Learn about the different types of planned giving, the benefits to donors and charities alike, and how you can get started today with RMBH Charities.
Planned giving is a smart and tax-savvy way for anyone to donate money — not just celebrities and the ultra-wealthy. Not only that, but it’s a great way to witness your hard-earned money going toward a cause you care deeply about. Whether you’re looking to make an impact through a philanthropic donation or simply want to lessen your tax burden while making a difference in someone else’s life, planned giving could be the key.
In this post, we’ll break down everything you need to know about the meaning of planned giving, and give you more information about planned giving program options that are available to you.
What is Planned Giving?
Before you can decide whether planned or legacy giving is right for you, we need to answer the question of “what is planned giving?”.
Planned giving is a way for people to make charitable donations that require more thought and planning than a one-time gift. Also known as legacy giving, this donation strategy involves creating an enduring gift for a charity or non-profit organization through estate planning. This is often done as part of end-of-life-planning, such as during the creation of a last will and testament. The planned giving method is especially helpful for those who want to make a significant contribution to a certain cause.
With a planned giving program, donors can give larger gifts to charity in a way that does not compromise their own financial security.
There are several types of planned giving options available. The most common type is through a will or trust.This allows donors to designate specific assets or funds to charities of their choice to be distributed after their passing. Other forms of planned giving include gifting life insurance policies, annuities, and charitable remainder trusts.
These types of gifts may offer tax benefits for the donor, as they are often considered charitable contributions that are exempt from federal income taxes. They also can be structured in a way that guarantees the donor a fixed monthly payment for the duration of their lifetime.
How is Planned Giving Different From Other Types of Charitable Donations?
Planned giving is a broad term that can include many things, from leaving charitable gifts during one’s lifetime to deferring large donations for after one has passed away. It allows individuals to make larger gifts than might otherwise be possible during their lifetime, while providing unique tax benefits for the donors and their heirs.
The main difference between traditional donations and planned giving is that the latter requires more advanced planning. Rather than just writing a check or setting up automatic payments (which you can do with planned giving as well), you will need to work with an attorney or financial advisor to create an estate plan that outlines your wishes for distributing your assets after you pass away. This helps ensure that your wishes are carried out according to your plan, rather than being left to chance.
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How to Choose the Right Organization for Your Planned Contribution
With planned giving, as is often the case with traditional donations, you have the ultimate freedom of choice when deciding which organizations receive your donations. Many charities run annual campaigns specifically for planned gifts. These campaigns help raise awareness about the importance of donating, and encourage people to join in by making long-term commitments to support their favorite organizations or causes over time.
Therefore, if you are looking to make a donation and are still searching for the right organization to support, pay attention to these types of campaigns. That way, you can learn more about the organizations to find out if they might be a good fit for your donations.
So with so many organizations out there, how do you know which one is the right match for your money?
The first thing to consider when choosing a charity is its mission. What does the organization stand for? Does its mission align with your values and beliefs? Understand who will benefit from your donation. Is the charity helping underserved communities or providing direct services? Are they working on long-term solutions or short-term fixes? Many organizations serve multiple purposes and goals. Knowing these details can help you make an informed decision about where to invest your hard-earned dollars.
It’s also important to do your research before choosing a charity. Look into its financials, look at the results of any audits that have been conducted, ask questions about its organizational structure and management team. These inquiries can give you additional insight as to whether or not this is an organization worth investing in.
Also, consider talking directly with someone at the charity in order to get more information. This will also give you an opportunity to ask any questions that might not have been answered by reading their website or other materials, and can also give you a stronger sense of confidence with your decision.
When it comes time to make your donation, be sure that there is a clear plan for how your funds will be used and which specific programs you’d like to support. The best organizations will provide detailed reports on how donations are being used and what impact they are having.
This can help you feel assured that your donation is being put towards something meaningful and worthwhile.
Lastly, don’t forget about taxes! Be sure that the charity is registered as a 501(c)3 non-profit organization so that any donations made are eligible for tax deductions. Check with an accountant if you have any doubts.
What Types of Planned Giving Options Are There?
Planning giving allows you to donate to your favorite organization in several ways, way beyond the standard “check in the mail”. There is an array of options you can choose from to show your support. Here’s a quick rundown of the various types of planned giving.
A charitable bequest is an important type of planned giving, allowing individuals to make a meaningful and lasting impact on their favorite charity. It is a way for donors to express their generosity by giving to a charity as part of their will or trust.
A bequest is a simple yet impactful way to make a gift, which is why it’s one of the most popular choices in the planned giving options. To make a charitable bequest, allocate a portion of your estate to a nonprofit in your legal will. This is typically done by leaving a specific amount of cash, a percentage of your total estate, or the remaining value of your estate after all other bequests and commitments have been paid out.
Bequests can last generations and help make sure that an organization is equipped to serve its mission far into the future. Bequests also offer unique philanthropic opportunities since donors may choose how much or what type of assets (whether cash, property or other assets) they wish to contribute.
Here’s an example of how a charitable bequest might be written:
“I give and bequeath $100,000 to the XYZ Charity House in New York, NY for its general corporate purposes.”
This exact wording will vary and should always be finalized with legal input. There is an unlimited tax deduction of charitable bequests against the value of an estate, which makes it a powerful tool to help reduce the amount of estate tax you pay. Always consult with a tax professional to find out what exactly your benefit will be and how to claim it, since this varies by state, income level, and other factors.
Annuity is a form of planned giving used in charitable donations that can provide the donor with various tax advantages during his or her lifetime. The donor makes an irrevocable gift to an institution such as a university or non-profit organization, which invests the lump sum payment and pays out the income earned from that investment to the donor, over an agreed-upon period of time.
