RBC Planned Giving Options
This document is intended to highlight planned giving opportunities for church members to financially support our Church while also maximizing donor benefits. Planned giving helps secure our Church’s future by reducing risk, increasing congregational commitment and generosity, and celebrating an individual or family’s contributions to the church. As a donor, planned giving offers tax advantages and a path to creating a philanthropic legacy, even without having to give a large one time gift. There are numerous options that may be considered; however, the most popular methods are outlined below. If you are interested in learning more about any of these options, we encourage you to reach out to the RBC Finance Committee or to a local certified professional financial advisor.
Appreciated Securities (Stocks, Mutual Funds, Bonds)
Retirement Assets (401k, IRA, 403b)
Donating an appreciated security, such as a stock or bond, is one of the easiest and most effective ways to contribute. The donor’s tax advantage with this method includes the avoidance of capital gains tax while still qualifying for a charitable income tax deduction. To qualify, the security must have been held for at least one year and should be valued at a price higher than what the donor originally paid. If the value has decreased, it is more advantageous for the donor to sell the security and donate the cash. Donations can be made electronically through a bank or brokerage or by signing and mailing the physical certificate prior to year-end.
Life Insurance
Life Insurance is another tool available for charitable gifts. There are three main options for using life insurance funds for giving: Charitable Giving Riders, naming the church as a beneficiary, and policy donation. A Charitable Giving Rider is an option that can be added to some policies in order to pay a specified percentage of the policy’s value to a charity. Designating the church as the beneficiary means the church will receive the policy’s death benefit and the donor’s estate value can be reduced by that amount. Choosing to donate a policy allows the church to become the owner and beneficiary. This method provides the donor the same estate tax benefits but also qualifies as a charitable deduction for income tax.
Donor Advised Fund (Charitable Giving Account)
| A donor advised fund is essentially an investment fund dedicated to supporting one or more charities. Cash, securities, and other assets may be contributed depending on the type of fund. The donor is generally able to take an immediate tax deduction and any investment growth is tax free. Once invested, contributions cannot be returned to the donor or any individual other than an eligible charity. Depending on the type of fund, several investment strategies are typically available, as well as the option to use an advisor to manage the fund. Investing in a donor advised fund allows multiple smaller contributions to potentially grow and maximize your charitable donation at a future time. |
Donating unused or unneeded retirement assets, such as an IRA, 401k, or pension, is another way to give. This can be done by giving during your lifetime or by designating the church as a beneficiary. If gifting during your lifetime, using retirement funds for qualified charitable distributions starting at age 70 ½ can help with tax planning and may reduce future Required Minimum Distributions (RMD). At age 72, donating your RMD will continue to provide a method for reducing income tax. If you choose to leave retirement assets to the church as a beneficiary, you will potentially reduce estate tax and avoid the income tax that would be incurred if left to heirs.
Wills & Bequests
Perhaps the simplest planned giving option is the use of a bequest or gift in your will. Bequests are a standard part of estate planning, which makes it an easier option to utilize than some other methods. The main donor benefit of a bequest is that you maintain use of all money and property during your life while still leaving a statement of faith and lasting legacy. There are two main types of bequests: specific and residual. A specific bequest designates a specific asset, dollar amount, or percentage of your estate to be given to a charity. A residual bequest is made from the balance remaining after all specific bequests have been given away and is typically a percentage of the residual estate. Like many of the other options, bequests can also help reduce or eliminate estate taxes.