A Guide to Giving
Community or Private Foundation? . . . . . . . . . . . . . 2 Your Dreams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5 Funds for Community Good . . . . . . . . . . . . . . . . . . . . . . 6 Field of Interest Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Scholarship Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Supporting Organizations . . . . . . . . . . . . . . . . . . . . . . . . 9 Nonprofit Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Donor Advised Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Your Community. Your Foundation.
Since 1922, thousands of people like you have chosen to give to causes they care about through Grand Rapids Community Foundation. Giving to the Community Foundation has many benefits.
Your Gifts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-12 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Closely Held Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Stocks, Bonds, Mutual Funds. . . . . . . . . . . . . . . . . . . . .14 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 401k and IRA Accounts . . . . . . . . . . . . . . . . . . . . . . . . . .15 Life Insurance, Retirement Accounts . . . . . . . . . . . . .16
Prompt, personal service. The Community Foundation strives to make your philanthropy uncomplicated and easy to understand. Meetings are held at your convenience, where you are most comfortable and as often as you need to talk. Your gift will be used wisely. We keep administrative costs low by pooling contributions and investments. Grand Rapids Community Foundation is a public charity, and all donations qualify for the maximum available tax deduction for charitable contributions. You have many gift-giving options. How and what you give depends on what you want to accomplish with your donation. Our development staff is always happy to sit down with you and your professional advisor to discuss the best giving option for you. Your gift will benefit the community forever. With the power of endowment, a gift made now will benefit the community for decades to come. Gift use can be narrow or more broad, depending on your desires. Your gift is secure. Grand Rapids Community Foundation manages its investments for total return. Each year we publish an annual report with an independent audit of our financial position, a statement of activities, and lists of gifts and grants.
The Benefits of Giving . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Charitable Bequests . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 The Metz Legacy Society . . . . . . . . . . . . . . . . . . . . . . . .19 Charitable Gift Annuity . . . . . . . . . . . . . . . . . . . . . . . . . .20 Charitable Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-23 Remainder Interest in Property. . . . . . . . . . . . . . . . . . .24
• Local control • Flexibility • Permanence • Charitable impact • Economy of scale • Public accountability • Tax advantages
Writing Your Ethical Will . . . . . . . . . . . . . . . . . . . . . . . . . .25 Your Foundation. . . . . . . . . . . . . . . . . . . . . . . . . Back cover
Photos in the Giving Guide
We found the images of our community and its people on Flickr, an online photography sharing site. All the photographers are Grand Rapidians and most of the images were taken in Kent County. We think the images are fun and clearly depict what makes this place special. Cover: Paul Jendraisiak/GRNow.com Inside cover: Steven Depolo Page 4: Terry Johnston Page 5: Paul Jendrasiak/GRNow.com Page 6: Yolanda Gonzalez Page 7: Steven Depolo Page 8: Steven Depolo, Matt Stangis Page 9: Nate Umstead Page 10: Terry Johnston, Steven Depolo Page 12: Clockwise from top left: Stacy Niedzwiecki, Yolanda Gonzalez, rest by Steven Depolo Page 14, 16, 17, 18, 22, 23 and 25: Stacy Niedzwiecki Page 26: Nate Umstead Graphic design: James Falk Illustration: Yolanda Gonzalez
Although community needs and organizations will change, funds that you endow at Grand Rapids Community Foundation will be held in your name forever.
Community or Private Foundation: Which Option is Right for You?
When people want to make a difference in their community and create a family legacy, they have many options, from creating a private foundation to the public-charity alternatives offered by a community foundation—namely a Donor Advised Fund or supporting organization. While private foundations may allow for greater donor control, the administrative requirements and operating costs can be substantial. The following chart compares features of Donor Advised Funds, supporting organizations and private foundations.
COMPARING THE OPTIONS
Deduct 30% Adjusted Gross Income (AGI) for cash gifts; deduct 20% AGI for gifts of long-term appreciated securities; deduction limited to cost basis for gifts of real estate and closely held stock Deduct 50% AGI for cash gifts; deduct 30% AGI for gifts of long-term appreciated securities, real estate and closely held stock
Ease of Establishment
A few months to establish
Typically, more costly to set up and maintain; 1-2% excise tax on net investment income
5% minimum annual payout required
No minimum annual payout; philanthropic services provided by the Community Foundation
Donor Advised Fund
Simple and quick to establish; could be done in one day
Pooled administration, annual fees; no start up costs
Whether you have a firm idea of what you hope to accomplish with your philanthropy—or an idea that’s just taking shape—Grand Rapids Community Foundation can help you achieve your philanthropic goals.
Deduct 50% AGI for cash gifts; deduct 30% AGI for gifts of long-term appreciated securities, real estate and closely held stock
Several months to establish, but could start with Donor Advised Fund if timing is an issue
Competitive administrative fees; some start up legal/filing costs
No minimum annual payout; philanthropic services provided by the Community Foundation
unrestricted field of interest advised
Converting a Private Foundation to a Community Foundation Fund
Though many people enjoy the experience of giving for years through a private foundation, sometimes private foundations run their course. In these cases, Grand Rapids Community Foundation provides a good option for the transfer of funds—enabling you to terminate your private foundation yet continue its charitable mission. The philanthropic giving options at Grand Rapids Community Foundation are tailored to you. For some donors an unrestricted gift to the Fund for Community Good meets their needs. Donor Advised Funds give donors more involvement in grantmaking and provide an excellent alternative to private foundations. Other options include scholarship, Field of Interest and nonprofit funds. All gifts are endowed and the community will benefit from your gift forever. You may use lifetime gifts and bequests to create a separate personal endowment. You may set up the fund in your name, a loved one’s name or anonymously. If you are willing to share the story of your gift, our staff will meet with you to talk about your family or personal history, your values and your philanthropic goals. Your name and your story will become part of our permanent archives, preserved and retold for generations to come. Whatever your wishes, your hopes or your dreams for the future of your community, a fund at Grand Rapids Community Foundation can make them a reality.
