Many charitable Rhode Islanders can realize the tax advantages of making a gift now, especially of appreciated assets, while still receiving income from that asset. A "planned gift" offers that flexibility, while ensuring that the charitable intent is met upon your passing.

As noted in How to Give, the resulting assets can be used to establish and name a new endowment, or to contribute to any of the Foundation’s 950 existing permanent endowments (including your own, if applicable). (If you haven’t already, see Types of Endowments.)

Use our Gift Law Calculator to see just how advantageous such a planned gift may be to you and your family.

Charitable Remainder Trusts

Charitable Remainder Unitrust and Charitable Remainder Annuity Trust

Charitable Remainder Trusts are often appealing to donors with appreciated assets such as real estate or securities producing little or no income. You make a charitable gift but retain for life, or for a fixed period for yourself or others, the right to receive payments from the trust. You may name an individual or corporate trustee or, in certain cases, request that The Rhode Island Foundation serve as trustee. Two special features are:

• Capital gains are avoided and, generally, the trust property is not subject to death taxes.
• At the death of the last surviving income beneficiary, the trust property is used to create an endowment fund to fulfill your charitable goals. The minimum contribution to establish a Charitable Remainder Unitrust or Charitable Remainder Annuity Trust in which the Foundation serves as trustee is $125,000.

The benefits of this type of gift include:

• Charitable income tax deduction (based on beneficiary age and payout rate)
• Avoid capital gains on gifts of appreciated assets 
• Opportunity for increased income  
• Reduce estate tax liability 
• Asset diversification and expert trust management
• Opportunities to make sizable gifts to one or more charities.

Use our Gift Law Calculator see just how advantageous such a planned gift may be to you and your family.

<top>

Charitable Gift Annuities

With this option, you transfer assets to the Foundation. In exchange, the Foundation agrees, by contract to pay to the beneficiaries you name a guaranteed annuity amount for life. Your charitable deduction is calculated by taking the value of the transferred property, less the value of the annuity.

If the annuity is funded with appreciated securities, a portion of the annual payments will be taxed as capital gain income. The capital gain will be allocated throughout the life expectancy of the annuitant. At the death of the last annuity recipient, assets will be used by the Foundation as you instructed. The minimum gift size to establish a charitable gift annuity is $20,000.

Benefits Include:

• Receive a guaranteed income stream
• Charitable income tax deduction
• Reduce capital gains
• Reduce estate tax liability
• Receive a portion of each payment free of income tax

Use our Gift Law Calculator to see just how advantageous such a planned gift may be to you and your family.

<top>

Deferred Gift Annuities

Contributing to a qualified plan such as a 401(k), 403(b), Keogh, or IRA is an ideal way to save for retirement.  Unfortunately, all of these plans are subject to contribution limitations.

If you would like to supplement the payments you receive from your qualified plan and Social Security, consider a deferred gift annuity.  Not only will you have more to spend in your later years, but you may reduce your income tax now.  You will also help assure that the Rhode Island Foundation will continue to serve as an important resource for all members of the community.

Unlike an employer-sponsored retirement plan, a deferred gift annuity enables you to

• contribute as much as you want without limitation,
• contribute appreciated stock as well as cash,
• decide in which years to make a contribution, and
• start receiving payments as early or as late as you wish.

To establish a deferred gift annuity with The Rhode Island Foundation, you would transfer cash or securities to the Foundation and execute an agreement that states when payments are to begin and to whom they are to be made.

In the year you make your contribution you will receive a charitable deduction, the size of which depends on the number of years before payments begin and the age(s) of the beneficiary(ies) at that time.  If you contribute appreciated securities, and name yourself as the sole or initial beneficiary, you will not be taxed on the capital gain at the time of the contribution.  A portion of your future payments will be taxed as a capital gain distribution.

If you know exactly when you want to retire, you can select in advance the year in which payments begin.  However, if your retirement date will depend on future circumstances, the agreement can provide for payments to begin in any year you later choose.  The longer you wait, the larger your payments will be.

Assuming you are now age 50 and you contribute $20,000, this is the guaranteed amount you would receive each year if you started payments at the following ages:

Note: These amounts are based on gift annuity rates in effect at this time. The Rhode Island Foundation's minimum age to begin payments is 60.

How does your favorite charity benefit from this plan?  At the end of your and/or another beneficiary’s life (lives), whatever remains of your original contribution will be used by The Rhode Island Foundation to make grants for your chosen charity or cause.  That amount may be more or less than your original contribution, depending on investment performance.

* The annual payments will depend on the compound interest factor during the deferred period and on the gift annuity rates offered by the charity.

<top>

Pooled Income Funds

A Pooled Income Fund is an arrangement in which you make an irrevocable gift to a fund maintained by the charity. The assets are commingled with other donors' gifts to create a single fund and the Foundation manages and controls the assets. The amount of income paid to the income beneficiaries is based on your proportionate share of the fund. When the last income beneficiary dies, the remaining principal of your gift is used to fund an endowment.

The Foundation offer two funds: a Pooled Income Fund which is structured to produce higher income and a Pooled Balanced Fund which provides a modest amount of income with potential growth of income and principal over time. The minimum initial contribution is $10,000. Additional gifts may be made to the fund in $1,000 increments.

Benefits include:

• Charitable income tax deduction
• Avoid capital gains on gifts of appreciated assets
• Asset diversification
• Opportunity for increased income
• Simple to establish

Use our Gift Law Calculator to see just how advantageous such a planned gift may be to you and your family.

<top>