Oregon Trail Community Foundation

WHY LEAVE MONEY TO YOUR HOMETOWN
Many citizens would like to find a way to leave money or property to their Communities. They realize that the citizen must put back more than they took out of the Community if it is to grow and prosper. Private donations of time, labor, and money are the essential ingredients of “Quality of Life”. The difference in the success of various communities can largely be attributed to its citizen’s willingness
to contribute.

It has been said of Western Nebraska and Eastern Wyoming that we are “asset rich and cash poor.” We are roughly 50 to 75 years younger than Eastern Nebraska and much younger compared to the East Coast of the United States. In practicable terms, we are three to four generations younger than the East. It takes several generations to generate wealth, especially liquid wealth. The most abundant potential donations or bequests in this area are property.

A community foundation, such as the Oregon Trail Community Foundation, provides a secure and trusted vehicle for these donations or bequests. Of all the types of foundations, a community foundation is the most flexible and can usually accommodate most wishes
of a donor.

The Oregon Trail Community Foundation serves the Panhandle of Nebraska and Eastern Wyoming. Donations can be made designating your community in this area as the recipient your donations. Your instructions can be very broad or quite specific. Check out “How to Create Your own Fund” on this web site for further ideas.

GIFTS OF SECURITIES (return to top)
United States tax laws offer a triple tax benefit for gifts of securities (stock, bonds and mutual funds) that have increased in value since their purchase or acquisition. First, you get a charitable tax deduction for the “market value” of your stock, bond or mutual fund. Second, you avoid the capital gains tax on the difference between what you bought the security for and its market value. And Third, you may realize a reduction in potential estate taxes.

It is important to note, never sell appreciated securities and then donate the cash! It is always better to donate the securities to the charitable institution and let them sell the securities. However, if your security has depreciated in value, then it is best to sell the security and then donate the cash. An example of Gifts of Securities versus Gift of cash:

	Gift of Security	Gift of Cash
Value of Gift	$100,000	$100,000
Income Tax Savings (35% tax)	35,000	35,000
Capital Gains Savings (15% tax on $80,000 gain)	15,000	0.00
TOTAL TAX SAVINGS	$50,000	$35,000

What is “Market Value?” For publicly marketed securities it is the average of the high and low price on the day the security was donated. If you mail the security to the charity, the postmark determines the day donated. If you have the security transferred from you brokerage account to the charity’s brokerage account, the day of transfer is the date of donation.

How much Can I Deduct? The general rule is you can deduct up to 30% adjusted gross income. For instance, if your adjusted gross income is $100,000, you can deduct $30,000. If your gift is greater than the example of $30,000, you can carry the excess out for
five years.

Can “closely held stock” be donated? Closely held stock can be donated to a community foundation. It is advisable to contact an accountant or we can use the Foundation’s accountant.

Can income be retained with a gift of securities? Yes. Most likely this would be in the form of a charitable remainder trust. We can provide you access to legal and accounting advice.

GIFTS OF REAL ESTATE (return to top)
Gifts of real estate are the most common gifts in this area since most of the wealth is tied up in real estate. In addition to the special incentives in giving appreciated real estate, it also provides some exciting possibilities in your estate planning. Some of the advantages of donating real estate are the same as donating securities.

Take and immediate charitable income tax deduction up to 30% of your Adjusted Gross Income. The excess may be carried over for five years.
You avoid capital gains tax on the appreciated value
You eliminate management worries
You eliminate insurance and maintenance costs
You eliminate property taxes
You simplify your estate

There are several ways to make a real estate gift:

An Outright Gift- this can be a designated or undesignated gift. An undesignated gift leaves it up to the Grant Committee of the Foundation to make grants for community betterment. With a designated gift, you instruct the Foundation to what project or projects you wish the gift to go. These instructions can include other foundations, churches, schools, etc. A designated gift of real estate would probably mean the Foundation would have to sell the real estate in order to make grants fulfilling your instructions. An undesignated gift may or may not be sold ad determined by the Foundation Board.
Gifts by Will- Real estate can be donated through your will. Your estate will receive a 100% charitable deduction for the full market value of the property with no limitations and there will be no capital gains on the appreciated value.
Gifting Property, but Retaining Income-Legal and accountant advise is needed, but this provides an exciting way to donate today, but to continue to receive income for as long as you and/or wife live. The amount of the charitable deduction and the income you receive is determined by schedules provided by the Internal Revenue Service. See “Charitable Remainder Trust” for more information.