TERMINATIONS MAy HAPPEN wHEN:
• The work of a private foundation has become overwhelming. • The next generation is uninterested or you have no heirs, but you wish to create and preserve a lasting legacy. • Administration of the foundation seems too costly or cumbersome. • You or your advisors identify a tax planning need for the higher public charity tax benefits. • You want to ensure a local focus for grants, but heirs have moved out of the community. • Assets in the foundation have declined to an extent where the costs and annual payout requirement make it impractical to maintain. • You become concerned about exposing yourself to liability, excise taxes and penalties associated with private foundations. • You are interested in tapping into community grantmaking expertise so that your charity can make a bigger impact.
People with private foundations most often consider converting to a Community Foundation fund when they realize that successor trustees living outside Grand Rapids might have less local focus with their grantmaking. Your Donor Advised Fund at the Community Foundation will continue supporting causes and nonprofits here in Kent County—forever.
If you’re not already sure what you’d like to accomplish with your giving, follow these five simple steps to clarify your goals.
Achieving Your Dreams What are Your Dreams?
Define Your Passion
• What issues or causes do you care about? • What organizations do you currently give to? • Where do you volunteer? • When you make a charitable gift, what gives you the greatest satisfaction?
Fund for Community Good or Unrestricted Fund
Meet the needs of a changing community by providing maximum flexibility for future grantmaking.
A supporting organization is an excellent alternative to a private foundation, with only a fraction of the administrative responsibilities and lower costs.
implement Your strategy
• Take advantage of our philanthropic services, ideas and advice. • Seek information about new or additional charitable opportunities from the Community Foundation. • Prioritize the needs, programs, and opportunities of your selected nonprofits. • Determine best giving instruments to accomplish giving goals. • Make gifts or grants.
Field of interest Fund
Ensure permanent support for a special area of interest while allowing flexibility for the future.
Help provide a permanent source of income to meet the future needs of a designated charity.
Improve the lives of students with a permanent source for higher education funding.
Donor Advised Fund
Recommend annual grants for the causes you care about most. If desired, design a family grantmaking plan that includes the next generation.
Create Your Plan
• If you could change three things in your community, what would they be? • Do you prefer to fund buildings, operations or projects? • How much involvement do you want with the causes you support? • What are your family priorities?
Review and Update Your Plan
Working with our philanthropic services team, evaluate results: • Did your gifts accomplish what you hoped they would? • Has your financial or family situation changed? • Are there changes in tax law relevant to your giving?
You may establish any of the above funds to honor the memory of a loved one.
Determine Your Giving Level
• What are your financial objectives? • What is your tax situation? • What is your own charitable giving comfort level? • Do you want to give during your lifetime or after?
Funds for Community Good
A Fund for Community Good is an unrestricted fund that allows Grand Rapids Community Foundation to help the community address unexpected and changing needs. Community Good funds target six broad grant areas: • arts and culture • community development • education • environment • health • human services A Community Good fund is a good choice if you value flexibility in helping future generations. Community Good funds allow the Community Foundation to seek long-term solutions to problems such as hunger, homelessness, child welfare and public education. They also support building projects that benefit the entire community. Contributions may be acknowledged in many ways, including publishing contributors' names in our annual report, ensuring that your name—or the name of a loved one—will always be remembered and linked with philanthropy. Establishing a Community Good fund can be the first important step to creating your own legacy of caring.
Field of interest Fund
• Create a lasting gift in your name or in the name of a loved one during your lifetime or at death. • Help meet the future needs of a changing community. • Receive an immediate tax deduction. • Add to your fund during life or at death.
A Field of Interest Fund is built on a gift from an individual or family to address a particular area of community life that captures the imagination or carries personal meaning, such as the arts, scientific research, animal welfare, education, youth programs or any other charitable interest area. We honor your wishes forever by annually awarding grants from the fund to organizations and programs in the named interest area. When we approve a grant to an organization, we make the gift in the name of your fund. Field of Interest Funds benefit from the oversight of our grantmaking staff and volunteers who award grants from your fund to organizations and programs making a difference in your interest area. Field of Interest Funds are flexible enough to fund a variety of organizations—even as needs change over time—and yet focused enough to create for you a highly personal and permanent charitable legacy.
• Create a lasting gift during your lifetime or after your death, in one or more special interest areas. • Receive an immediate tax deduction. • Add to your fund during life or at death. • Create a gift that supports your special interest and is flexible for the future.
llan and Claudia Carlson still remember what it was like to live within a budget. They went on picnics and to the lake with their children. They borrowed books from the library. They also remember the lean times as very good times and believe that they live almost as simply as they did 25 years ago. “When you don’t have a lot, you don’t seem to need as much,” said Claudia Carlson. “But there’s no point in just accumulating wealth,” said her husband, Allan.
