Planned gifts come in three types: current gifts, deferred gifts, and split interest gifts.
Current gifts are those given and received now. Examples of current gifts include cash or checks, stocks or bonds, real estate, personal property, and art or antiques. The donor simply sends or brings the actual gift to your organization or signs papers transferring the asset(s) to your organization.
In the case of certain sophisticated kinds of current gifts, such as real property or closely-held stock, your organization will want to carefully consider the merits and disadvantages of accepting such gifts. To protect both the donor and your organization, your gift acceptance policies should clearly spell-out procedures for the staff to follow when offered unusual gifts.
An outright charitable lead trust also qualifies as a current gift, since the trustee is obligated to send a fixed annual amount to your organization for a set number of years.
Deferred gifts are decided upon or given now but received by your organization at some time in the future, often at the end of the donor’s (and the donor’s spouse’s) lifetime. The most common deferred gift is a bequest. The donor makes a provision now in his or her will to benefit your organization but the gift is not received until after the donor’s death.
Similarly, your organization may be the beneficiary of a life insurance policy that matures at the death of the insured. Some donors may wish to donate an insurance policy now, making your organization both the owner and the beneficiary of the policy and producing tax savings for the donors—and your organization will receive the proceeds of the policies after the donors’ lifetimes.
Qualified retirement plans make particularly good assets for deferred charitable gifts, since they will be subject to both income tax and estate tax at the end of the donor’s life. The charitable designation can be made directly with the retirement plan administrator— and avoid all taxes.
Split interest gifts share benefits with both the donor (and/or the donor’s heirs) and your organization. There are many types of split interest gifts, each has numerous nuances and financial responsibilities and some are very sophisticated and complicated. Financial and legal counsel should be sought before deciding to offer them.
The attraction of most split interest gifts is that the donor can arrange for your organization to receive the gift’s corpus in the future, while retaining regular payments of investment earnings for a period of years or for the rest of the donor’s (and spouse’s) lifetime. As you can imagine, these payments can make a nice addition to retirement income. For younger donors, the payments can be deferred until the donor retires or reaches 65 years of age.