THE BENEFITS OF PLANNED GIVING

Personal Benefits
• Planning your giving and using a budget provide help you determine how much you can afford to give and when you should give it. When a request for giving falls outside your giving plan, it is easier to say no.
• Planning saves you time in the long run.
• It can help focus your giving and make it more effective.
• Your financial resources are more likely to align with your personal values.

Tax Benefits
• Planning maximizes the tax benefits available to charitable givers, who can deduct qualified donations that total up to 50% of their adjusted gross income.
• The tax benefit received reduces the cost of a donation. A $100 donation from someone in the 30% tax bracket really costs the donor only $70.
• Stocks that have appreciated in value can be donated to charity, avoiding capital gains taxes for the donor and providing a tax deduction as well. Donors can deduct the fair market value of their gift stock, enabling them to give a larger charitable gift than they could give if they simply sold the stock, paid capital gains taxes, and donated the net proceeds. The nonprofit organization pays no taxes on the stock, thereby netting the entire market value of the gift. (Caution: The IRS limits your annual tax deduction to stock donations worth up to 30% of your adjusted gross income.)

THE ADVANTAGES OF DONATING STOCK Current value of stock: $1,000 Original cost of stock: $100 If you sell the stock yourself… Taxable amount if sold Taxes you pay (20%) You earn $900 $180* $820 If you donate the stock to charity… You get tax deduction of You pay this much less in income taxes So your donation really costs you But the value to the charity is * In 28% tax bracket $1,000 $280 $720 $1,000

Note: You'll need records of your contributions if you plan to claim tax deductions. Be sure you receive a receipt or letter acknowledging your contribution from the charitable organization you choose. A canceled check is all you need for gifts of less than $250. If you buy a ticket to a fund-raiser (or a similar sort of contribution in which you receive a dinner or something else of tangible value) only part of your donation is tax-deductible - the amount that exceeds the cost of whatever you receive in return. The tax-deductible portion of your donation should be printed on your receipt.

	PROFILES IN GIVING Tony Morley & Ruth Anne Olson "Consider establishing a donor-advised fund in your local community foundation. It's very simple." Read more

TYPES OF GIFTS
The instruments available for making charitable contributions continue to multiply - here are a few of the most common:

Cash: A direct gift of cash or a check is the simplest giving option. It is also tax-deductible up to the 50% of adjusted gross income limit. But remember, you should have a receipt.

Appreciated stocks: When you donate stock the IRS allows you to take a tax deduction on the fair-market value of your gift, providing you have held the stock for more than 12 months. Mutual funds may also be donated and are subject to the same rules.

Other assets: Real estate, art work, insurance policies, automobiles, boats, time share units, clothing, and other tangible goods can qualify as donations.
(For a more in-depth look at such giving options, see the Minnesota Toolkit for Giving.)

Pro-bono services: Lawyers, doctors, accountants and others often donate valuable services to nonprofit organizations. Their time, like that of other volunteers, is not tax-deductible, but their expenses, including mileage allowances, are deductible.

LEVERAGING YOUR GIVING
The following tools enable you to leverage your giving to increase its value to you or to a nonprofit organization:

Matching funds: Many companies will match charitable contributions made by their employees, a practice that magnifies the value of individual contributions.

	FACTS & FIGURES Percy Ross, a syndicated columnist and radio personality, amassed over $7 million and gave it all away (in small sums) to individuals who would call in and make requests to use his money. More Facts & Figures

Charitable remainder trusts: Stock or any other assets held in this account earn annual income, which the donor or the donor's heirs may enjoy for their lifetimes. When they die, the charity receives the remaining assets. The donor also receives a partial tax deduction at the time the trust is established.

Charitable gift funds: Sometimes called donor-advised funds, charitable gift funds are mutual funds that allow donors to receive immediate tax deductions while their money grows, potentially enabling larger amounts to be contributed to charity at some date in the future. Donors have a say in who receives contributions and when they receive them. Mutual fund companies charge a fee for administering these funds.

Will: This legal document enables you to make charitable bequests as you plan for the disposal of your assets after your death.

Insurance: Charities may be named as sole or partial beneficiaries on life insurance policies. They may also be named as owners of a policy, which allows the person buying the policy to deduct premiums. Potentially, this tool could cost little to give a charity a lot when you die.

