PLEASE NOTE: All information contained herein is for educational purposes only. We are not providing legal advice on any of the subject matter, and personal financial circumstances vary greatly. A Scout is Thrifty – please discuss all gifts with your financial advisors.
Gifts of cash have always been the most basic and important source of support for Scouting. However, cash gifts also represent after-tax dollars, and they may impact cash flow for many donors. There may be better ways to give…
DONOR ADVISED FUNDS
Donor advised funds are among the fastest and most popular types of gifts. You can create a large “charitable checking account” consolidating your charitable gifts into one fund, and then give advice later as to which charities should receive distributions – both Scouting and non-Scouting charities (your college, church, hospital, etc.). It’s similar to a family foundation (you can even involve your family as advisors), but without the tax issues or limitations. Accelerating your gifts now also increases your chance of itemizing your tax deductions.
More information about creating a Donor Advised Fund can be found here.
GIFTS OF APPRECIATED STOCKS, BONDS, AND REAL ESTATE
Giving appreciated property may provide even greater tax benefits than cash gifts. In most cases, if you contribute property you’ve owned for more than one year – stocks, bonds, mutual fund shares, land, farms, homes, etc. – your charitable deduction is equal to the fair market value of the property. However, by donating these assets you also avoid the capital gains tax on any increase in value. It would be a gift of pre-tax assets, not after-tax dollars.
PERSONAL PROPERTY GIFTS
Gifts of art, collectibles and collections, antiques, boats, cars, or other items of personal property may also make great gifts to the National Capital Area Council. They may be costly to insure, or difficult to sell. Sometimes the value is real, sometimes it’s sentimental. But the tax deduction also depends on what the property is and if the council could possibly use it in its Scouting programs. If personal property has appreciated in value, and is related to Scouting’s purpose, your tax deduction is the fair market value of the items. If the property is unrelated to Scouting or Scouting’s mission? Your deduction may be limited to your cost basis. Again, talk to your advisors about this; it could make a big difference with valuable gifts. For very highly appreciated property, you may save more in taxes by selling them and contributing the proceeds. Many personal property gifts (or gifts in kind) are often worth less than you paid for them (like cars, boats, etc.). For these gifts, your deduction is the lesser of its current value or what you paid for it, regardless of council use. Please talk to your advisors about these gifts.
A WORD ABOUT APPRAISALS
When you contribute almost any non-cash assets (other than publicly traded stocks), you must document the value of the assets for the IRS. You will also need to complete an IRS Form, so see the instructions for it at www.irs.gov. Appraisals will also be needed for less traditional types of assets, such as oil and gas interests, copyrights, patents, etc. Trying to substantiate a large charitable gift without an appraisal – whether it is a Mickey Mantle rookie card, vintage guitar, or a farm – is the fastest way to lose your tax deduction. Please talk with your advisors.
BEYOND … OUTRIGHT GIFTS
BEQUESTS AND BENEFICIARY DESIGNATIONS
Bequests: Making a gift through your will is still an important and effective way to support local Scouting. Plus, reducing or eliminating the estate tax means a larger estate you can give to your family AND the charities you care most about. Most importantly: make sure you have a will that is up to date. Wills are not just about transferring assets – they are also critical in protecting your family in many ways.
Life Insurance: Gifts of life insurance can be a great way to leverage your gift to Scouting. Many donors choose to transfer ownership of a policy as a donation– either paid up, or with premiums due – and receive a current income tax deduction for the value of the policy. Simply naming National Capital Area Council as the beneficiary of the policy is a very flexible type of gift. But, like a will, since you can still make future changes, you will not receive a tax deduction for it.
IRA and Retirement Plan Transfers: IRAs and retirement plans are often hard hit with taxes when left to heirs, but you may greatly reduce your tax loss by naming the Council an estate beneficiary of your retirement plan assets (leaving other assets with step-up basis to your heirs). As for lifetime gifts from your IRA, direct transfers to the Council or other charities can avoid the tax on those withdrawals. Talk with your adviser.
OTHER STRATEGIES
Gift Annuities: A simple and effective way to make a gift of cash or stock and receive lifetime income in return, as well as an income tax deduction. The payments are guaranteed, vary depending on your age, and are partially tax free. At the end of one or two lifetimes, the remaining gift is distributed to the Council. A great way to leverage highly appreciated, low yielding assets and increase your income.
