Berkshire Taconic Community Foundation

Cash

Cash, including credit card and check, is an easy and convenient way for donors to open a fund or give to an existing fund. Gifts of cash allow them to claim a tax deduction of up to 50 percent of their adjusted gross income in any one year when they itemize deductions. If a donor cannot deduct the entire gift in the first year, any excess may be carried forward for up to five additional years.

Securities

Gifts of appreciated securities offer important tax advantages. When donors itemize deductions, the full fair market value of the securities is deductible as charitable contribution up to 30 percent of adjusted gross income. Deduction amounts that exceed the limit can be carried forward for up to five additional years. Donors do not have to pay federal or state capital gains taxes on the appreciated portion of the gift. In addition to publicly traded securities, closely-held stock, restricted securities and mutual funds are also options for giving.

Retirement Plans

Retirement plan assets, such as 401(k) plans and IRAs, can make excellent charitable gifts.

Because retirement plans are heavily taxed at the death of the plan participant, many people prefer to leave other assets to heirs and to name a fund at Berkshire Taconic as the beneficiary of the retirement plan, which allows them to donate the full amount of the plan to the fund and avoid most taxes.

The simplest way of leaving retirement fund assets to Berkshire Taconic is to designate it as the beneficiary or contingent beneficiary of the retirement fund. This avoids both the estate tax and income tax, which can total 80 percent or more of the plan’s assets. Another option is to designate a charitable remainder trust as the plan beneficiary, providing lifetime income to children or grandchildren and a charitable fund at Berkshire Taconic as the remainder beneficiary.

Life Insurance

A donor with a life insurance policy that is no longer needed can use it to make a significant gift to charity, with tax benefits that can be enjoyed during his or her lifetime.

There are many types of life insurance products currently available that provide very individualized planning. In most cases, the donor irrevocably assigns the ownership rights of a life insurance policy to Berkshire Taconic, which is designated as the beneficiary. The donor then makes yearly contributions to Berkshire Taconic to cover the annual premium; the yearly contributions are deductible up to 50 percent of adjusted gross income. Paid-up policies can also be contributed.

A donor can replace the dollar value of an asset transferred to Berkshire Taconic with a life insurance policy. Or, the donor can use regular payments from a charitable remainder trust to fund an irrevocable life insurance trust. The trust can purchase insurance on the donor's life to benefit his or her heirs. This way, donors can make a gift to Berkshire Taconic and replace the value of this gift within their estate with life insurance proceeds.

Real Estate

Berkshire Taconic welcomes gifts of real estate that are readily marketable and free of environmental or other problems. Berkshire Taconic can accept gifts of real estate, including a house or condominium, farm, commercial building and income- or non-income-producing land.

A gift of real estate that donors have owned for more than a year entitles them to the same federal tax advantages as those available for gifts of securities: the full market value is deductible as a charitable contribution, up to 30 percent of adjusted gross income, when they itemize deductions. Deduction amounts that exceed the limit can be carried forward for up to five additional years. In addition, donors do not have to pay federal or state capital gains taxes on the appreciated portion of the gift and remove the asset from their taxable estate.

Tangible Personal Property

In many cases, Berkshire Taconic will accept personal property, such as artwork, jewelry or antiques, as a donation. However, donors need to be aware that under the so-called “related use rule,” unless Berkshire Taconic can use the donated item in connection with carrying out its charitable purpose, the donor may not claim the fair market value of the donated items as a charitable income tax deduction. If this is the case, the deduction is limited to the donor’s cost basis of the donated item, which in many cases is far less than its current value.

There are, however, notable exceptions that might make a donation of tangible property financially attractive. Inherit valuable tangibles acquire a new basis based on their value at the time of the inheritance. If your client gives them to Berkshire Taconic, the deduction equals the new basis, even if Berkshire Taconic immediately sells them. If a donor makes a gift at their death through their will or a revocable trust, the estate is allowed an estate tax charitable deduction equal to the fair market value of the property, whether or not the personal property relates to the charity's tax-exempt purpose.

Private Foundations

Donors with a private foundation may wish to use its 5 percent annual required payout to create a donor advised fund at Berkshire Taconic, allowing them more time to deliberate about their grants. They may also meet their payout requirement by contributing to an existing fund at Berkshire Taconic, such as their local area fund. All contributions to Berkshire Taconic count toward the private foundation annual payout requirement.

Donors may also choose to transfer the assets of their private foundation into a donor advised or other type of fund at Berkshire Taconic and terminate the private foundation. This frees them from the responsibility of administering a private foundation and allows them to focus their energies on identifying organizations that they want to support. The fees for having the foundation operate as a fund at Berkshire Taconic are frequently less costly than the costs of maintaining the private foundation.