WILLS AND BEQUESTS (return to top)
One of the most common ways of making your wishes known is a provision in your will. A will is very important unless you don’t mind the state distributing your assets. A will is a good way to make a difference in the quality of life in your community. A charitable bequest to your Oregon Trail Community Foundation can be a stated amount or a percentage of your estate. This bequest can be an “undesignated gift" which means it simply goes to the Foundation, invested by the Foundation, and income from the investments are granted yearly to community projects.

For larger bequests, some people would rather make a “designated” gift. This gift may be designated for a specific project or projects. Some will request a “fund” be set up with your family name. “Funds” come in various forms. See “How to create a Fund” for more information on the different types of funds.

There are ways to make a bequest to the Foundation and at the same time provide and income to loved ones. See “Charitable Gift Annuities” or “Charitable Remainder Trusts” for further information.

CHARITABLE GIFT ANNUITIES (return to top)
If you have a desire to somehow make a gift to your community, but you have a concern about your income for you and spouse for the rest of your lives, consider a “charitable gift annuity.” This is a simple low or no cost agreement between you and the Oregon Trail Foundation. Basically, you agree to make an immediate donation (minimum $10,000) to the Foundation, and the Foundation agrees to pay you a percentage (depends on age and runs from 5.7% to 11.3%) each year for as long as you and your spouse live. Some of the advantages of a charitable gift annuity are:

Simple and low or no cost to set up
You receive an income for you and your spouses life
You receive an immediate tax deduction (determined by IRS tables)
Part of your yearly income is tax free (determined by IRS tables)
Donation can be money, securities or property

A variation of this instrument is a “Deferred Payment Gift Annuity”. In this case, a gift is made, but payments to you and your spouse are deferred for a period of years. For example, if you are 50 year old and you make a $10,000 gift, but you defer receiving income until you are 60, you would receive $920 (9.2%) a year for the rest of you and your spouse’s lives. You still receive an immediate tax deduction for the gift (determined by IRS tables).

If you need further information on this wonderful way to give to your community, call, write or e-mail (info@OTCF.org) the Oregon Trail Community Foundation. Your communication with the Foundation is kept confidential. For similar type instrument, see “Charitable Remainder Trusts.”

CHARITABLE REMAINDER TRUSTS (return to top)
This is a legal instrument that you can have your lawyer draw up. This is similar to a ”Charitable Gift Annuities.” In this instrument, you transfer irrevocably assets such as securities or property to the Oregon Trail Community Foundation. In return, you receive an immediate charitable tax deduction for part of the gift (determined by IRS) and you and/or loved ones begin receiving an income for life or a specific number of years. The amount of the income varies and depends on how many recipients there are and their ages. The Foundation does not receive any money until the trust terminates.

The income may be a fixed dollar amount and this is called an “Annuity Trust” or you can receive a percentage each year of the assets (called a Unitrust). This type of trust increases your income if the assets go up in value, but decreases your income if the value of assets goes down.

This requires a “trust document” because it is somewhat complex and must conform to IRS rules. It also requires a “trustee” to manage the assets in the trust. You have the option of acting as a trustee or you can appoint a trustee such as the Oregon Trail Community Foundation.

You may call, write or e-mail the Foundation for further information or a confidential meeting. Our Trustee will listen to what you want to accomplish and then bring in an expert to put together all of the necessary documents and information. This material will be given to you and/or your lawyer, who will draw up the legal instruments.

Many of the benefits of a Charitable Remainder Trust are the same as a Charitable Gift Annuity, but the Charitable Remainder Trust is more complicated and can address more issues:

There is satisfaction in giving back to your Community

You can bypass capital gain taxes on assets given

You can provide income for life or a number of years to those you love

Your trust will grow tax free and can make your ultimate gift larger

By your actions, you teach your family the importance of giving back to your community

Allows you to convert property into income and reduce your management of the property

This may allow you to increase your income from currently low income producing property

This creates an immediate tax-deductible charitable gift, which reduces current taxes.

GIFTS OF RETIREMENT PLANS

If you have questions or want the Foundation to contact you, please e-mail us at info@OTCF.org or send your letter to OTCF, Box 1344, Scottsbluff, NE 69361.

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