Types of Gifts

A monetary gift is the most popular and simple type of charitable gift. This type of gift is generally tax deductible if you itemize your deductions on your tax return, making the actual cost to you less than the gift itself. Cash gifts are fully deductible up to 50 percent of your adjusted gross income. Any excess of the fifty percent deduction rule can be carried forward for up to five additional years.

Mid-America is able to accept credit or debit card payments for cash gifts. If you wish to make a regular donation to Mid-America you can simplify the process by authorizing automatic payments from the checking or savings account of your choice. To initiate automatic payments you much submit a Debit Authorization Form to Mid-America.

Long-term appreciated assets usually generate the most favorable tax benefits for a charitable gift. This could be stocks, bonds, or any kind of real property.

Imagine you have an asset that has appreciated significantly over a long period of time. This could be stocks or bonds, a mutual fund, a vacation home, or any other asset you own. When you sell that appreciated asset, you will be required to pay tax on the appreciated amount – or capital gain. Presently that amounts to 15% or 20% depending on your annual income.

Let’s say you purchased 1,000 shares of XYZ stock several years ago at $15 per share ($15,000). Today that stock is worth $25 per share ($25,000). If you sell all your shares your capital gain will be $10,000. At a 15% tax rate you will owe $1,500 in tax on the sale of that stock. Imagine buying a vacation home 30 years ago for $50,000 and today it is worth $500,000. Your capital gain would be $450,000 and at 15% you would owe $67,500 in taxes!

Rather than sell the asset and write a check, you should consider transferring the asset directly to Mid-America. That way, Mid-America books the investment at a fair market value while you take an equivalent income tax deduction. Since the transaction avoids capital gains taxes, you can actually deduct more from your income that if you had given straight cash. Donating appreciated assets is a great way to maximize your charitable goals.

What if you don’t want to sell a winner? Sell a depreciated asset and donate the proceeds to offset any capital gains you realize from an appreciated asset while still receiving a deduction for the gift of depreciated assets.

To discuss ways to maximize your sale of long-term assets contact Mid-America’s Vice-President of Advancement at 219-864-2400 or by email at mdeckinga@midamerica.edu.

Folks engaged in agriculture can face unique taxation and stewardship challenges, especially if they are unable to itemize and must take a standard deduction. If you take a standard deduction and do not receive a tax benefit from charitable gifts of cash, why not consider a gift of commodities and take advantage of the tax benefits? A gift of commodities given directly to your church or Mid-America may help you avoid federal, state and self-employment taxes. The process is very simple.

Download the Farm Commodity Gift fact sheet produced by the Barnabas Foundation for more information. Please consider making a commodity gift to Mid-America. We would be happy to help you arrange the transfer of the commodity and provide the necessary documentation.

In each of our lives there are special people whose memory we would like to honor. A meaningful way to pay tribute to a relative, friend or colleague is through an Honor or Memorial Gift. The person you honor will be notified of your gift. We will inform a family member about a memorial gift. Gift amounts will not be specified.

If you would like your gift to be in honor or in memory of an individual, please indicate who the gift is in honor or in memory of as well as the name and address to whom we should send notification.

The “IRA charitable rollover” incentive allows individuals age 70½ or older to exclude from their gross income gifts transferred directly from their IRAs to Mid-America Reformed Seminary. Under this provision, individuals may make gifts to charity from their Traditional IRA and Roth IRA accounts without any tax liability if their gifts are “qualified charitable distributions.” No charitable deduction may be taken, but distributions will qualify for all or part of the IRA owners required minimum distributions.

If you are a non-itemizer, this will eliminate the need to claim a charitable income tax deduction. Additionally, individuals who choose to make gifts in excess of 50 percent of adjusted gross income could also benefit. For higher income earners, the impact of receiving additional income on the taxability of social security payments, the deductibility of medical expenses, miscellaneous itemized deductions and child tax credit, and application of the alternative minimum tax can often result in a net income tax cost of making a charitable gift.

For more information download the IRA Charitable Rollover Fact Sheet.

Click here for sample wording to request an IRA distribution from your IRA plan administrator.

Barnabas Foundation’s Stewards Fund, a donor-advised fund, is one of the best ways to maximize and simplify charitable giving. In fact, many have found that using a Steward’s Fund restores or increases the joy of giving - and God loves cheerful givers! (2 Corinthians 9:7)

• The Stewards Fund enables a donor to make a one-time gift to Barnabas Foundation and decide later how the gift will be distributed to the donor’s favorite charities.
• The donor receives an immediate tax benefit and has plenty of time to determine which charities to support.
• The Stewards Fund also provides the flexibility to ensure that gifts are applied in the most effective way.
• A donor can give appreciated assets, like stock; arrange for the sale of a business; or use the Fund as an alternative to a family foundation.
• The Stewards Fund accommodates many charitable gift opportunities, and also allows the donor to designate multiple charities from a single gift.