Endowments: Endowments are meant to sustain an organization for the future not provide operating funds for the present. The principal of an endowment remains intact and is invested to earn interest for the endowed organization. You can contribute to an organization's endowment or set up your own endowment - typically with a large gift.

Foundations: There are more than 44,000 foundations in America - many of them family foundations and two-thirds of them with assets of less than $1 million. According to the Council on Foundations, a third of the foundations in America control 90 percent - more than $230 billion - of all foundation assets and account for 93 percent of foundation giving. The number of foundations is growing rapidly and their assets are also growing rapidly, thanks to a booming stock market. Foundations have legal costs associated with setting them up and ongoing administrative expenses, so establishing a foundation is practical only for people who have a half-million dollars or more to give away. For smaller amounts, a community foundation might be a better vehicle.
(For more information on family or community foundations, see the Council on Foundations Web site.)

	PROFILES IN GIVING Paul Shoemaker "The generation of philanthropists now in their 30s will have given more than any previous generation by the time they are in their 60s - and they will have given differently." Read more

"Investments" in philanthropy: The venture-capital model is becoming popular in philanthropy circles. More and more givers see themselves as investors in new ideas for nonprofit action. Two vehicles suitable to this philanthropic style are social venture funds and giving circles.

Social Venture Funds support projects that may not be supported by traditional grant makers. Like venture capitalists, investors in social venture funds often offer management expertise and other practical assistance as well as money. They are willing to take a certain amount of risk on new ideas, and they closely monitoring the results.
(For more information on these funds, check out organizations in Seattle, Austin, or Arizona. Similar groups are being organized in other cities, including Dallas and Denver.)

Giving Circles are similar to the popular investment club idea. In the giving circle a small number of members meet regularly to make joint decisions to invest their charitable contributions. As in investment clubs, participants share responsibility for proposing, investigating, and monitoring organizations in which they invest.
(For more on giving circles, see the Minnesota Toolkit for Giving.)

E-philanthropy: In the Internet Age the newest instrument for giving is online. There are a growing number of e-philanthropy sites, but they are not all the same. Some allow you to make donations online; others offer donations to charity for products you buy online; and still others send donations to charity whenever you merely visit a site.
(View our Resources for a list of Web sites.)

ACCEPT RECOGNITION
If you prefer to make a gift anonymously, make your wishes clear to an organization that receives your donation. There are good reasons that some people prefer to give anonymously. They want to protect their privacy. They want to prevent "me too" requests from other organizations. Or they believe that giving anonymously is a virtue, a higher form of charity. But there are also good reasons for not giving anonymously. Your name on an organization's list of donors can sometimes extend your contribution, adding credibility to the organization among people who know and respect you. They may contribute because you did.
For an excellent discussion of this issue, see the Northwest Giving Web site.)

VOLUNTEER
Some donors also become volunteers for the organizations they support, often serving on the boards of directors and helping to raise additional funds. In the process they learn how well their own contribution is being used. They are also able to put their personal expertise and skills, in addition to their money, behind an organization.
(For more information, see the Independent Sector's "Ten Tips on Volunteering Wisely.")

	FACTS & FIGURES With his savings and assets of $4.7 billion, Jeff Bezos (CEO of amazon.com) could wipe out the external debt of Honduras. More Facts & Figures

Attorneys, accountants, financial planners, and others can offer help in selecting the appropriate instrument for your charitable giving and ensuring that your choices meet all legal requirements. "The number-one reason people seek help is that they want to do some good, but they don't know how to implement their charitable intentions," says Ed Slott, a of Rockville Centre, New York, CPA and the editor of Ed Slott's IRA Advisor. A qualified advisor can explain all the available methods for giving to charity and see which one fits you best. You will also probably want to get professional advice in one of these situations:

• Your total assets (including the equity in your home) exceed $675,000 ($1.35 million for a married couple).
• You want to set up a foundation.
• You want to start a giving circle.
• You want to set up a charitable remainder trust.
• You want to donate real estate, retirement accounts, shares of a private company and other legally complicated assets.
• You and your spouse have a conflict about your charitable giving goals.
(For more information about financial advisors, see
· Financial Planning Association
· National Association of Estate Planners and Councils)

Next: Step 4 - Where Should You Give?

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