The biggest benefit of this option for you, as the donor, is that you can make a large gift during your lifetime without compromising your income. The nonprofit is able to invest and grow those funds. When the donor passes away, or when the terms of the annuity have ended, the nonprofit is able to keep the remaining funds.
With this option, you get an immediate tax deduction for the value of your gift. In addition, the charity or non-profit organization gets an immediate influx of funds that can be used to support its mission right away.
A trust is an important part of a planned giving strategy involving the transfer of property — either real estate or personal belongings — to another person or entity. It is different from an annuity in that it has no life expectancy and payouts cannot be stretched out over one’s lifetime.
A charitable trust is a legal entity that is created in order to collect and manage money or property for the purpose of providing funding to a designated charity or charities. When setting up a trust, an individual is designated as trustee to take over after the donor’s death and to decide how and when property should be transferred, allowing them to control how funds should be given out to other beneficiaries.
For the trustees, setting up a trust allows them to increase their impact while keeping careful control over how their philanthropic efforts are spent. Organizations funded through charitable trusts receive more reliable, consistent donations than they would through other donation channels; this means they can better plan for future initiatives and determine what kind of support is needed from donors.
To set up a charitable trust, you will need guidance from an experienced lawyer who specializes in trust law. This attorney can help choose the most appropriate structure for your goals and provide advice for complying with relevant regulations.
There are two main types of trusts. These include:
- Charitable Remainder Trusts (CRT)
- Charitable Lead Trusts (CLT)
Charitable Remainder Trusts
In the charitable remainder trust, you have two options for your donation:
- The first is a charitable remainder annuity trust. This allows the donor to receive a fixed dollar amount of regular payments until they die.
- The second is the charitable remainder unitrust. With this arrangement, the donor receives a percentage of the overall value of the donation instead of a lump sum payment.
Charitable Lead Trusts
A charitable lead trust is another option. It works similarly to a charitable remainder trust, but instead of providing ongoing payments, it provides donations up front. With a CLT, the donor contributes assets into the trust. These are then paid out in regular installments over a specific period of time before being distributed to charity after the trust terminates.
Trusts, like annuities, offer significant income tax deductions and can help you avoid capital gains and estate taxes. They typically require the assistance of a financial and legal advisor to ensure that all instructions are properly set out and followed. Trusts can be extremely beneficial tools in transferring assets from one generation to another and donating to charity.
Ultimately, trusts provide donors with peace of mind knowing that their legacy will benefit those they care about most.
Life Insurance Policy
Another option for planned giving is donating your life insurance policy as a gift. By donating your life insurance policy you can enjoy tax benefits within your lifetime, each year, while also providing much-needed assistance for those in need.
Donating your life insurance policy ensures that not only will your beneficiaries receive funds upon your death, but also that a portion of your donations will go toward helping people in need through charities or other non-profits organizations you choose. It’s important that you consult with a tax professional or financial planner to learn more about potential tax benefits, as these vary depending on the type of policy and donation terms.
Gifts of Appreciated Securities
Gifts of appreciated securities are another great way to give back while enjoying special tax benefits at the same time.
When you donate stocks or bonds that have increased in value since you bought them, you can deduct both the current market value and any capital gains taxes associated with them on your taxes — meaning more money left over for those in need!
Blended gifts are an excellent option if you want maximum flexibility when making donations or gifting assets.
With blended gifts, donors can combine multiple forms of gifting into one package. This may include cash, mutual funds, real estate investments, and other assets. As a donor, it allows you even more control over your philanthropic efforts since you can donate to multiple charities with multiple types of gifts- while still taking advantage of beneficial tax deductions!
What is the Biggest Benefit of Planned Giving?
Planned giving is an incredibly rewarding way for individuals to make long-term contributions towards meaningful causes. It demonstrates a level of commitment and dedication that goes above and beyond the traditional means of donating.
At its core, the ultimate motivation behind planned giving is simply to ensure that one’s philanthropic goals can endure far beyond a person’s own life span.
Rather than merely writing a check, people who engage in planned giving are creating legacies; they are leaving behind a meaningful, charitable legacy that will continue bearing fruit long after they’ve passed on.
There’s something profoundly rewarding about knowing your contribution was enduring enough to create a lasting impact for generations to come!
How to Prepare a Planned Gift
Before making any kind of major financial decision, it’s important to do some research. That means talking with people who have experience with planned giving. You may also want to get advice from legal professionals who understand how estate planning works and what kind of tax implications come with various types of donations.
Finally, once all the details are worked out between both parties (you and the charity) it’s time for paperwork! You’ll want to make sure everything is properly documented so there’s no confusion down the road about what was promised and by whom.
Why You Should Consider RMBH Charities For Your Planned Giving
Generous giving is an essential part of Jewish culture and those looking to provide support for a cause may consider Rabbi Meir Baal Haness Charities. Our network supports many life-enhancing causes, including providing financial assistance to Torah scholars, widows, orphans, new mothers, brides, special education initiatives and more in various cities within Israel.
By joining our network of generous donors that support our cause, you too can be part of our beacon of giving by donating to Kupath Rabbi Meir Baal Haness charities. This will help promote continued growth for children who desire to learn Torah and enable Torah scholars to live dedicated Torah lives with financial stability.
Consider including RMBH Charities as part of your planned giving preparations. We’re here to talk with you and are happy to discuss options with you to make sure your funds are directed to the initiatives of your choice. Contact us today to make sure your gift counts in exactly the way you want it to.
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