True to their words, their gift of $1 million to the Fund for Community Good was received at Grand Rapids Community Foundation in December 2005.
In 1998, the Carlsons established a Donor Advised Fund at the Community Foundation. Their 2005 gift was their second major donation to the Community Foundation. “The Community Foundation has proved itself responsible with our funds in the past, and we trust them to do what’s best with this gift,” Allan said. The Carlsons own EPS (Engineered Protection Systems), a home and commercial security company.
erb and Dori Vander Mey were long-time supporters of Grand Rapids Community Foundation. Herb served on the Board of Trustees of the Community Foundation in the 1980s, and he and Dori made annual gifts each year to the Fund for Community Good. After Herb’s passing in 2004, Dori continued her support. A battle with multiple sclerosis and remission gave Dori the impetus to start a Field of Interest Fund that would bear the Vander Meys’ name long into the future. The Field of Interest Fund was designed to be flexible, yet specific to a cause she and Herb cared greatly about. Grants from the Herbert and Doris Vander Mey Fund for the Treatment of
Neurological Diseases will provide grants to organizations that will help people with neurological diseases and medical research in the field. “As someone who experienced serious illness and disability and also experienced the miracle of total remission, I am compassionate toward people with illnesses like mine. I especially care about children with disabilities. My ability to give is a gift from God, and we must give as the Lord blesses us,” Dori said.
Higher education is seen as one of the surest paths to increased opportunity. Unfortunately, many people who could benefit the most from a post-secondary education are least able to afford it. Scholarship funds help them on their path to higher education. Grand Rapids Community Foundation holds funds for aspiring artists, engineers, musicians, pilots, teachers and others. Applications are available online, and awards are based on a competitive process, and guidelines set by you. Selection criteria may include academic achievement, extracurricular activities, and a statement of the applicant’s personal aspirations, goals and financial need. Advisory committees of knowledgeable community members help screen and select candidates. They make recommendations to the Community Foundation’s Board of Trustees. You or a member of your family may participate in the scholarship selection process if you wish. Like other Grand Rapids Community Foundation funds, scholarship funds are endowed and may be named to honor loved ones. Community Foundation staff manages all details of awarding scholarships—from announcing availability to processing applications to writing checks.
• Create a lasting gift in your name or in the name of a loved one during your lifetime or at death. • Help students receive a college education or other advanced training. • Participate in the scholarship selection process, if you wish. • Receive an immediate tax deduction. • Add to your fund during your lifetime or at death.
Established by an individual, family or business with a gift of at least $1 million, a supporting organization is a separate nonprofit entity that operates under Grand Rapids Community Foundation and qualifies as a public charity. A supporting organization is an excellent alternative to a private foundation, with fewer administrative responsibilities and lower costs. You select some board members, maintain personal involvement and support cherished causes. We provide an array of philanthropic and administrative services to make the giving experience simple and enjoyable.
• Create a separate charitable vehicle as an excellent alternative to a private foundation. • Enjoy public charity tax status by maintaining a close connection to Grand Rapids Community Foundation. • Participate in naming a board of directors, which may include family members. • Avoid the 5% annual distribution requirement of private foundations, allowing for grants of any size to be made at any time. • Provide an avenue for family members to engage in philanthropy for generations to come. • Access the expertise of the Community Foundation’s professional staff. • Receive an immediate tax deduction. • Pay no excise tax on investment earnings.
areather Greer was the first person in her family to earn a college degree. After graduating from high school, she went on to Western Michigan University and received her bachelor’s degree. From there it was a master’s in curriculum and teaching from Michigan State University. Her first, last and only job was with the Kent Intermediate School District (KISD). “I taught high school students business subjects, which included everything from how to operate a mimeograph, key punch machine, or an IBM Selectric typewriter to a word processor,” she said with a laugh. From 1972 until she retired in 2005, she dedicated herself to teaching young people the fundamentals of business. “Business makes the world work, and all of it intrigues me,” Dareather said. “I had a teacher who inspired me, a typing
teacher, actually. He taught me to type on a manual typewriter without letters on the keys! He gave me the love of business education.”
As part of her retirement and subsequent estate planning, she created a scholarship in her name at Grand Rapids Community Foundation for African American females. “In high school, I knew I wouldn’t be able to attend college, because my parents didn’t have the money. I found out about grants and student loans that helped pay for college, and I decided to pursue my dream of becoming a teacher. I want others to be able to fulfill their dreams also,” she said. Her agreement with the Community Foundation, specifies that scholarship applicants must show they have been active in multiple community service projects.
During the Great Depression, the Clinic for Infant Feeding helped make sure babies didn’t succumb to malnutrition or starvation. The clinic’s mission touched the heart of Mrs. John Wood Blodgett, one of Grand Rapids Community Foundation’s original trustees. In her will, Minnie Blodgett left a bequest to Grand Rapids Community Foundation and designated it for the Clinic for Infant Feeding. Today, the Clinic for Infant Feeding no longer exists. But because Mrs. Blodgett entrusted her bequest to the Community Foundation, her legacy and intention endures. Her fund, Minnie C. Blodgett Clinic for Infant Feeding, continues to make grants to improve the care of children. If you want your gift to support specific charitable organizations, you can establish a nonprofit fund. Your gift becomes a permanent fund of the Community Foundation, which will support the organization as long as it exists. If it ever closes its doors, the Community Foundation will use the fund to support programs with similar goals. When you establish a nonprofit designated fund, it also opens the door for the designated nonprofit organization to create a planned giving program by which other donors in the community can leave estate gifts that support the nonprofit. If desired, the nonprofit may also encourage gifts to the fund from its current donor base. It is important to remember when designating your fund that it will last forever. The less restrictive it is, the more it will help meet the unexpected and changing needs of upcoming generations.
