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Types of Endowment Gifts

Introduction
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The goal of endowment fund at First Lutheran Church of Venice is to provide members and friends with a potentially advantageous means to support the church's mission and ministry. There are a variety of ways that you may make a gift to the endowment fund. There are tax benefits associated, to different degrees, with these various methods of giving. It should be noted that this account is not meant to be a definitive tax advisory treatise. Anyone seriously considering a gift should consult their tax accountant or call a member of the endowment committee such as Richard Bruning or Ed Freston who can provide you with a proper source. The various methods of giving can be generally divided between outright gifts and planned gifts.

Outright Gifts
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Gifts of Cash
A gift of cash is the easiest and most direct way to give. It can be as simple as writing a check payable to the First Lutheran Church Endowment Fund with a attached note indicating the gift as unrestricted or designating it as support for one of the projects or ministries listed in the general endowment fund description.

Gifts of Real Estate
A gift of real estate may include a gift of a principal or vacation residence, commercial buildings or unimproved land and may be for the entire property or a fractional interest. The donor is entitled to a charitable income tax deduction of the full fair market value of the equity in the real estate, valued at the time of the gift. Additionally, the donor will avoid capital gains tax on the transfer. Gifts of real estate may also generate substantial estate tax savings by removing a high-value asset from your estate.

Charitable Bargain Sale
With a charitable bargain sale, you sell a residence to the church at less than its fair market value. You earn a charitable income tax deduction for the difference between the fair market value of the assets and their sale price to the church. You and the church agree on the purchase price for the property, and on whether you will be paid in a lump sum or through an installment note. If lump sum, the transaction gives you cash that you can use to purchase another asset, or as the entry fee for a retirement facility.

Remainder Interest
Another option for gifting real estate is the remainder interest. A gift of a remainder interest allows you to continue to enjoy your home for your lifetime, and the lifetime of your spouse, while providing a current charitable income tax deduction and potentially lower estate tax costs.

Gifts of Securities
Using appreciated securities (stocks and bonds) is a popular method of making a gift. A gift of appreciated securities provides a double tax savings: you may deduct the average of the high/low value of the securities on the date of the gift and totally avoid capital gains on the appreciation. A gift of appreciated securities, held for more than one year, entitles you to a charitable income tax deduction in the year you complete the gift. You may use the deduction to offset up to 30% of your adjusted gross income. Any deduction exceeding the 30% limit is carried forward for up to five additional years. You may also donate securities you have held for less than one year, but your deduction will typically be based on what you paid for the securities.

Gifts-in-Kind
Gifts of property such as equipment, paintings or other art objects may be donated to the endowment fund and entitle you to an income tax deduction. Because items of this nature are subject to estate tax, a donation, either during your lifetime or as a bequest under your will, may also produce estate tax savings. For gifts made during your lifetime, the amount of the deduction depends on whether the gift relates directly to the educational or ministerial purposes of the church. This is an instance where you should definitely seek counsel from a member of the committee.

Planned Gifts
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A planned gift requires careful consideration of the financial, personal and charitable objectives of the donors and should involve input from their financial and legal advisors. Many planned gifts are outright gifts. Other planned gifts are deferred, where the donor retains some level of control over the assets for either one or more lifetimes or a term of years.

Bequest
A bequest is the easiest and most common form of planned giving. You may make provisions for the endowment fund in your will or living trust by designating either a specific dollar amount or a percentage of your estate. By so doing, you: may change the amount and nature of your gift anytime prior to your passing, may direct how your bequest be used, retain control over the assets for the duration of your life, may delay the gift until after the occurrence of a specific event such as the death of your spouse or children and may provide for the care of your loved ones before the church receives any portion of your estate. Bequests under your will or living trust provide estate tax relief to your heirs and may enable you to provide larger benefits to your loved ones since charitable gifts are not taxable.

Gifts of Life Insurance
Naming the First Lutheran Church Endowment Fund as owner and irrevocable beneficiary of the policy will generate an income tax deduction for you. The charitable deduction will depend on several factors including what, if any, premiums are still to be paid. This may be a cost efficient way to provide a significant gift in support of First Lutheran Church. Paid-up policies will generally result in an income tax deduction equal to the cash surrender value of the policy. For policies with premiums remaining to be paid, the deduction is approximately equal to the cash surrender value plus a portion of the last premium payment. If you continue to make future premium payments, you may also receive an income tax deduction for them. You may also designate the church as the beneficiary or contingent beneficiary of your group term life insurance through your employer. This method of giving will not generate a current income tax deduction, but it will remove the value of the insurance from your estate.