terms of their giving to the institutions and charitable organizations they love.
While nonprofit leaders consider creative strategies to sustain their organizations, donors are likewise looking for ways to maximize their charitable giving. Against this backdrop, gift planning can be a powerful tool, offering arrangements that allow donors to continue supporting the charitable organizations they care about most while taking advantage of tax savings and other financial benefits.
During challenging times, life income gifts and other tax-advantaged gift instruments can be a tax-savvy way to support Duke University and other favorite charities. Vehicles such as the Charitable Gift Annuity (CGA) and the Charitable Remainder Unitrust (CRUT) allow you to donate cash or appreciated assets to Duke in exchange for lifetime income payments.
A CGA can be a particularly attractive option for donors concerned about the impacts of market volatility on retirement accounts and pensions. A CGA generates a guaranteed, fixed-amount stream of income for the lifetime(s) of one or two individuals, with the added bonus of an immediate charitable deduction. When the annuity’s income interest(s) concludes, the designated charitable beneficiary (like Duke!) receives any remaining gift balance to use as the donor instructed. Some donors fund multiple CGAs over time, like a laddered bond portfolio, which can provide a hedge against inflation. And you can take advantage of very generous annuity rates!
For example, Fred is 60 years old and wants to supplement his retirement income. He establishes a current charitable gift annuity with Duke that will pay him a fixed rate of 5.2% for his lifetime. Fred likes this plan so much, he decides to establish a second gift annuity that will begin payments when he turns 65, with an increased rate of 7.1%.
Gifts of securities, including highly appreciated stocks, bonds, or mutual funds, may provide additional tax advantages. By donating appreciated securities that you have owned for at least one year, you avoid recognizing taxes on the capital gains you’ve accrued in those assets. You also receive a tax deduction based on the assets’ current fair market value – in other words, the same income tax savings as if making a gift of cash or by check.
Eligible taxpayers can save taxes by making their annual gifts to charity using Qualified Charitable Distributions (QCD) from an IRA. QCD gifts are excluded from your taxable income in the year of the gift and help satisfy your RMD once mandatory withdrawals begin (currently, at age 73). You can use annual QCD gifts to support your favorite Duke Annual Fund(s), fulfill multi-year pledges, or even establish a named scholarship.
Planned gifts can thus provide immediate financial benefits, including a fixed stream of income for life, a current tax deduction, and/or reduction of overall taxable income. Gift planning offers solutions to tax and income challenges while empowering you to continuing investing in your favorite charities. For more information on how to create a lasting legacy at Duke through a planned gift, contact Duke’s Office of Gift Planning at (919) 681-0464 or giftplanning@duke.edu. Our charitable planning professionals are available to work with you and your advisors.
This information is provided with the understanding that neither Duke University nor the authors are providing legal, accounting, or other professional advice or counsel. Please consult your personal counsel about the financial, tax, and legal implications of any gift.
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