Philanthropy and Charitable Giving

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Philanthropy and Charitable Giving Why We Give
and How We Give
The Guardian Life Insurance Company of America,
New York, NY
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Disclaimer

• The foregoing information regarding estate,
  charitable and/or business planning techniques is
  not intended to be tax, legal or investment
  advice and is provided for general educational
  purposes only. Neither The Guardian Life
  Insurance Company of America (Guardian), nor its
  subsidiaries, agents or employees provide tax or
  legal advice. You should consult with your tax
  and legal advisor regarding your individual
  situation.
• Links to other sites are for your convenience in
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  Guardian does not maintain these other sites and
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  Although Guardian believes that the information
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  Guardian does not recommend or endorse these
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  any way.

GEAR 2008-9685 Approval 01/05/2009 Expirati
on 07/04/2010
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What is Philanthropy?

• The idea behind meaningful philanthropy
• is a desire to change the world
• for the better.
• Alan Alda

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What is Charitable Giving?

• To me, money is a means to do good.
• Eli Broad

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Charitable Giving in America

• Over 70 of households make charitable gifts
• An estimated 260.28 billion was given to
  charities in 2005 by Americans
• Americans give, on average 2.2 of their
  after-tax income
• The Center on Philanthropy at Indiana
  University, Panel Study, 2005 wave, revised
  January 2008
• Giving USA 2006

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Why Do Americans Give?

• Have an impact in society and make a difference
• Pride in the community
• Creating a legacy and perpetuating family values
• Sense of obligation and guilt
• Good business

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Why Do Americans Give?

• Tax management and leverage
• Recognition, standing and prestige
• Giving back and redemption
• Compelled by recent events
• Religious identity

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Why Do Americans Give?

• Philanthropy is different for each person.
• The outcome of philanthropy can be as much for
  oneself as it is for others.

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What Do Americans Give?

• Time and Talent
• Treasures
• Money
• Property

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Time and Talent Volunteerism

• Most altruistic
• Often brings greatest personal satisfaction
• No financial incentive or reward

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Treasures Cash Contributions

• Cash contributions
• Checkbook philanthropy
• Tithing

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Income Tax Deduction

• Cash Contributions
• Up to 50 of adjusted gross income in the year
  the gift was made
• Carryover of unused deduction

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Treasures Contributions of Property

• Art work
• Securities
• Cars
• Real estate
• Personal property (e.g., furniture, clothing,
  used electronics, etc.)

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Income Tax Deduction

• Contributions of Property
• Up to 50 of adjusted gross income in the year
  the gift was made, with exceptions
• Amount of deduction depends upon the type of
  property donated
• Ordinary income type property
• Capital gains type property
• Related use gift of property
• Carryover of unused deduction

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Treasures - Planned Giving

• Gifts to charity made at death (testamentary
  gifts)
• Through wills and revocable living trusts
• Through beneficiary designations
• Through a life estate with remainder to charity

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Treasures - Planned Giving

• Particularly advantageous with IRD (income in
  respect of a decedent) assets
• Qualified retirement plans
• Individual Retirement Accounts (IRAs)
• Annuities

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Common SpecialtyPlanning Techniques

• Retirement Assets Donated to Charity
• Donor Advised Fund
• Charitable Gift Annuity
• Pooled Income Fund
• Life Insurance Charitable Giving

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Retirement Assets to Charity

• Retirement Plans
• 401(k) Plans
• Profit Sharing Plans
• Pension Plans
• Individual Retirement Accounts (IRAs)
• Others
• Commonly used in testamentary planning
• Many tax benefits
• Not as common for lifetime gift planning
• New rules have helped

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Donor Advised Fund

• What is it? How does it work?
• Contributions can be accumulated
• Contributions are invested and grown
• You, as donor, can advise the donor advised
  fund on the investment strategy
• You, as donor, can advise the donor advised
  fund to make a distribution
• Same tax deduction as a gift of cash
• Donor advised fund does not have to distribute
  your contribution each year

