ArtsPartners recently hosted a round-table discussion on charitable gifts with staff and board members of not-for-profit organizations. Karen Stumpe, an attorney with Kavanagh, Scully, Sudow, White & Frederick, PC, and Jim Sullivan of the Community Foundation of Central Illinois, joined me in facilitating the discussion. Following are some highlights that may be of benefit.
Stumpe reminded all of us of the importance of maintaining the 501(c)(3) status. Organizations must complete the appropriate annual reporting requirements and make certain the organization's activities comply with the approved purpose clause stated in the not-for-profit notice from the Internal Revenue Service. Often, not-for-profit organizations change or evolve according to the needs of members and markets. It's important to recognize how those changes can affect an organization's not-for-profit status in the eyes of the IRS.
Sometimes donors wish to make a gift of tangible property that has appreciated in value or is no longer of interest to the family. Stumpe recommended, "Prior to accepting gifts of tangible property, including real estate, one must understand any restrictions that come with the gifted property. Title searches and other forms of due diligence may assist in finding out if the gift is free of liens, identify any other owners, and discover if the title is clear before the gift is accepted."
When receiving gifts, make certain your organization can handle any restrictions that may come with the gift. Also, make sure your organization can administer the gift. Jim Sullivan gave an example: "If your organization is not set up to receive stock or other marketable securities, you need to set up a brokerage type account. If this is not feasible, the Community Foundation's Depository is an option. The Depository at the Community Foundation allows a donor to open an account and make a gift of stock or mutual funds. The Community Foundation then sells the gift and makes certain the proceeds from the sale are donated according to the donors' wishes."
As a public charity, the Community Foundation fulfills several functions in charitable and planned giving, including handling endowed funds and providing donor-advised funds, charitable remainder trusts, and charitable lead trusts. For more information, call 674-8730 or visit www.communityfoundationci.org.
Stumpe shared a gifting idea that was new to most participants: donor loans made interest-free to a charity. Interest rates are low right now, so some individuals are willing to lend their support via a loan. It's important to check with your attorney or accountant for the maximum amount allowed in Illinois. This type of gift provides no tax deduction, nor does it earn any income for the donor. The donor may wish to make arrangements to have the loan forgiven upon his or her death, if not fully repaid at that time.
Life insurance can be an easy way to make a donation. The most straightforward method of using a life insurance policy for a charitable purpose is to designate a charity as the beneficiary of some or all of the proceeds.
As 2004 came to a close, many charities made their appeals for year-end gifts, but in reality, charitable giving is a year-round activity that often requires planning. AA!