Most people know that they can write a check and support the Lisbon Public School Foundation. But did you know there are many other ways that you can provide financial support to our school? Here is a brief listing of other ways to give, along with the benefits of each. If you have any questions, please contact the North Dakota Community Foundation (NDCF), which manages our fund, at 701-222-8349.
Life Insurance/Retirement Accounts
This is one of the easiest ways to provide financial support to our school system. You simply make the North Dakota Community Foundation a beneficiary (or partial beneficiary) of your policy. You need to specify that the Lisbon Public School Foundation is the fund you wish to support at the NDCF.
Benefits of Life Insurance/Retirement Account beneficiary: Easy process and no impact on your current financial situation.
Gift of Stock
You can also transfer stock to the NDCF for the Lisbon Public School Foundation. Your investment professional simply transfers the stock, via wire transfer, into the NDCF account. (Your investment professional can contact NDCF in Bismarck for account information).
Benefits of a Stock Transfer: Donors get to take a tax deduction for the current market value of the asset and avoid capital gains tax on the stock.
Example: John Doe owns stock that he originally purchased at $1/share, but is now worth $10/share. He transfers the entire amount to the NDCF for the Lisbon Public School Foundation and receives a tax deduction for the full $10 current market value. In addition, he does not have to pay the $9/share in capital gains taxes. NDCF sells the stock and places the money in the Lisbon Public School Foundation fund.
A bequest is the property or money that you promise in your will to give to another person or organization after you die. It enables you to maintain full control over your property and money during your lifetime and yet to receive a charitable estate tax deduction for the value of the property at the time of your death.
It is usually advised to have an attorney help you in drafting a will. The language needed to include if you would like to leave some or all of your estate to the Lisbon Public School Foundation is as follows:
“I give and bequeath to the North Dakota Community Foundation (Tax ID 45-0336015), a qualified charitable organization under IRS 501(c)(3), located in Bismarck, North Dakota, (a percentage of the estate, specific dollar amount, or remainder of estate) to the Lisbon Public School Foundation, a component fund of the North Dakota Community Foundation.”
Benefits of Bequests: The executor of your estate will deduct the fair market value of the property you transfer to the Lisbon Public School Foundation. This charitable deduction can save a substantial amount of estate tax. In addition, you will know that your gift will continue to support the kids in our area far into the future.
Example: Fred and Marie Thompson have three grown children. They specify in their will which personal items go to each child. The remainder of their estate is sold and the proceeds are distributed according to their will: 25% to each of their three children and 25% to the NDCF, to support the Lisbon Public School Foundation.
Charitable Gift Annuities
A Charitable Gift Annuity is a contract between a charity and an individual. The individual, referred to as the donor, transfers property to the NDCF for the Lisbon Public School Foundation and the NDCF promises to pay a given amount at the end of each selected payment period to one annuitant for life or two annuitants for both lives (usually the donor or the donor and his/her spouse). Part of the payment is interest earned on the initial gift and is taxable as ordinary income. Part of each payment is return of principal and is tax free. However, if an annuitant survives past his or her life expectancy, all later annuity payments will be ordinary income.
Benefits of a Charitable Gift Annuity: Gift annuities are most attractive if you desire fixed payments. The annuity amount is fixed and will not change with current investment or market conditions. Also, appreciated property can be transferred to NDCF for our school foundation in exchange for a gift annuity. With appreciated property, a portion of the capital gains is allocated to the charitable gift amount and there is no capital gains tax on that amount.
A Charitable Gift Annuity is especially attractive if you have an asset that is not producing a large amount of income – such as a stock or CD – and gift it to the NDCF. The rates for gift annuities are shown in the table below and are particularly attractive in today’s market place.
Sample Annual Gift Annuity Payout
For a $10,000 gift.*
|Age||Annual Annuity||Income Tax Deduction||Income Taxed||Tax-Free Income|
|60||$ 440||$ 2,087||$ 106||$ 334|
|65||$ 470||$ 2,848||$ 103||$ 367|
|70||$ 510||$ 3,615||$ 98||$ 412|
|75||$ 580||$ 4,216||$ 98||$ 482|
|80||$ 680||$ 4,758||$ 97||$ 583|
|*rate subject to change, for illustration only||**income tax deduction in year of gift only|
Example: Mary Johnson, age 70, gives $10,000 to NDCF for a gift annuity agreement to benefit the Lisbon Public School Foundation. The payment rate, based on her age, is 5.1%, which means she will receive $510 every year. A large part of that payment will be income tax-free for the first 15 years. Her gift results in an immediate charitable income tax deduction of $3,615.
At the time of her passing, the original amount of her gift, minus the cost of making the life payments, will be deposited in the Lisbon Public School Foundation fund by the NDCF to use for whatever projects are needed at that time in the school.
Charitable Remainder Unitrust
The Charitable Remainder Unitrust is a special trust that pays income to family members. After all of the income payments have been completed, the remainder is distributed to qualified charities, in this case the NDCF for the Lisbon Public School Foundation. The person who establishes the trust may select the unitrust percentage, the persons to receive the income from the trust, and the charities which will receive the principal of the trust after all income payments are completed. You could choose several charities, in addition to the Lisbon Public School Foundation.
Benefits of a Charitable Remainder Unitrust: The major benefits of the trust are as a means to bypass the capital gains tax, increased income, and for a charitable income tax deduction. The details of a charitable remainder unitrust can be complex. If you have specific questions about these benefits, contact your financial advisor or call the NDCF at 701-222-8349.
Example: May Singh of Hazen, ND created a uni-trust with $200,000 through the NDCF in 1997. She received an annual income of approximately $10,000 every year. At the time of her passing in the spring of 2014, the uni-trust account had a balance of $206,079 and had paid out $157,074 to her over the years. Per May’s wishes, the remainder of the trust was used to establish two new funds at NDCF, to benefit the charities that were most important to May.
There are other, more complicated vehicles for transferring property and benefiting the Lisbon Public School Foundation, including a Charitable Remainder Annuity Trust and an Annuity Lead Trust. The staff at the North Dakota Community Foundation is experienced in a variety of giving tools and would be happy to answer questions or provide information if you would like to support our school in one of these ways.
Note: The North Dakota Community Foundation is not engaged in rendering legal or tax advice. This article is meant to provide general information about several different ways to support the Lisbon Public School Foundation. The NDCF recommends that any prospective donor consult their tax or legal advisor before entering into any giving program.
The North Dakota Community Foundation is a public, non-profit tax-exempt corporation which receives and distributes charitable funds to support a wide range of programs which benefit North Dakotans. NDCF currently manages over 680 funds for various North Dakota communities and donors, including 65 community foundations and nearly 200 scholarship funds. It holds assets in excess of $82,000,000 and to date has made more than $75,000,000 in grants all across North Dakota. For more information, contact the NDCF at 701-222-8349.