SAMPLE BEQUEST CLAUSES – NATIONAL CAPITAL AREA COUNCIL, BSA Note: Bequests similar to the four samples may also be made to family trusts or charitable trusts, donor advised funds, or numerous other gift vehicles. Any of these bequests may be:
- Contingent on surviving other beneficiaries, or life events
- Residuary gifts, from what may be left over in an estate, and
- Percentage designations from the overall estate
GENERAL BEQUEST “I give, devise, and bequeath to the National Capital Area Council, Boy Scouts of America, a not-for-profit corporation with headquarters in Bethesda, Maryland, or its legal successor thereto: (insert sum of money, portion of estate, description of property, or…” the rest, residue, and remainder of my estate.”) to be used for such purposes as the council may designate.” (The simplest way to make a gift to Scouting without conditions. The council board has the freedom and responsibility to determine the use of the funds or property received. They may place the gift in the endowment, spend it on capital or operating needs, etc.)
SPECIFIC BEQUEST “I give, devise, and bequeath to National Capital Area Council, Boy Scouts of America, a nonprofit corporation with headquarters in Bethesda, Maryland, or the legal successor thereto, (insert sum of money, portion of estate, description of property, or ”… the rest, residue, and remainder of my estate.”) to be owned, held, and used by the National Capital Area Council for the following purpose(s): (list specific purpose for which bequest is made) If it is found by the executive board of the National Capital Area Council that all or part of this bequest cannot be used to the best advantage for the above purpose, then all or any balance of this bequest not so expended may be used for any purpose, approved by said executive board, within the corporate powers of the council.” (When this form of bequest is used, the gift property will be used for the specific purpose or projects chosen by the donor. For example: to fund understaffed Scouting districts, to fund Hispanic Scouting initiatives, to build or improve a council camp or office, provide camperships, etc.)
GENERAL ENDOWMENT BEQUEST “I give, devise, and bequeath to the endowment fund of the National Capital Area Council, Boy Scouts of America, a not-for-profit corporation with headquarters in Bethesda, Maryland, or its legal successor thereto (insert here sum of money, portion of estate, description of property, or the rest, residue, and remainder of my estate), to be added to, held, and administered by the trustee in accordance with the terms, provisions, and conditions as set forth in the declaration of trust of the National Capital Area Council.” (When this form of bequest is used, the use of the principal and income from the funds or property is governed by the terms of the council’s trust agreement. For many BSA councils, this principal is presumed to be held in perpetuity and may not be spent, unless donor otherwise specifies.)
SPECIFIC ENDOWMENT BEQUEST “I give, devise, and bequeath to the endowment fund of the National Capital Area Council, Boy Scouts of America, a not-for-profit corporation with headquarters in Bethesda, Maryland, or its legal successor thereto: (insert sum of money, portion of estate, description of property, or ”… the rest, residue, and remainder of my estate”), to be held in trust by said trustee and by their lawful successor, to be used for (List specific purposes for which bequest is made – donor may permit use of principal). If it is found by the Executive Board of the National Capital Area Council that all or part of the income cannot be used to the best advantage for the above purpose, then all or any balance of the income not so expended may be used for any purpose approved by said Board which is within the corporate powers of the council.” (This form of bequest differs by either restricting the use of the income or unrestricting the principal. For example, to fund understaffed Scouting districts, to create camperships for disadvantaged youth, to build or renovate a camp facility or office, etc.)
BEQUEST FOR DONORS CONCERNED ABOUT MERGERS “I give, devise, and bequeath (insert sum of money, portion of estate, description of property, or…” the rest, residue, and remainder of my estate.”) to the National Capital Area Council, Boy Scouts of America, located in Bethesda, Maryland, or its legal successor thereto, or, in the event of a merger or consolidation, to the district/geographic area previously served or defined by the National Capital Area Council boundaries as of the date of this Will.”
BEQUEST ALTERNATIVES You may also make distributions via beneficiary designations for: life insurance, IRA’s and other retirement accounts, charitable trusts, revocable trusts, and gift annuities. To do so, simply ask the plan or fund administrator for a Change of Beneficiary form. Write in National Capital Area Council, Bethesda, Maryland, and the percentage you want to go to the council.