• Create a lasting gift in your name. • Help meet the present and future needs of a designated charity. • Add to your fund anytime. • Ensure that if a charity ceases to exist, your gift will continue to support similar causes.
Donor Advised Fund
A Donor Advised Fund at the Grand Rapids Community Foundation is simple to establish and operate. The Community Foundation is responsible for ensuring that legal requirements for investment, distributions and payouts are met, allowing you to easily manage your charitable giving without the burden of running a private foundation. With a Donor Advised Fund, you recommend grants to any charity that meets IRS guidelines, while we handle administrative details. Our grant allocation procedure protects you by ensuring your grantees meet the legal standards for charitable intent. Under IRS regulations, our Board of Trustees approves all grant recommendations. Donor Advised Funds also allow future generations to participate as advisors to the fund. Unlike private foundations, which are required to distribute 5% of the assets annually, Donor Advised Funds carry no minimum annual distribution requirement. After the last fund advisor passes away, the Donor Advised Fund retains its name thus preserving your legacy as a Field of Interest, Scholarship, Designated or unrestricted fund that honors and supports your favorite causes forever.
• Create a lasting gift in your name or in a loved one’s name. • Establish a fund, which is like having a private foundation—without the administrative work and expense. • Participate in the grantmaking process. • Involve family members in the giving experience. • Access the expertise of the Community Foundation’s professional staff. • Add to your fund at any time. • Receive an immediate tax deduction.
sustain a healthy ecosystem
help people live healthier lives
om and Mickie Fox are well known in the Grand Rapids business community. Tom Fox’s days as owner of Fox Jewelers made him a legend in retailing. Strong supporters of the West Michigan area, Tom and his wife, Mickie, have supported countless local organizations. Their decision to establish a Donor Advised Fund at the Community Foundation with appreciated stock ensured that their commitment to this community will last for generations. “We’ve always been extremely proud of being part of the Grand Rapids community, and we’re now at the point in our lives where we can give back to this community in a significant way,” Tom said. As the Foxes discovered, a Donor Advised Fund at Grand Rapids Community Foundation is simpler and less expensive than establishing and managing a private foundation. They recommend how the spendable portion of their fund will be used and, each time a grant is approved, the grantee receives a letter indicating Tom and Mickie made the gift. The Foxes know their fund will increase in value over time and continue to support the causes they care about forever.
Your gifts can
support the arts and social enrichment
help students to succeed in school
promote economic prosperity
create a vibrant neighborhood
A cash gift is the most popular type of charitable gift because of its simplicity. With a gift that meets our fund minimum, you can establish a fund of your choice that will begin generating income for grants or scholarships immediately.
• Enjoy ease of giving. • Give as much or as little as you choose. • Combine multiple gifts over time to establish a fund.
Closely Held stock
If you own closely held stock in your business, you may choose to contribute it to Grand Rapids Community Foundation. Giving it to a charitable organization may offer you and your company several advantages. First, you’ll receive a charitable deduction for the appraised fair market value. You’ll also avoid tax on the capital gain. And, at a later date, the company may redeem the stock, or the company employee stock ownership plan or another shareholder may buy the stock back at its fair market value.
• Take a charitable deduction for the appraised market value, not the cost basis (original investment). • Avoid capital gains tax. • Buy back or redeem the stock. • Reduce the size of your estate.
TH E AD D E D D IvI D E N DS O F G IvI N G SECu R ITI ES
With either a gift of cash or securities, your charitable deduction would be the same—$10,000. In the 28% bracket, your net cost would be $7,200. But if you give securities that you purchased for $1,000, you could also save $1,350 in capital gains tax. The net cost of the gift: just $5,850. Cash
Cash is the simplest gift to give. You can combine multiple cash gifts to establish a fund at the Community Foundation.
Receive a deduction for the appraised market value.
How to Make a Gift for 59 Cents on the Dollar
Cash Appreciated Property
Current fair market value of gift 401k and iRA Accounts
Maximize value by avoiding income and estate taxes.
$10,000 $10,000 $2,800 $0 $7,200
$10,000 $1,000 $2,800 $1,350 $5,850
Cost basis Income tax savings (assuming 28% income tax bracket) Capital gains tax you save by giving stock (assuming 15% capital gains bracket) Net cost of gift
Closely Held stock
Receive a deduction for the appraised market value, avoid capital gains tax and buy back at new cost basis, if you choose.
Life insurance Policies
Receive a deduction for the computed current value of your paid-up policy or premium payments.
stocks, Bonds, Mutual Funds
Receive a deduction for the full fair market value, and avoid paying tax on your capital gain.
stocks, Bonds, Mutual Funds
Giving gifts of long-term appreciated property in the form of stocks, bonds or mutual funds will provide greater tax benefits than a cash gift of equivalent value, especially if they have a low cost basis. You will receive a charitable deduction for the full market value of your property—even if you initially bought it for far less. You will also avoid capital gains tax, money you’d have to pay if you liquidated the property.
