Covenant Chapel | Planned Giving

planned giving

What is Planned Giving?

Planned giving provides several ways to creatively fund ministry and kingdom work through Covenant Chapel. Click an option below or scroll down for more information.

How can I participate in Planned Giving?

What are some types of planned giving?

There are many types of planned giving. A few common types are explained below, but contact the director of finance for more options and information.

Bequest

A gift to charity at death. A bequest is the simplest type of planned gift to make and one of the easiest to implement. Many people desire to benefit charity but are unable to donate property while they are alive.

For example, a donor may have property that is needed during life to cover living expenses or rising health care costs. A donor can retain ownership and use of property during life and still benefit charity by leaving it to charity at death. A donor can leave property to charity by including a bequest in his or her will or trust. Property that passes by a beneficiary designation (such as individual retirement accounts) can be left by designating the charity as a beneficiary.

Gift Annuity

A charitable gift annuity (CGA) is a contract between a donor and a charity and is an agreement where a donor makes a gift of cash or property and a charity agrees to make fixed payments to the donor for life (Annuity).

A gift annuity contract provides fixed payments to one or two individuals for life. A portion of each gift annuity payment to the donor is tax-free. Annual gift annuity payouts are based on the donor's age (rates are higher for older donors). The donor receives a current federal income tax deduction for the present value of the gift to charity.

Charitable Remainder Trust

A charitable remainder trust receives cash or property from a donor, makes payments for a life, lifetimes or term of years and then distributes the remainder to charity.

A donor transfers cash or appreciated property to the CRT. The CRT is a tax-exempt trust that can sell the appreciated property without paying capital gains tax. A CRT can last for the lifetime of one or more beneficiaries or for a specific term of years.

A charitable remainder annuity trust (CRAT) pays a fixed dollar amount each year. By contrast, a charitable remainder unitrust (CRUT) pays an amount equal to a percentage of the trust value at the beginning of each year. Most CRT payouts are taxed to the beneficiary as ordinary Income and/or capital gain. A unitrust offers four flexible payout options. A standard CRUT pays a fixed percentage of the trust value.

A net income trust (NICRUT) pays the lesser of the trust's net income or the standard amount. A net income with makeup trust (NIMCRUT) is like a NICRUT but can make additional distributions. Finally, a FLIP trust pays like a NIMCRUT until a certain date or event and then "flips" to payout like a standard CRUT.

Charitable Lead Trust

A charitable lead trust (CLT) receives cash or property from a donor and makes payments to charity for a specified period. At the end of the period, it distributes the trust property to a specified beneficiary, usually family.

A donor transfers cash or property to the CLT. Unlike a CRT, a CLT is a taxable trust. Each year the CLT will report its income and then take a deduction for the amount that it distributes to charity, any excess is subject to tax. A CLT can last for the lifetime of one or more beneficiaries or for a specific term of years.

Each year, a CLT pays either a fixed annuity amount or available unitrust amount to charity. A family CLT receives property and usually distributes it to a family member at the end of the term. A gift tax deduction is available to a donor who creates a family CLT. A grantor CLT receives property that ultimately returns to the donor. The donor gets an income tax deduction when the trust is created. However, the donor has to report trust income on his or her personal income tax return each year.

Life Estate Reserved

Charity accepts a gift of property - either a personal residence or farm - and the donor retains the right to use the property for his or her lifetime.

A person may desire to leave his or her house or farm to charity at death, but would like a current tax benefit. Donors can deed a house or farm to charity but keep the right to use the house or farm for their remaining lifetime. The donor receives a current federal income tax deduction for the remainder value of the home or farm. The donor is able to use and control the home or farm while alive.

A donor executes a deed transferring a house or farm to charity. In the deed, the donor retains a "life estate," that grants the donor the right to live in the home for life. The life estate typically lasts for the life of the donor. The deed of the remainder interest to charity must not be restricted. It is possible for a donor to make a gift of a remainder interest even though there is a mortgage upon the residence. The donor agrees to be responsible for the maintenance, insurance and taxes on the property.

Bargain Sale

A bargain sale works just like any other sale except that the sale price is a bargain (less than the property is worth). The donor transfers an asset to charity and receives less than fair market value in return.

Many people desire to benefit charity but cannot afford to give an entire property to charity. Other people may have mortgaged property that they are willing to give to charity. Charity can buy the property at a bargain price or agree to accept the donor's mortgaged property. The donor gets a cash payment or debt relief. The donor avoids gain on the part of the property that is a gift. The donor receives a current federal income tax deduction for the part of the property given to charity.

The donor also receives a charitable deduction for the difference between the fair market value of the property transferred and the cash received in the bargain sale. A donor sells the property to charity and receives a cash payment or debt relief. The donor gets the cash or debt relief he or she desires and the charity receives a valuable property for less than full price. The difference between the sale price and the appraised value of the property is a gift to the charity.