A donor who wishes to preserve or perhaps increase income might fund a charitable remainder trust, a charitable gift annuity or a pooled income fund. All three of these gift plans provide income for you or your loved ones over a designated timeframe or for life.
Significant tax advantages can be associated with income producing gifts, such as an immediate charitable income tax deduction, an avoidance of immediate capital gains taxes upon the sale of appreciated assets and eventually estate tax savings.
Charitable Remainder Trust:
To create a charitable remainder trust, a donor must irrevocably transfer assets to Canisius College (or other qualified party) as the trustee. The trustee manages the investment and pays an income to the donor or his/her beneficiaries. At the end of the trust period, the remainder of the trust belongs to Canisius College. Just about any asset may be used to fund this trust. More popular assets used include cash, securities or property.
Charitable remainder trusts offer income benefits in the form of fixed or variable income plans. Donors who desire a fixed source of income may find the charitable remainder annuity trust (CRAT) best suited to their needs. The dollar amount of the income is set as a percentage of the amount originally placed in the trust. The charitable remainder unitrust (CRUT) is a variable income gift plan that can provide an element of inflation protection, since the pay out is based on an annual valuation of the trust. As the value of the unitrust assets grow, the income paid to you or your loved ones increases proportionately. Likewise, if the value of the assets decline, the amount of the income will decrease also.
Charitable Gift Annuity:
A gift annuity is among the oldest, simplest and most popular methods of making a deferred gift. It is based on a contractual agreement between one or two donors and a charitable organization, and based on the income beneficiary's age. This fixed-income gift plan offers you lifetime income. The income is calculated on the size of the gift, the number of income recipients and the ages of those income recipients. As the donor, you can receive favorable income, estate and capital gains tax treatment from the gift. Long-term appreciated assets are ideal for funding a charitable gift annuity because they reduce capital gains tax exposure. The full assets of the college secure the income. A hybrid of this plan, known as a deferred payment gift annuity, allows a donor to make a current gift, receive all the tax benefits and defer income to a later time.
Pooled Income Fund:
Structured like a mutual fund, the donor, through a gift, buys units in the fund and shares in the net income, based on the number of units owned. This income is usually paid quarterly by the fund and the donor may also receive favorable income, capital gain and estate tax benefits.