Planned Giving Options Prove a Little Creativity Can Shape the Future

Halloween also marks the arrival of another season: the charitable giving season.

Many people make important decisions about charitable contributions this time of year. As with Halloween, a little creativity can go a long way, generating an enormous, positive impact on tax liability while supporting a favorite charity.

Most of us, if given a chance, would like to leave some kind of lasting legacy to show our lives have made a difference, a contribution that will benefit generations to come. In the past, only a privileged few could create such legacies through gifts of cash. But today, with all the new tax-favored ways of giving, many more of us can explore alternative means of contribution.

Planned giving, when donors combine gifts with financial and estate planning, can be especially rewarding. Patrons are able to do more for their favorite charities while also enjoying greater tax and financial benefits.

Some examples of creative, planned giving include:

Appreciated stock This option provides you with a terrific tax deduction while at the same time eliminating unwanted capital gains taxes on that asset.

Gift annuity This option is best for patrons who are 60 years old and older.  It pays an annual percentage based on age. For the typical 75-year-old, it would pay an annual percentage of roughly 7.5 percent for the rest of the person’s life. For a $10,000 gift, that would amount to $750 a year.  The benefits include a charitable deduction and a steady, guaranteed income.

Paid-up life insurance policies A gift of life insurance policies that are no longer needed for your security or the security of your family provides another way to benefit a special charity. A good example is a policy acquired for a child’s education when the child is now grown. Donation of a policy can help you make a significant gift and avoid paying taxes on the cash value.

Gifts of real estate When appreciated real estate is donated, capital gains taxes are completely avoided and the full fair market value of the property is generally deductible as a charitable contribution. Federal tax laws also permit a charitable deduction for gifts of fractional interest in real estate. This type of gift can be particularly rewarding if you own a vacation home that you use only part of the year. In addition, a special provision of the tax law allows an immediate income tax charitable donation for a gift of a remainder interest in your home or farm, and you retain an absolute right to occupy the home or farm for your life or that of your family.

Charitable bequests The most popular planned gift is a simple charitable bequest. Bequests are favored because they give you or loved ones the opportunity to leave a lasting legacy. To create a bequest, you direct in your will that part of your estate go to your favorite charity. Charitable bequests do not interrupt your lifestyle or have any immediate out-of-pocket costs, yet they offer great flexibility in giving. You can bequeath a specific asset or sum of money, a percentage of your estate or what remains of your estate after you have provided for other beneficiaries. You also can designate how you would like the bequest used or leave it unrestricted to benefit the area of greatest need. Most importantly, you can change any bequest provision throughout your lifetime, so you remain in complete control of the process.

Gifts of cash Cash is the most popular and simplest way to give. Your gift is immediately available to support significant programs, and every dollar you give is deductible in the year you make your gift.

For more than a century, generous community support has assisted Sparrow Hospital and the Sparrow Health System in developing and strengthening medical resources for the people of mid-Michigan. As a not-for-profit community hospital, Sparrow truly belongs to the community. Every dollar of excess revenue is reinvested in Sparrow’s patient care, prevention and community outreach programs that address the unique health needs of our community.

Sparrow’s fundraising arm, the Sparrow Foundation, launched a major capital campaign in 2005 to help fund important expansions to the hospital’s Emergency Services Department that will more than double its size and create a new Pediatric Emergency Department, the first of its kind in this region.

This expansion project also will construct a new 10-story west wing to address additional patient care needs. This space will house Sparrow’s expanded Emergency Department, new surgery suites, and the Cardiovascular Centers of Excellence. The first phases of the project currently in construction have already connected the new parking deck to the main hospital with a new lobby.

These all are critical projects, plans that will improve access to our services and accommodate new medical technology. But this initiative is more than that. It demonstrates Sparrow’s commitment to ensure our ability to deliver first-class healthcare services to this region well into the 21st century. Providing the best service available in a cost-efficient manner is the goal of every well-run business, and expansion often is part of that process.

As construction moves forward, so, too, does the charitable campaign that helps finance the project. The goal of this campaign is to raise an additional $6 million over the next four years. Expansion and renovation costs are significant, but the potential return on this investment is many times greater, one that leads to improved health and a better life for everyone in the region.

Join us in helping to shape the future of healthcare at Sparrow by leaving a lasting legacy for your family, your neighbors, your employees and all the residents of mid-Michigan.

For more information or to make a tax-deductible donation, call the Sparrow Foundation at 517-364-5680.  

Joe Wald is Sparrow vice president of community relations and president of the Sparrow Foundation.

 

 

 

 

 

 

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