Henry County Community Foundation (HCCF), an Indiana nonprofit corporation established in 1985, encourages the solicitation and acceptance of gifts to HCCF for purposes that fulfill its mission by supporting local community needs in Henry County.
The following guidelines govern acceptance of gifts made to HCCF, either unrestricted, for the benefit of any of its programs, or for the benefit of local community agencies:
HCCF reserves the right to accept or reject all proposed gifts on a case-by-case basis, after review by the Board of Directors.
With the exclusion of publicly traded securities, the transfer of ownership of any non-cash contributions to HCCF is subject to approval by the Board of Directors. Acceptance is based on these guidelines that are intended to eliminate financial risks associated with holding title to such property. For example: for contributions of real property, an Indemnification and Hold Harmless Agreement may be required along with a Phase I environmental audit, at the Donor’s expense, prior to acceptance of the property by the Board.
All non-cash contributions will be liquidated, unless the Board of Directors agrees to retain the assets. No contributions will be accepted subject to Donor restrictions defining a holding period for the investment, unless approved by the Board.
Valuation of non-cash gifts, the preparation and filing of Internal Revenue Form 8283, or other forms required for the purpose of obtaining a charitable income or estate tax deduction, will be the responsibility of the Donor, or the Donor’s personal representative.
Checks are to be made payable to HCCF.
Publicly traded and closely held stocks and bonds will be accepted at fair market value, as determined under Internal Revenue Service rules. It is the donor’s responsibility to obtain any necessary appraisals of securities. Special attention will be given in the preparation of gift proposals to tax restrictions such as the restriction on excess business holdings, restricted or controlled stock, and the capital gains treatment of discounted bonds when they mature.
Life Insurance Policies
The Foundation may accept gifts of life insurance policies. Prior to accepting a policy requiring ongoing premium payments, the Foundation shall obtain a written agreement with the donor regarding how such premiums will be paid. A donor may make a planned gift of life insurance to the Foundation, either by irrevocably designating the Foundation as the owner and beneficiary of the insurance policy, or by designating the Foundation as a percentage beneficiary of a life insurance policy owned by the donor.
Artwork and Collectibles
All proposed gifts of Artwork/Collectibles will be considered on a case-by-case basis. The Donor must provide one qualified appraisal as to the value of the Artwork/Collectibles dated no earlier than 60 days before the proposed date of the gift. The Foundation reserves the right to conduct its own, independent appraisal of the Artwork/Collectibles if needed. In reviewing acceptance of the gift, the Foundation shall take the following into consideration: its interest in the item (s); whether the item (s) is (are) marketable; its ability to safeguard the item (s); and the cost to insure the item (s) from theft/loss/destruction. The Foundation reserves the right to make exceptions to any of the above guidelines.
Types of Planned Gifts Offered
Provision for a planned gift investment may be made in the form of a bequest or device through a properly executed last will and testament. Such a bequest should read: “I give and devise the following gift to the Henry County Community Foundation, Inc.” followed by a description of property to be given in specific kinds, percentages, number of dollars or remainders.
A donor may provide for a planned gift in investment in the Henry County Community Foundation, guarantee a life income for him/herself and/or someone else he/she may designate and quality for both income and estate tax benefits through a charitable gift annuity. The donor provides for a guaranteed life income that is determined at a rate calculated from actuarial tables based on the life expectancy of the life income beneficiaries. Annuities often offer a higher rate of return than many other forms of investment (higher rates of return for more advanced ages). The total assets of the institution are pledged to guarantee the life income. Contributions for gift annuities are retained in 100% fundable reserve until the demise of the life income beneficiaries. The donor also provides for an ultimate gift to the Henry County Community Foundation. The donor qualifies for the income tax charitable contribution deduction for the computed value of the future gifts on his/her tax return for the year in which the annuity is purchased. The deduction qualifies under the carry-over rules. A portion of the annual incomes is excludable, tax-exempt income. The balance of the contribution value qualifies for an estate tax charitable deduction. The donor must make formal application for an annuity. The Foundation reserves the right not to accept annuity applications for less than $25,000, for more than two lives or for annuitants under fifty-five years of age.
