The Rotary Foundation offers several ways to structure a charitable gift that furthers Rotary’s mission. Furthermore such gifting may provide tax and other financial benefits to the donor and loved ones. There are a number of opportunities to construct a gift to the Foundation.
IRA Charitable Rollovers
The IRA charitable rollover has been reinstated and extended — this provision permits individuals age 701/2 and older to make tax free distributions of up to US$100,000 from an IRA directly to charity. This is effective for all of 2013. As always, consult with your advisors before making any charitable gift. Rollover distributions cannot be used for donor advised funds or life income agreements.
IRA Transfer Form
Life Income Agreements — Gifts that give back
Have you ever thought about making a contribution to The Rotary Foundation during your lifetime but were concerned about outliving your resources, meeting family obligations, or preparing for retirement? A life income agreement may make it possible by providing lifetime payments to you, a loved one, or both, as well as provide immediate tax benefits and the opportunity to maximize appreciated assets, if desired. Rotary’s planned giving team can easily prepare a no-obligation illustration.
Summary of possible benefits
- Annual payments for you or another beneficiary
- Immediate federal income tax deduction
- Potential estate tax savings
- Increased income from low-yield assets
- Avoidance or reduction of capital gains taxes on gifts of appreciated assets
- Opportunity to be recognized as a Major Donor to The Rotary Foundation
- Satisfaction in knowing that your contribution will make a difference in many lives
Types of Life Income Agreements
1. Charitable gift annuities
In exchange for your gift of cash or marketable securities to the Foundation, you (and another beneficiary or a survivor) receive guaranteed fixed payments for life.
Under the terms of a charitable gift annuity agreement, you make a gift of cash or publicly traded securities and, in return, collect regular payments for life that never change in size or frequency, regardless of changes in the economy. Payments to you (and another beneficiary, if you wish) are backed by the Foundation’s available assets. The number of annuitants and their ages determine the payout rate.
The Rotary Foundation’s Permanent Fund receives the charitable portion of the gift upon the death of the last annuitant. Donors interested in the stability of fixed payments tend to favor this type of life income agreement. Learn how you can make a difference in the world and your personal financial security.
The Gift Annuity Rates Table – for examples
2. Deferred charitable gift annuities
Like the charitable gift annuity, the deferred charitable gift annuity is a simple agreement with regular payments that never change in size or frequency, regardless of changes in the economy. However, with a deferred charitable gift annuity, these payments are postponed for a specified time (at least one year after the date of the gift) and generally payments and tax deductions are greater.
The size of the payment you receive each year depends on the amount transferred, your age now, and your age when the payments begin. You receive a charitable income tax deduction in the year of the gift. Because you identify the date to begin payments, this life income agreement is a helpful retirement and tax planning tool.
The minimum contribution for either annuity type is US$10,000 and the minimum age of the beneficiary is 50.
3. Charitable remainder trusts
A charitable remainder trust is a trust into which you irrevocably place assets in exchange for an income, either for life or a certain number of years. These trusts allow you to reduce capital gains taxes on gifts of appreciated property and are a great strategy for incorporating charity into your estate plans.
A charitable remainder trust can be funded with cash, real estate, publicly traded stock, closely held stock, bonds (including tax-exempt bonds), and certain other assets. You will receive payments at a rate agreed upon by you and the Foundation, with a minimum of 5 percent of the initial trust principal. There are two types of charitable remainder trusts:
- Unitrust — Income fluctuates annually with the trust’s fair market value
- Annuity trust — Income payments are fixed and determined when the gift is made
Payments from both trusts are backed only by the trust’s assets. The minimum amount needed to form a trust at The Rotary Foundation, with Rotary as trustee, is $100,000 and the minimum beneficiary age is 50.
4. Pooled income fund
The contributions of many individuals are pooled and invested under professional management. Each contribution purchases “units” in the fund at their current value, and you or another beneficiary receive a proportional share of the fund’s net income on a quarterly basis.
Participating in the pooled income fund is easy and requires a smaller investment than other life income agreements. The minimum initial gift is US$5,000 and involves the irrevocable transfer of property, such as cash or publicly traded securities, to the fund. Similar to a mutual fund, the income you receive is based on your gift’s fair market value and the variable rate of return that the fund is producing. The fund’s investment objective is to secure a reasonable current rate of return consistent with the preservation and long-term growth of principal. Pooled income fund gifts support the Permanent Fund.
Charitable Bequests — Gifts through your Estate
Each year, thousands of Rotarians and friends designate a portion of their assets in their estate plans to benefit the Foundation. Bequests made through wills or living trusts play an important role in securing the future of Foundation programs by building the Permanent Fund. These commitments also enable individuals to make gifts that may not have been possible during their lifetimes.
Bequests can take several forms:
- Specific bequest — Gives the Foundation a specific piece of property: “I give 500 shares of stock.”
- Residual bequest — Designates all or a portion of whatever remains after all debts, taxes, and expenses have been paid: “I give 50 percent of the next residue and remainder of my estate.”
- Contingent bequest — Takes effect only under certain conditions: “In the event that my spouse does not survive me, I give to The Rotary Foundation of Rotary International, an Illinois not-for-profit corporation, the sum of . . .”
Life Income Gifts Brochure
Charitable Gift Annuities
Life insurance gifts can provide a significant, cost-effective gift to The Rotary Foundation and may be structured as a
- Beneficiary designation. Identifying Rotary as the named beneficiary of an existing insurance policy is a great way to utilize a policy that is no longer needed. You simply complete the insurance company’s change of beneficiary forms and let The Rotary Foundation know.
- Ownership transfer. In certain situations, The Rotary Foundation can accept full ownership of an insurance policy and also be the beneficiary.
Elizabeth Cruft-Anderson (847) 866-3354.
The Foundation cannot provide legal or financial advice. We urge you to consult with your legal representative or financial adviser to determine the appropriate way to give and the best language to use when making a bequest.