A Stewards Fund account can be established by contributing a number of different types of assets. There is no set-up fee for this account and individuals may gain tax benefits as well, depending on the asset(s) they contribute.

Click here for a brief article explaining why a donor advised fund may make sense for you. For more information on setting up a donor advised fund through Barnabas Foundation, view the Stewards Fund Fact Sheet or the most recent Stewards Fund Annual Summary.

A charitable gift annuity is an irrecoverable monetary gift to Mid-America Reformed Seminary in return for a fixed lifetime income. This fixed income is based on the donor’s age and a charitable tax deduction for the calculate gift value. Gift annuities can be an excellent investment as they can often produce a higher rate of return that a certificate of deposit or a money market account.

There are two types of charitable gift annuities: current and deferred. A current gift annuity qualifies for immediate income tax benefits. A portion of the gift is tax deductible as a charitable contribution with a portion of the income received each year being tax-free. Furthermore, if a gift annuity is funded with long-term appreciated securities, the donor may also receive additional tax advantages. Not only is a portion of the capital gain on the appreciation avoided, but any reportable capital gain is also spread over the donor’s life expectancy rather than all in the same year.

A gift annuity can also be deferred. A deferred charitable gift annuity is a type of life income gift that allows you to defer the income until a later date, such as retirement, while claiming an immediate income tax deduction. You may determine the deferral period, and the annual income is higher when the payments begin. Like the current charitable gift annuity, a deferred gift annuity enables a portion of the appreciation to escape capital gains tax entirely when funded with appreciated assets.

A charitable remainder trust is an irrecoverable transfer of assets in the form of cash or securities to Mid-America Reformed Seminary. In return the donor receives income from the trust. The trust can be funded with cash, real estate or with long-term, highly appreciated securities to avoid the capital gain on the transfer to the trust. The trustee, who is designated by the donor, manages and invests the assets and pays to the beneficiary an income of usually between 5 and 8 percent for life or for a term of years. Funding trusts with appreciated assets enhances the tax benefits for the donor and may avoid capital gains liabilities.

A charitable lead trust is the reverse of a charitable remainder trust. A charitable lead trust provides for a gift of income interest from property for a designated term of years after which the property either reverts to the donor or passes to a non-charitable beneficiary designated by the donor. The income generated from assets placed in this trust is paid to Mid-America Reformed Seminary. At the end of the trust term, the principal either returns to you or is transferred to named beneficiaries such as children or grandchildren. While gift or estate taxes may be reduced or eliminated on the transfer of property to other family members, it is important that your tax advisor review the tax consequences prior to establishing a charitable lead trust.

The owner of a residence, vacation property or farm may donate the property to Mid-America but retain the legal right to occupy the property or continue to operate the farm for life. A significant income tax deduction may be immediately available and the benefits of a charitable bequest are also retained.

Do you have a written will? If you don’t, state laws will determine what will happen to your estate when you die. A written will should be a carefully planned document that ensures your estate will be distributed according to your wishes. You can name Mid-America Reformed Seminary in your will as part of your charitable bequest. Charitable bequests can take a variety of forms.

Individual retirement plans and company-sponsored pension and profit-sharing plans may be used to make charitable gifts to Mid-America while limiting tax liabilities for your heirs. Amounts remaining in qualified retirement plans at death may be subject to more than estate taxes, so a gift of the retirement plan balance may produce the greatest tax savings for your heirs. Additionally, if you are over age 59 and have excess retirement funds, it may be wise to give a portion during your lifetime to avoid penalty.

It is possible to name Mid-America Reformed Seminary as the beneficiary to all or a portion of a life insurance policy.

You have several options:

• Make Mid-America Reformed Seminary the beneficiary of an existing policy and earn an estate tax charitable deduction.
• Make Mid-America Reformed Seminary the owner and beneficiary of an existing policy, thus removing it from your taxable estate and earning an immediate income tax deduction approximately equal to the cash value of the policy (future premiums are tax deductible).
• Take out a new policy with Mid-America Reformed Seminary as the owner and beneficiary (all premium payments are tax deductible).
• Use in conjunction with a life income gift to “replace” for your heirs an asset that you have given to Mid-America Reformed Seminary.