• Receive a charitable deduction for the fair market value, not the original investment. • Avoid capital gains tax. • No minimum is required. • Multiple gifts can be combined to establish a fund. • Realize substantial tax savings. • Reduce the size of your estate.
Whether it be a home, cottage, business property or undeveloped land, Grand Rapids Community Foundation may be able to help you turn an asset into an excellent charitable gift. We can accept the gift outright or show you how a charitable trust can be used to convert your asset into a gift that also produces an income. Because each gift of real estate is unique, a Community Foundation staff member would be happy to meet with you to discuss the logistics of making such a gift.
• Base charitable deductions on the appraised fair market value, not the original investment. • Avoid capital gains tax. • Receive substantial tax savings. • Reduce the size of your estate. • Relieve your heirs of the burden of selling the property.
A Gift of Appreciated Stock
r. Mary Appelt faced the human drama of life and death every day in an operating room. A practicing anesthesiologist (now retired), Dr. Appelt saw firsthand the benefits of philanthropy on all levels of society. “Whether we give to provide an underprivileged student a college education or to create a state-of-the-art neonatal center, it’s very important to give back to the community that has supported and rewarded us,” she said. Like many investors, Dr. Appelt was faced with paying capital gains and income taxes on some highly appreciated stocks she wanted to sell. She believed that giving her appreciated stocks to the Community Foundation offered a more significant social benefit, while helping her achieve her charitable and financial goals. “It pleases me to know that the gift I made to Grand Rapids Community Foundation will continue to generate revenue that can be reinvested in our community,” Dr. Appelt said. Dr. Appelt chose to direct her gift to the Fund for Community Good. “I am confident that the Community Foundation will use the income from my gift to help address this community’s most pressing needs,” she said.
legendary golf pro, Hollywood filmmaker and Grand Rapids business leader, Marvin stahl was also a civic-minded philanthropist. When he and his wife, Dottie, could no longer enjoy their beloved summer home on Baldwin Lake, they donated it to Grand Rapids Community Foundation. The home was sold, with proceeds establishing the Marvin Stahl Fund. Since 1987, the fund has substantially increased in value while awarding grants to many community programs and services.
401k and iRA Accounts
Assets held in 401k and IRA accounts require special consideration in your financial and estate planning. The law requires income tax to be paid on any withdrawals from the accounts, which may diminish its value for you and your heirs. If you leave retirement assets to family members in your estate plan, an estate tax may be levied as well. This double taxation could significantly decrease the value of the asset for your heirs. By naming the Community Foundation a beneficiary of a retirement asset during your lifetime, you can remove it from your estate, preserve more of its value and receive a federal deduction for the gift.
• Maximize asset value. • Minimize estate tax. • Receive a federal income tax deduction.
John Gill and Rita williams
“ The community is our responsibility and it should be our first priority. We all have a duty to the community.” — Rita Williams
Life insurance Policies
G iving a life insurance policy is an inexpensive way to make a substantial contribution to Grand Rapids Community Foundation. Many people find in later years that they don’t need all the insurance they did when they were younger. If you own “unneeded” policies, you may name the Community Foundation as sole beneficiary and transfer ownership. Once you do that, you are immediately eligible for a charitable tax deduction on the computed current value of your paid-up policy. If you are still making annual premium payments, those payments will also qualify for a charitable deduction. (Those premiums are paid directly to the Community Foundation, which in turn pays the insurance company.)
• Claim a charitable deduction on the computed current value of your paid-up policy or take tax deductions on annual premiums.
The Benefits of Giving
Gifts to Grand Rapids Community Foundation come in all shapes and sizes. Cash, securities, closely held stock, business interests, real estate and private homes have been used to establish charitable funds. Whatever the asset, each and every gift is an important contribution to the Community Foundation’s work.
we encourage you to make an appointment with our development staff to talk about your objectives and your situation. They may be able to offer suggestions you have not considered or known about.
Note: Contributions in excess of the percentage limitation may be carried over for charitable deduction purposes in the five succeeding taxable years. The chart here illustrates only some of the applicable tax treatments. Please review your giving options and related tax benefits with your professional advisor.
Three common methods allow you to turn life insurance policies into a charitable gift
CHAR ITAblE I NCOM E TA x DE DuC TIO NS FO R I N D IvIDuAl S
Type of Contribution Amount that can be deducted Percentage of Adjusted Gross Income that can be deducted in one year 50% 50%
Cash Ordinary income property, such as inventory, depreciable property, agricultural products, oil and gas property, Section 306 stock, original issue discount debt instruments, art work by its creator and other property, the sale of which at fair market value would yield ordinary income Short-term capital gain property (held less than 12 months), such as stocks, bonds and other capital assets, the sale of which at fair market value would yield short-term capital gain long-term capital gain property (held more than 12 months), such as stocks, bonds and other capital assets, the sale of which at fair market value would yield long-term capital gain long-term appreciated real property
Cash Value Cost Basis
Simply list Grand Rapids Community Foundation as the beneficiary when purchasing a new life insurance policy, or execute a simple change of beneficiary form on a current policy. Upon your passing, your estate receives a charitable deduction, and the death benefit passes to the Community Foundation tax free. You may also name the Community Foundation as contingent beneficiary if your primary beneficiary passes away before you do.
