017 DGM – Smart and Easy Ways to Leave a Gift to Charity

Smart and Easy Ways to Leave a Gift to Charity (part 1)

Welcome back. This is the podcast that helps you and other donors and volunteers do good even better — regardless of which charities or causes you support. 

This is Ed Long. Each week on this podcast I talk about charities and provide actionable tips to help donors and volunteers to take their philanthropy to the next level and do good even better.

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Main topic

  • Smart and easy ways to leave a gift to charity (part 1)
    • We’re talking again today about the smart part of Give Smart from Your Heart.
    • It’s about leaving a gift to charity when you die, through your estate.Smart and Easy
    • Individuals gave $22 billion through their estates in 2012, according to Giving USA.
    • When people hear “planned giving” or “estate giving” to charity, they think yikes – complexity – CRTs and other acronyms – lawyers! But leaving a gift to a charity of your choice doesn’t have to be complicated.
    • I’m going to give you general information, not specific advice on individual matters. If you want specific advice on the things I discuss you should should contact a professional advisor experienced in those matters.
    • #1: The super star assets to leave to charity
      • IRAs, retirement plans, deferred annuities and U.S. Savings Bonds purchased at a discount are what we call deferred-income assets. Each contains income that has never been taxed.
      • When choosing which assets to leave to which heirs, think of charities first for deferred-income assets. No one will benefit more.
        • Charities won’t pay income taxes on payouts from these assets.
        • Individual beneficiaries will pay income taxes on those payouts, at their individual rates.
        • An example: Let’s say you have a $100,000 IRA and other assets to leave in your estate, and you’d like to help both your nephew Bill and your favorite charity. Bill is in the combined 35% tax bracket (federal and state income taxes).
          • If you give the IRA to your favorite charity, it will get to keep all $100,000 (or benefit 100%) from the gift — because the charity pays no income taxes.
          • If you give the IRA to Bill, he will get to keep only $65,000 (or benefit 65%) from the gift — because he will have to pay $35,000 (35%) in income taxes.
          • Give the IRA to the charity, your other assets to Bill.
    • #2: Changing your mind during lifetime
      • Stuff happens. Relationships change. Financial situations change. Things change.
      • It’s valuable to set up gifts to charity in a way that you can change your mind down the road. Perhaps you’ll want the money or asset for other purposes. Perhaps you’ll no longer have the money or asset. Perhaps the charity will no longer be operating, or no longer be operating in your focus area.
      • When evaluating approaches to leaving gifts to charity, look at whether you can change your mind during your lifetime. Or, if you become incapacitated, whether your agent could do so for you under a financial power of attorney.
        • An example: We just talked about leaving an IRA to a charity. You would do that during your lifetime by naming the charity as the beneficiary. Good news for you: You can change your beneficiary naming during your lifetime; the charitable beneficiary has no rights to the IRA until you’ve died and the charity is still named.
    • #3: Estate taxes
      • We’re talking about the Federal Estate Tax — the tax on giving assets to others at your death. Although few estates are taxable under current estate tax laws, gifts to charities are normally 100% deductible for estate tax purposes.
        • An example: Let’s say that George (a widower) had an estate valued at $6 million and died in 2013. In 2013 the Federal Estate Tax exemption amount $5.25 million. He would have a taxable estate of $750,000. George could give $5.25 million of his estate to family and friends and give the remaining $$750,000 to charity, and there would be no Federal Estate Tax on George’s estate.
    • Your smart and easy assignment for today
      • Pull out the paperwork on any IRA, retirement plan or deferred annuity you own. Check whether you’ve named beneficiaries, and see who they are.
        • Next week we’ll talk about the mechanics of naming a charity as a primary or contingent beneficiary.
      • For extra credit, why not pull out all your planning documents including retirement plans, and take a look to set that they’re up to date.
    • A big part of giving smart from your heart is knowing about the tax and other rules that apply to giving to charity.
    • Coming up next week,
      • Comparing our list of seven smart and easy ways to leave a gift to charity.
      • Tips on how to hire an attorney or other professional advisor.
  • Had experiences? Have feedback? Share your thoughts  in the Reply / Comment section at the bottom of the page. Or email me at ed[@]seriousgivers.org

Episode sponsor

  • Today’s sponsor is the number 5915. 
    • $5,915 was the amount SeriousGivers spent in 2013.
    • Because its 2013 revenue was far below $50,000, SeriousGivers filed the simplified IRS Form 990-N.

    • Form 990-N, however, provides no meaningful financial information.

    • Nonprofits should be open about their finances and operations.


  • Fake charities among IRS dirty dozen tax scams for 2014
    • Impersonation of charitable organizations is among the list of the top twelve tax scams for 2014, joining identity theft, tax-related telephone scams and nine others.
    • Focusing on disaster-related scams, here’s a bit of what the IRS had to say: “Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers.”
    • Dig before you donate.
      • CharityCheck101.org is a free, quick way to check the identity and tax status of any group soliciting funds as a charity.

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  • Use the reply / comment box below.
  • Send me an email at ed[@]seriousgivers.org.

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About Ed Long, the podcaster

Podcaster Ed Long has been preparing more than 40 years to do this podcast. He knows charities and the rules that apply to them. He’s analyzed charity finances and operations.  He’s founded and run charities, and volunteered for them. He’s helped the public and law enforcement fight fake charities, and has served as a philanthropy educator and coach. Before all that he worked as a partner with a major Wall Street law firm. Ed is the founder and CEO of SeriousGivers, which itself is a charity. Ed knows the great work that strong charities can do with the resources entrusted to them, and is passionate about helping others find and support strong charities.