CREATING ENDOWMENTS
Local council endowments are important because they blend the visions of
their donors with the needs and objectives of Scouting. One of the exciting
things about an endowment gift is the bond, the relationship that is created
between the donor and the Council.
Local Council donors can make their endowment gift in a number of ways and
using a variety of gift techniques. It can always be made directly to a local
council endowment fund during life. If the gift is one of cash, marketable
securities or similar types of property, the donor may qualify for membership
either in the James E. West Fellowship, the 1910 Society, or the Founders
Circle, depending on the size of the gift. Others choose to endow a particular
Council staff position or program, an endowment option previously used only by
colleges and universities. Also, many donors designate their council endowment
fund as beneficiary of their estate through their will, or as remainder
beneficiary of their planned gifts.
For example, many donors receive a charitable gift annuity from Scouting and,
by doing so, receive quarterly annuity payments from the BSA for the rest of
their lifetimes. However, they choose a local council endowment fund to receive
the gift when the annuity ends, creating a perpetual source of support for the
council in the name of the donor or other loved one. Please contact your local
council to discuss the many exciting and innovative ways that you can create an
endowment gift to support Scouting in your community.
Income Producing Gift Plans
Several gift plans enable you to make a gift to Scouting while
providing income for yourself or others. You also may increase your spendable
income through tax benefits and diversification of assets. These plans, each
offering distinct advantages, allow you to make your gifts in ways that will
best meet your personal needs and achieve your financial goals.
All the plans offer current income tax deductions, and all provide the
opportunity to avoid or reduce capital gains tax if appreciated property is used
to make the gift (even under the new Tax Act of 1997). Many planned gifts will
also help you reduce or eliminate gift and estate taxes. With many of the plans,
the remainder of your gift is available to the local council only after the
income payment period that you select has ended. You also designate how the
Council will ultimately use this gift.
Although most donors create these gift plans during their lifetime, they can
also be established through your will. These testamentary gifts may greatly
reduce estate taxes, and accomplish other personal and financial goals, such as
passing ownership of business assets to other family members at significant tax
savings.
Careful planning with the council, our Regional Endowment Counsel, and your
financial advisers is important in evaluating the timing and suitability of
these plans for your situation. We would be pleased to provide you details of
the personal benefits and financial implications of either a lifetime or
testamentary gift using any of the income-producing plans. Just contact your
local council, BSA Regional Office, or the Finance Support Division at the BSA
National Office (available directly through this website)
UNITRUST
When you want the flexibility of a variable annual income
The unitrust is a charitable income trust. When you make a gift into the
trust, you and/or another beneficiary you select will receive income either for
life or for a term of years (your choice), immediate income tax deductions for
setting up the trust. Eventually, the council or Scouting program of your choice
will receive the principal of the trust.
Your income from the unitrust may vary from year to year, since the income is
based on a trust principal that is revalued annually. As the principal grows,
your income from the trust will grow as well, protecting your trust income
against inflation. If you have assets that are difficult to value, though, there
may be other gift plans better suited to your situation.
Many donors use the unitrust to make gifts of real estate. If you use real
estate to fund the trust, you will begin to receive the income when the property
is sold and the trust has reinvested the proceeds of the sale in
income-producing assets. Because you receive income only after the property is
sold, you may elect to receive additional income later to "make up" for the
payments not made to you before the property was sold.
You can make additional gifts to a unitrust at any time. Whenever you add to
the trust, it usually results in higher annual income and additional tax
deductions. A unitrust can pay income for one or more lifetimes, or or a
specified term of years (up to twenty years). These trusts are often used to
generate retirement income, pay for educational expenses, or provide support for
children and parents.
ANNUITY TRUST
When you want a predictable amount of income every year
The annuity trust is very similar to the unitrust, except that it provides an
annual income that does not fluctuate with the market. You receive a fixed
percentage of the initial value of the assets placed in the trust. This
arrangement is ideal for donors who want their annual trust income to be steady
and not tied to market performance.
As with the unitrust, the annuity trust can pay income for one or more
lifetimes, or for a specified term up to twenty years. Of course, even though
the donor can specify the amount of annual income to come from the trust, the
annuity must be a reasonable amount so that the trust principal remains
sufficient to generate the income payments. Your advisers can provide you with
guidance on a percentage appropriate to your needs and based on a reasonable
market forecast.
CHARITABLE REMAINDER TRUSTS
The charitable remainder trust is the broader name for the two types of
charitable remainder trusts just discussed -- the unitrust and the annuity
trust. As mentioned above, they are often used by donors to Scouting to attain
their personal financial objectives while also making a significant gift to the
local council of their choice. The type of remainder trust best suited to you
depends on your individual needs.
THE BSA POOLED INCOME FUND
Pool your gift with others for maximum effect
The BSA Pooled Income Fund has been compared to a charitable mutual fund,
since your gift to Scouting is "pooled" with others in the fund. You receive
professional management of your money (without cost to you), and allows you to
diversify your income sources and portfolio. The pooled fund investment
philosophy is to obtain a competitive yield with moderate growth and relative
stability of the annual income return.
You may choose to receive the lifetime income from your share of the fund, or
may select one other individual as beneficiaries -- though all income
beneficiaries must be at least 40 years of age at the time you make your gift.
The income is paid quarterly. When the income stream from your gift ends, the
remainder of your gift becomes available for use by the local council that you
selected. You receive a current income tax deduction for the remainder value of
the gift at the time your gift is made.
Your initial gift to the BSA Pooled Fund must be at least $5,000, but you may
make additional gifts of $1,000 or more to the pooled fund as often as you
desire. Each gift will increase your annual income and provide you with
additional charitable income tax deductions.
If receiving tax-free income is a priority, then you should consider one of
the other trust vehicles such as the charitable gift annuity. Pooled funds are
not allowed to receive or invest in tax-exempt securities.
BSA NATIONAL GIFT ANNUITY PROGRAM
Simple to create, and income payments begin either now or in the future
The BSA Charitable Gift Annuity is among the easiest and most popular methods
of making a planned charitable gift. Here is how it works: you make a gift of
cash or readily marketable securities to Scouting. The minimum gift is $2,500
for each annuity you establish. The Boy Scouts of America then guarantees the
payment of a fixed annual income based on the size of your gift. These payments
can be made to one or two individuals of your choice, including yourself.
The income is paid quarterly, and begins immediately. You also receive an
immediate income tax deduction, based on the remainder value of your gift. An
additional advantage is that part of the annual income you receive will be
tax-free return of principal. It is important to remember that the annuity rate
and the value of the gift, and therefore the amount of your deduction, increase
with the age of the annuitant(s). This makes the immediate charitable gift
annuity even more attractive for older benefactors.
A variation of the gift annuity is the deferred payment gift annuity. It is
designed to appeal to those who could use a current income tax deduction but
don't need the additional income right now. You may make your gift for a
deferred annuity in a single transfer, in a series of transfers, or in periodic
transfers during especially high income years. The income will be paid to you
quarterly, starting on a future date you specify. The benefits of the deferred
annuity are the same as for the immediate charitable gift annuity; however,
deferring the income usually results in a greater deduction and even larger
annual payments than the regular gift annuity.
Your local council will receive the remainder of your gift at the end of your
lifetime income interest. As with all gifts, you may designate which local
council will ultimately benefit, and even specify a specific use for your gift.
For more information contact Robert Sharetts at 610-926-3406.
Hawk Mountain Council, BSA
5027 Pottsville Pike
Reading, PA 19605
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