You may donate an existing, paid-up life insurance policy to Grand Rapids Community Foundation or purchase a new paid-up policy in the Community Foundation’s name. As long as all rights of ownership are transferred to the Community Foundation, you should receive a current income tax deduction equal to the lesser of your basis in the policy or the policy value.
You may transfer an existing insurance policy or purchase a new policy on your life and name Grand Rapids Community Foundation as the owner. Every year you donate sufficient funds to the Community Foundation to pay the annual premiums. These contributions are tax deductible, subject to individual limitations. If you stop providing these funds, the Community Foundation reserves the right to cash in the policy.
Fair Market Value
Fair Market Value
Tangible personal property held long term, Fair Market Value if the recipient’s use of the property is related to its exempt purpose or function; unrelated use limits deduction to lesser of cost basis or fair market value, but the 50% ceiling applies
The Metz Legacy society
Named for George and Mary Metz, whose $100,000 gift was the first bequest received by Grand Rapids Community Foundation, the Metz Society recognizes people who have included the Community Foundation in their estate plan.
Metz Society members receive special benefits. • Invitations to Metz Society members only events. • Recognition in our annual report. • Choose to be interviewed so we can create your personal philanthropy biography.
Gifts provided through wills or trusts have become the foundation of the American philanthropic tradition. In fact, the vast majority of planned gifts ultimately received result from bequests. Such gifts enable you to make significant contributions that may not have been possible during your lifetime. When you remember the Community Foundation in your estate plan, you may reduce your estate taxes while supporting your community. You may give a specific dollar amount, property or a percentage of your estate. You may also give the remainder of your estate after bequests to friends and family. When planning a bequest to Grand Rapids Community Foundation, be sure to talk with a member of the development staff. Your staff representative will help make sure that your wishes are clearly understood in the present so they can be carefully carried out in the future.
Metz Society members are invited to special Community Foundation events that are exclusive to members and donors. If you have included the Community Foundation in your will or estate plans, please let us know. Even if you wish to remain anonymous, we want to be able to fully carry out your gift intentions. Knowing what you want is important to us.
• Divide assets between loved ones and your charitable interests in any manner you choose. • Reduce the size of your taxable estate.
arvey Lemmen was born in Ionia in 1922. While his family was of simple means, his parents were devoted members of the community. His father, a school board member, and his mother, a homemaker, stressed the importance of a good education. Harvey listened and learned, and, in 1940, graduated valedictorian of his class. His success in high school helped him earn a scholarship to the University of Michigan. “I had never been away from home, and I remember feeling a little homesick at the university,” said Harvey, who majored in accounting. By 1944, Harvey earned his degree.
He briefly entered the working world and returned to his alma mater in 1945 to earn an MBA. He became office manager of Meijer in 1949. “It sounds impressive, but there were only about 12 employees. We worked in a small office in Greenville with old wooden floors. There were only a few Meijer groceries at that time,” Harvey said. He retired as chief operating officer after 38 years. “The thing that really matters to me is helping people. I believe that how much you help others is the one true measure of success,” he said.
“ I have included the Community Foundation in my will because it is a permanent part of our community. I know that my gift will benefit the people here long after I’m gone.” —Harvey Lemmen
ong time Grand Rapidians steele and Mary Taylor are active and engaged philanthropists with a sweet spot for D.A. BlodgettSt. John’s, a children’s welfare agency. They discovered the Community Foundation in 1982 and were part of an original “Friends” group that promised an
unspecified financial commitment by direct gift or estate plan. They have a Donor Advised Fund at the Community Foundation and also have made provisions in their estate plan for growing their fund. With a planned gift to D.A. BlodgettSt. John’s, Steele and Mary’s fund will ensure that children in its
foster care system have a chance at a college education. They also support kids there with tutoring, other pre-college aid and college tuition.
Charitable Gift Annuity
Charitable gift annuities offer two key benefits: simplicity and a reliable income. When you establish a gift annuity with Grand Rapids Community Foundation, you and/or someone you designate will receive a life income in exchange for your charitable gift. The annuity rate depends on the annuitant’s age. The older you are, the higher the rate. Charitable gift annuities offer several tax advantages as well. Part of the gift qualifies for a current federal income tax deduction. By transferring an appreciated asset to the Community Foundation, you will reduce and defer your capital gains tax and may reduce probate costs and estate taxes. Check with your tax or financial advisor for detailed tax implications. A deferred gift annuity allows you to make a gift now and receive payments later in life. This type of gift is attractive to younger donors who are planning for retirement. You will receive a higher rate and a lifetime income, based on when you want to start receiving payments (at least 12 months after establishing the fund). If you need current tax deductions and want to augment retirement income on a tax-sheltered basis, a deferred gift annuity is an excellent option.
• Provide income for life for you or a beneficiary. • Make an immediate, significant gift to the Community Foundation. • Attain a more favorable current and retirement income tax position. • Establish an annuity for as little as $10,000. • Lock in an attractive rate of return. • Save on probate and estate taxes. • Realize a charitable tax deduction and increase disposable income. • Annuities are easy to establish and, generally, there is no cost involved.
