In parts one and two of this series, we discussed in detail why we should give. I encourage you to go back and read the previous posts in the series. Last week we started on how to give financially, thinking beyond just giving from what’s in your checking or savings account. I’ve included the chart on financial giving once again since most of us never think about the other 90% of our assets that we can give from.
Ninety percent of these “other assets” may include retirement plans such as:
- IRA’s and 401k’s
- brokerage accounts
- stocks, bonds, and mutual funds
- promissory notes
- mortgages receivable
- cash value life insurance policies
- tangible personal property
- art collections or classic automobiles
- oil and gas interest, mineral rights, precious metals
- raw or undeveloped land like ranches and farms
- single family dwellings, condominiums, apartment buildings, vacation properties, rental and commercial properties
- Commercial business holdings like an S- Corp, C-Corp, Limited Liability Corp (LLC)
- Limited Partnerships (LP), Family Limited Partnerships or Sole Proprietorship, etc.
Giving Non-Liquid Assets with large capital gains like those mentioned above directly to your favorite charities is a tax-smart way to give. Since less goes to taxes, more goes to ministry; plus it may increase personal savings since you may receive a full tax deduction for the fair-market value of the asset given directly to a charity. Non-traditional giving can be very complicated, but there are many Kingdom Building financial tools available to create financial endowments like Charitable Gift Annuities, Donor Advised Funds, estate planning techniques and more.
The Charitable Gift Annuity enables one to make a gift like the assets mentioned and receive fixed payments for life. At your death, the remainder will be available for the mission of your recommended charities.
A Charitable Gift Annuity offers the following advantages
- A potential for a high rate of return. Your annuity payments may be considerably more than you are presently receiving
Immediate tax deduction. The donor receives an immediate partial tax deduction
- Provision for yourself and one other: your spouse, a special needs child, or a parent
- Lifetime payments. The annuitant(s) receive payments for life.
- Flexibility: you choose immediate or deferred payments and frequency of payments—quarterly, semi-annually or annually
- Partial tax-free payments. Part of the payments may be a tax-free return of principal and last, the
- Ability to support your favorite charities. For ultimate flexibility, the donor may recommend favorite ministries or charities and use a Donor Advised Fund or a selected Charity Advised Fund to receive the charitable portion of the gift
Gifts of cash and securities may be exchanged for a Charitable Gift Annuity. Non-cash assets will be immediately sold and invested.
Next week I will discuss how a Donor Advised Fund may be used for tax efficient giving in a year of receiving an unusual windfall of cash such as an oil discovery, a lump sum pension buyout or as a beneficiary of what remains in your retirement plans after you’re gone.
Non-traditional giving is very complex but I’m here to help you turn your non-cash assets into “living water” to build the Kingdom of God. Feel free to contact me at our office by calling 830-609-6986 during business hours of 8:00am-5:00pm CDT to learn more.