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Charitable Gift Annuity
Donor
Charity
1. Donation to charity
2. Promise to pay annuity stream
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Charitable Gift Annuity

• What is it? How does it work?
• Dual purpose
• Stream of income to donor for life
• Remainder to charity
• Inexpensive to set up
• Deal directly with charity of choice
• Reliance on charity
• Maintaining the familys financial legacy
• Obtained through a Wealth Replacement Trust
• Purchase life insurance in Wealth Replacement
  Trust using income stream

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Pooled Income Fund

• What is it? How does it work?
• Somewhat similar to charitable gift annuity
• Stream of income for life based upon investment
  performance
• Asset to charity upon death
• Deal directly with charity of choice
• Reliance on charitys investment management
  skills
• Maintaining the familys financial legacy
• Obtained through a Wealth Replacement Trust
• Purchase life insurance in Wealth Replacement
  Trust using income stream

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Pooled Income Fund
Donor
Pooled Income Fund Trust
1. Contribute to trust
2. Pay income stream based upon investment
results
3. Remainder to charity
Charity
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Gift of Life Insurance

• Four Methods
• Charity as beneficiary of group term life
  insurance
• Charity as beneficiary of personally owned life
  insurance policy
• Gift of an existing life insurance policy to
  charity
• Gift of premiums to charity for charity owned
  life insurance policy on donor

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Charitable Beneficiary of Group Term

• Group Term Life Insurance
• Group term life insurance
• Provided by employer
• Income tax on benefit in excess of 50,000
• Charity named as beneficiary for full year
• Avoid income tax
• Create social legacy

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Charitable Beneficiary of Personally Owned Life
Insurance

• Personally Owned Life Insurance Policy
• Name as primary beneficiary
• Name as contingent beneficiary
• Beneficiary of some or all of death benefit

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Transfer Life Insurance Policy

• Transfer of Policy
• Gift of existing life insurance policy to charity
• On-going gift of premiums to charity

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New Life Insurance

• New Life Insurance
• Gift of money to charity for charity owned life
  insurance policy on donor
• Annual gift of money to charity for premiums
• Insurable interest rules

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Wealth Replacement Trust

• What Is It? How Does it Work?
• Irrevocable life insurance trust
• Replaces wealth gifted to charity
• Premiums paid from income stream
• Premiums paid from other assets or cash flow
  sources (depending upon charitable giving
  technique)
• Allows for social legacy without reducing family
  family

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Other SpecialtyPlanning Techniques

• Charitable Remainder Trust
• Charitable Lead Trust
• Qualified Conservation Contribution
• Private Foundations

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Choosing a Charity

• Charity Navigator (charitynavigator.org)
• GuideStar (guidestar.com)
• Community Giving Resource (smartlink.org)
• American Institute of Philanthropy
  (charitywatch.org)
• Better Business Bureau Wise Giving Alliance
  (give.org)
• Schwab Charitable (schwabcharitable.org)
• Publication No. 78 (irs.gov)

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Conclusion

• Philanthropy and charitable giving are what you
  want it to be and what you make it to be
• Many ways to accomplish your goals
• Create a community and social legacy
• Create a family legacy

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For Additional Information

• Lynn Shaffer, EWI Executive Director
• Corporate Office
• 515 South 700 East, Suite 2A
• Salt Lake City, UT 84102-2801
• Phone 1.877.4EWI.NOW(1.877.439.4669)
• Fax [phone]
• Email lynn_at_ewi.connect.com

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For
Additional Information

• EWI of Denver
• Wealth Strategies Group
• Gerry C. Frantz, CLU
• Financial Representative
• 6455 South Yosemite Street, Suite 300
• Greenwood Village, CO 80111
• Phone [phone]
• Email Geraldine_Frantz_at_wealthsg.com