Charitable trusts allow you to “donate the tree, and keep the fruit” or “donate the fruit, and keep the tree.” A valuable option in estate planning, charitable trusts provide maximum flexibility for giving a gift and securing a life income. Your options include a charitable lead trust (CLT) or several types of charitable remainder trusts (CRT).
Here’s how it works:
1. With the help of your professional advisor, you select an asset that will be used to fund your trust. 2. You transfer ownership of the asset to the trust, which owns and manages it for a specified period of time. This provides an immediate tax deduction. 3. While the trust holds the asset, it pays you, a charity or someone you designate income. 4. At the end of the trust term, the trust transfers the assets to Grand Rapids Community Foundation.
Kenneth larm’s Creative Gift: from Furniture Inheritance to Community Good
few years ago, donor Ken Larm received a Grand Rapids Community Foundation postcard that described charitable gift annuities (CGA). He liked what it offered, and he carefully considered which assets he could use to establish a CGA. He landed on a unique solution. In 1992, Ken inherited a fair amount of vintage Herman Miller furniture. Back then he chose to liquidate the items, which had appreciated considerably since their creation in the 50s. “I decided to put the money in U.S. savings bonds. I saw this as a safe investment that allowed me to diversify my assets,” he said.
Ken discovered that his bonds had more than doubled in value since 1992. He called the Community Foundation to see whether he could use the bonds to establish a CGA. “This was a great option for me, because I was able to get a good rate of return due to my age,” Ken said. “I feel that giving back to the community is the right thing to do.” After Ken’s lifetime, the CGA residuum will roll into a Field of Interest Fund to be established through his estate. He has specified that the B. Kenneth Larm Fund will be unrestricted.
Charitable lead Trust
With a charitable lead trust (CLT), you donate income to charity and retain the principal. Through the trust, you determine how much will be paid to Grand Rapids Community Foundation for how long. The principal that remains after the trust terminates will revert back to you or pass to another designated individual. You may choose between fixed or variable income payments. Charitable Lead Trusts are an effective tool for excluding assets—and subsequent appreciation on those assets— from your taxable estate, while ensuring your favorite causes receive significant charitable support.
Charitable Remainder Unitrust: Variable Payments BEnEFiTs
• Retain and transfer appreciated property to family members at low cost. • Reduce the burden of gift taxes or probate and estate taxes on your property. • Achieve a more favorable income tax position depending on the characteristics of the trust. • A charitable lead trust can be extremely useful to implement in a year in which you have an unusually large amount of taxable income and can use a very large current deduction.
The percentage payment you receive from a unitrust varies from year to year as the fair market value of your trust assets fluctuates. If the value of the trust assets increases, so too would your payments. You must specify a payment rate (at least 5% by law). If your trust assets outperform that rate, the extra gains would be reinvested, eventually increasing your principal and payments. You may view this as a possible hedge against inflation, assuming growth in value of the trust assets is somewhat comparable to the inflation rate. The reverse, however, is also true. If your trust earns less than the rate you specify, you will still be paid that same percentage. This could erode your principal and lower your payments. To emphasize asset growth and a higher charitable deduction, establish a lower trust payout rate. If you select a higher trust payout rate, you’ll receive a greater annual payment and lower charitable deduction. You can fund a unitrust with cash or, ideally, with long-term, highly appreciated securities. The charitable deduction you are allowed is based on: the asset’s fair market value (even though you may have purchased them for less); your chosen payout rate; the number of specified beneficiaries; and beneficiaries’ ages or the trust’s term of years. Your tax, legal and financial planning counsel can help you assess the options best suited to your situation.
• Provide lifetime income for yourself or other named beneficiaries. • Make a significant charitable gift. • Hedge against inflation. Income may increase if assets grow in value. • Save on estate taxes. • Avoid immediate capital gains tax when original asset is sold. • Realize a charitable tax deduction. • Increase income by converting low yield assets. • Make additional contributions if you like.
Charitable Remainder Trusts
A charitable remainder trust (CRT) is one of the most flexible ways to give to Grand Rapids Community Foundation. With a charitable remainder trust, you donate an asset to charity and retain the income for a term of years or for life. Because the CRT is charitable, it can sell highly appreciated property without paying capital gains taxes, allowing the full asset to work. You may choose between fixed (annuity) or variable (unitrust) income.
ax Doering, like many Grand Rapids Community Foundation benefactors, has been a lifelong resident of Grand Rapids. Max has seen how growing community needs challenge local nonprofits. “I really wanted to give something back to this community,” said Max, a stockbroker for more than 40 years. “That’s why it was especially meaningful to establish our charitable remainder unitrust to benefit Grand Rapids Community Foundation.”
Charitable Remainder Annuity Trust: Fixed Payments
A charitable remainder annuity trust (CRAT) pays a lifetime income based on the initial value of the assets funding the trust. The payout rate must be at least 5% of the initial fair market value of the gift.
If you establish an annuity trust, you will receive a deduction for the present value of the charitable remainder interest and avoid capital gain tax on the transfer of appreciated long-term securities. Typically, the allowable charitable deduction from a CRAT is slightly greater than from a unitrust when the initial value and cost basis of the assets gifted are equal. For a calculation on a CRAT just give one of the development team members a call at 616.454.1751.