Deferred Payment Gift Annuities
Deferred payment gift annuity plans provide for a guaranteed life income at some point in the future (must be more than one year from the date of the agreement), a charitable gift, and a tax deduction now. The annuity income is computed from the amount of the principal invested plus the accumulation of compound interest from the time of the investment to the time payment begins. The rate is computed from life expectancy tables at the age payment begins. This plan provides for income tax contribution deductions, some tax-exempt income in the future (although less than would have been received from an immediate payment gift annuity), estate tax deductions, and probate cost savings.
Charitable Remainder Trusts
Charitable remainder trusts are created when an individual transfers property over to a trustee under the terms of a legal document which describes the purpose and manner under which the trustee administers the property to fulfill the objectives established by the trustor. The Henry County Community Foundation may act as trustee for charitable remainder trusts, if the donor does not have a preference to name a third party of their choice to act as same. The trustee manages, administers, and makes disposition of both the income and the principal under whatever terms are specified by the trust. He/she may pay income to the trustor and/or someone he/she designates for life or a specified number of years, and then the remainder may be paid over to a charitable institution. Trusts may be modified in a variety of ways to suit the objectives of the donor. The Foundation reserves the right not to accept trust arrangements for less than $25,000, for more than two lives, or for income beneficiaries under fifty-five years of age.
The Tax Reform Act of 1969 limited income, estate and gift tax benefits to two types of trusts:
- Annuity Trust
The annuity trust specifies in a fixed number of dollars the amount of the annuity to be paid annually to the income beneficiaries. This must be an amount equal to at least 5% of the fair market value of the property transferred into the trust. The remainder, after the life income interests have terminated is paid over to the charitable institution.An annuity trust provides a fixed income for life, income tax benefits in the form of the income tax deduction and avoidance of capital gains tax liability, freedom from management concern, estate tax benefits and avoidance of probate problems.
The unitrust specifies a fixed percentage of the net fair market value of the trust assets as appraised annually to be paid over to the donor or anyone designated by the donor as income beneficiary. This must be an amount equal to at least 5% per year.The unitrust provides an income related to the total value of assets including growth and appreciation. The unitrust provides an inflationary hedge. The trust provides income tax benefits in the form of contribution deduction and avoidance of capital gains tax liability, freedom from management concern, estate tax benefits, and avoidance of probate problems.Unitrusts may also be written with the option: 1) to pay out actual income or a specific percent (not less than 5%), whichever is lower, with make-up payments in future years when income exceeds the specified percent; 2) to pay out actual income or a specified percent (not less than 5%), which ever is lower, without make-up payments for any deficiency; and 3) with the goal of distributing tax-exempt income where principal is invested in tax exempt bonds or securities and pays out only the income if income is less than the specified percent.
Short-Term Charitable Income Trust (Charitable Lead Trusts)
An individual may establish a trust designating the income be paid to the charity for a specified term of years after which the property reverts back to the owner or the owner’s heirs or whomever the owner designates. Under this arrangement, the donor may take an immediate income tax deduction for the present value of the income interest. However, in that case the trust is considered to be a part of the donor’s taxable income property.
If the owner chooses not to take an immediate deduction the income will not be taxable to him/her. The trust itself is a taxable entity to the extent it realizes income in excess of that which it pays out to the charitable organization.
If the owner designates the trust property revert back to heirs, he/she has created a taxable gift under the unified gift and estate tax for the present value of the future interest. However, the unified credit applies and the gift tax is on the future interest amount only, often at the lower end of the marginal gift and estate tax rates.
Trusts established under the terms of a will are called Testamentary Trusts. Trusts may also be created during a lifetime. Such trusts qualify for income tax benefits as well as estate tax benefits and also avoid probate problems.
Adopted by the Board of Directors: August 9, 2006