First Lutheran Church of Venice
Types of Endowment Gifts
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.
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.
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 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.
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.
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.