• Provide lifetime income for yourself or other named beneficiaries. • Make a significant charitable gift. • Realize the security of a predictable lifetime income stream. • Save on estate taxes. • Avoid immediate capital gains tax when original asset is sold. • Realize a charitable tax deduction. • Increase income by converting low yield assets.
Max and his late wife, Lois, established their charitable remainder unitrust with appreciated stocks. Their gift provided an immediate charitable tax deduction, thus decreasing their tax liability during a high-income year. Max receives income during retirement, and, as the trust’s assets grow in value, the trust will act as a hedge against inflation. Max and Lois were also able to make a much larger gift to Grand Rapids Community Foundation because they avoided paying capital gains taxes. Through their charitable remainder unitrust, the Doerings’ generosity will continue to benefit the community that contributed to their own prosperity.
A Will of Wisdom: Writing your ethical will
aving any degree of wealth at life's end is a sweet reward for hard work, saving and wise investments. Many people find peace of mind and satisfaction in creating estate plans that acknowledge loving relationships or that reward nonprofits doing great work. Beyond legal documents, there is another document you can create to reward people after your death. An ethical will is a document you create for loved ones to share your values, beliefs, spirituality, favorite memories and hopes and dreams for the future. An ethical will helps you tell others about yourself and leave them a gift more valuable than money. People who think they are not writers might be intimidated by creating an ethical will. However, it can be done over time and doesn’t have to be complicated. If you are not a computer user, you can handwrite a note or a series of notes, you can write in a journal or notebook or electronically record your thoughts. Keep your ethical will with your other important papers and know that your loved ones will be pleased to read it.
These questions will help you think about what you might tell people about yourself. Think through your responses and ask yourself why as you write. Remainder interest in Residence or Farm
Giving a remainder interest in a personal residence or farm allows you to stay in your residence or operate the farm without disruption. You receive an income tax charitable deduction for the present value of the remainder interest. In computing this value, depreciation may be taken into account. This gift permits you to avoid any potential capital gain tax on the built-in appreciation. In contrast, if you made the same gift to a unitrust, you would have to give up possession of the property. Giving a remainder interest provides a deduction that frees up tax dollars into spendable income without causing any lifestyle disruption. Taxes, insurance and normal maintenance remain your responsibility. You will be entitled to additional deductions upon making subsequent capital improvements. • What was your childhood like? • What were you like in school? • What is your best advice for parents? • What was the most rewarding aspect of being a parent? • What do you believe in? • Do you believe in God? • What do you think heaven is like? • What are you most proud of? • What are your most closely regarded values? • Is anything in the world worth dying for? • What would your descendents be surprised to know about you? • How do you want to be remembered?
• Improve your cash flow. • Make a substantial gift to Grand Rapids Community Foundation while retaining lifetime use of property. • Realize an immediate charitable tax deduction. • Avoid capital gains tax. • Enjoy a more favorable income tax position.
• What were the best years of your life? • What world event had the most impact on you? • How did you decide on your profession or career? Do you think it was your calling? • What was the most difficult decision you ever made? • What is the bravest thing you’ve ever done? • Did you love your spouse (or significant other) at first sight? When did you know it was love? • What is key to a lasting marriage? • What is key to a lasting friendship? • Who is your best friend?
Your Community. Your Foundation.
Since 1922, Grand Rapids Community Foundation has worked to build this community’s permanent endowment and lead the community in strengthening the lives of its people.
PURPOsE Grand Rapids Community Foundation makes grants to nonprofit organizations throughout Kent County, supporting arts and culture, education, community development, environmental preservation, health and human services. We seek to serve the community with leadership that encourages collaboration, demands accountability, values diversity, promotes justice, supports prevention and advances systemic solutions to community problems. LEADERsHiP Grand Rapids Community Foundation is governed by an elected 12-member volunteer Board of Trustees. Trustees serve one or two four-year terms. FinAnCiAL MAnAGEMEnT Grand Rapids Community Foundation manages its investments and its spending by closely adhering to policies developed by volunteer committees, leaders and recognized experts in finance. The investment policy is designed to produce a total return that exceeds the inflation rate by at least 5% annually. The spending policy, which allows us to grant 5% of the average market value balance over the past four years, allows grantmaking to continue at a relatively stable rate, despite variations in the investment market.
inTEGRiTY The Grand Rapids Community Foundation is confirmed in compliance with the National Standards for U.S. Community Foundations, voluntarily adopting policies and procedures to guarantee that we conduct business not only legally, but ethically. HisTORY Founded in 1922, Grand Rapids Community Foundation was one of the first community foundations in the United States and the first in Michigan. Like other community foundations, it is a public charity, chartered to safeguard the broad interests of the entire community it serves. sERViCEs The development staff at Grand Rapids Community Foundation is available to help you define your philanthropic goals, discuss your charitable plans or evaluate giving options. We will work with you and your tax, legal and/or financial planning counsel to come up with the best plan for your situation. For more information or to set up an appointment, call 616.454.1751.
Note: The examples used throughout this book illustrate potential tax consequences of various gift options. Your particular situation may differ. Please call the Community Foundation at 616.454.1751 to learn more.
Grand Rapids Community Foundation 185 Oakes Street S.W. Grand Rapids, Michigan 49503 Tel: 616.454.1751, Fax: 616.454.6455 Email: firstname.lastname@example.org Website: www.grfoundation.org facebook.com/GRCommFound @GRCommFound