Making a gift to The Community Foundation can be as simple as writing a check or as sophisticated as creating an estate plan.
Your clients may give cash, publicly traded securities, closely held stock, real estate, real property, insurance policies, limited partnership interests, retirement plan assets and combinations of the above. Cash gifts are deductible up to 50% of the donor’s adjusted gross income with a five-year carryover for any excess. Checks or money orders can be made out to The Community Foundation of West Alabama.
Appreciated Securities and Real Property
Gifts of appreciated securities or real estate may be made to the Foundation and may allow a donor to make a more substantial contribution while gaining important income tax advantages. By giving in this form capital gains tax on the stock’s appreciation is avoided. Gifts of appreciated securities are deductible at their full market value if held longer than 12 months. The Community Foundation allows the donor to claim a deduction based on the market value of the securities at the time of the gift. The Community Foundation strongly encourages all donors to consult with their tax advisors before making such a gift so as to be aware of all tax law that concerns donated appreciated property.
Closely Held Stocks
Donors may choose to contribute closely-held stocks to the Community Foundation of West Alabama. This may provide an opportunity for them to increase the liquidity of their assets for charitable giving. Closely held stocks are shares in a privately-owned business and are usually owned by family members, top management and the corporation itself. The stock can be contributed outright to the Foundation and the donor is entitled to a deduction for the appraised fair market value. The donor also avoids the potential capital gains tax on any appreciation in the value of the stock. Subsequent to the gift, the Foundation may sell the stock to the corporation or other shareholders for cash. There can be no prior agreement between the charity and a potential buyer before the gift is made.
Mutual funds can be excellent assets to contribute to the Community Foundation. The fair market value of a mutual fund share is its public redemption price on the date of the gift. Gifts of mutual funds are deductible at their fair market value up to 30% of the donor’s adjusted gross income, with a five-year carryover, if needed.
Gifts of life insurance enable donors to make a future major gift to the Community Foundation at a relatively modest cost. Donors generally are entitled to a federal income tax deduction for the value of ongoing premium payments. Gifts of life insurance are a particularly attractive way for younger donors to make significant gifts or for families who no longer need the security of large death benefits.
Gifts of real estate may be made to the Community Foundation of West Alabama. Real estate may include a house, farm, vacation home, commercial building, and income-producing or non-income producing land. Gifts of real estate may be contributed as outright gifts, as a retain life estate with the remainder to the Foundation, or to a charitable remainder trust. Real estate may also be given to CFWA through a donor’s will.
Tangible Personal Property
Gifts of tangible personal property such as art, antiques, collectibles, jewelry, rare books, stamps and coin collections, can be made to the Community Foundation. When gifted to a public charity, such items are deductible at full fair market value as determined by a qualified appraisal if the use of the contributed property is related to the tax-exempt purposes of the charity. If the use of the contributed property is unrelated to the tax-exempt purpose of the charity, in other words being given with the express purpose for the charity to sell it and use the proceeds, then the donor is entitled to a charitable deduction for his or her cost basis in the property.