Gift Acceptance Policy
Introduction:
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.
Assets:
Cash
Checks are to be made payable to HCCF.
Securities
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
Bequests
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.
Gift Annuity
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-the annuity and the unitrust.
- 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.
- Unitrust
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
