Planned Gifts for Scouting
In addition to gifts made during the donor's lifetime, the BSA Foundation can accept a wide range of planned gifts.
Bequests are the simplest way of
making future gifts – and revocable gifts – to the Foundation. The key
to making effective bequests is precise language that accurately
identifies the charitable recipient and the donor’s intent. Donors may
choose to make gifts in the form of: a) an exact dollar amount, b) a
percentage amount, or c) as a portion of the residue estate or trust.
They may also name the Foundation contingent beneficiary of an estate.
Either the Foundation staff or
National Major Gift Counsel can also provide sample bequest provisions
to your professional advisors in drafting suitable bequest language on
a confidential basis, without requiring the advisor to identify the
Almost half of all personal wealth in
the U.S. comes from real estate. This is particularly true for older
donors whose homes have greatly appreciated in value over the years. In
these situations, a life estate may enable a donor to give generously
to Scouting and also achieve significant income and estate tax benefits.
A life estate is basically a deed
restriction. It gives the donor the right to use a personal residence
(or farm) for life, or a specified term, with the remainder interest
passing to the BSA Foundation. The most common property used for life
estates is the donor’s primary residence, though second homes may also
Creating a life estate gift
generates an immediate income tax charitable deduction for the net
present value of the remainder interest in the property. This type of
gift also removes the real estate from the donor’s estate, potentially
reducing estate taxes. Some donors will even use their income tax
savings to purchase life insurance, thereby replacing the value of the
donated property for their heirs.
Though a life estate irrevocably
conveys the remainder interest in the property to the Foundation (to be
used as the donor requests), these arrangements do offer some
flexibility. For example, the donor might decide to enter a retirement
community. The donor could then rent the property and receive the
income. Or the donor and the Foundation might agree to sell the
property and divide the proceeds during the donor’s lifetime, according
to their respective interests.
Retirement plan beneficiary designations
Retirement plans, including IRAs,
401(k) plans, 403(b) plans, Keoghs, and SEP plans, can be effective
assets to use for testamentary charitable gifts.
Many people choose to name their
heirs as beneficiaries on retirement plan documents. However, for
donors with charitable intentions, this may not be the wisest course of
action from a tax planning perspective. Assets in retirement plans can
be hit with both income and estate taxes if left to anyone other than
the surviving spouse. These funds are considered “income in respect of
a decedent,” or IRD, so any individual beneficiary (again, except for a
surviving spouse) is required to pay income tax on the distributions.
Donors can avoid this “double
taxation” by designating the Foundation as the beneficiary of all or
part of the plan's assets. As a qualified public charity, the
Foundation does not pay any tax on the distribution. The donor may then
leave other assets that are taxed more favorably to family and
A sample IRA beneficiary designation and letter to an IRA plan administrator is available from the Foundation.
Charitable Remainder Trusts
A charitable remainder trust (CRT)
enables the donor to irrevocably give cash or property to the trust
while retaining an income stream, either for life or for specified time
period. The donor may also select someone else, such as a spouse,
parent, or child to receive the payments.
The CRT terminates either on the
death of the named beneficiary or at the end of the specified term. The
appreciated principal then passes to the Foundation to grow in a fund
established by the donor. Some of the benefits of a remainder trust:
· Allows donor to convert non-productive assets into an income stream
· Generates immediate tax deduction for
contribution to the trust, and avoids capital gains tax on the sale of
appreciated property by the trust
· Pays annual distribution to the donor or other beneficiaries selected by donor
· Very flexible in structuring the
amount and timing of income payments to the income beneficiaries
(either for life or a term of years)
· Donor can designate future use of
gift proceeds through the Foundation to the local council or Scouting
program of his or her choice.
There are two basic types of
charitable remainder trusts: annuity trusts (CRATs) and unitrusts
(CRUTs). The primary differences between these two types are the method
used to determine the payments, and the annual valuation requirement.
In an annuity trust, a specific,
fixed annual income is paid to the donor or other beneficiaries. The
income beneficiaries receive a constant annual payment, regardless of
value fluctuations of the trust assets or the actual return on the
trust assets. In contrast, the unitrust pays a specified percentage of
the net fair market value of the assets. The trust is revalued annually
for income purposes, so the annual income will typically fluctuate
based on fund performance.
There are many variations on these trusts. You may want to discuss these with one of the National Major Gift Counsel or the BSA Foundation staff.
Charitable lead trust
A charitable lead trust (CLT) is the
“mirror image” of a charitable remainder trust. It is a trust that
generates income for Scouting first, and then transfers trust assets
either to the original donor or to the donor’s family members.
The donor transfers cash or property
irrevocably to a trust, creating an income stream to the BSA Foundation
for a certain number of years. At the end of that period, the principal
either reverts back to the donor or passes to non-charitable
beneficiaries, such as the donor’s children, grandchildren, or
If persons other than the donor receive the remainder of the lead trust:
· Donor receives a federal gift or estate tax deduction for the present value of the payments given to the BSA Foundation.
· Taxable income and capital gains realized annually by the trust are taxed to the trust.
· The principal ultimately passes to non-charitable beneficiaries either outright or in a continuing trust.
· The present value of the assets
passing to non-charitable beneficiaries is a gift for gift tax purposes
or is included in the estate for estate tax purposes.
If the donor receives the remainder of the lead trust:
· Donor obtains a current income tax deduction equal to the present value of the total payments to the Foundation.
· Taxable income and capital gains realized annually by the trust are taxed to the donor
Lead trusts are ideal vehicles for
making significant charitable gifts and transferring assets with high
growth potential to the next generation. It may also be appropriate to
fund a lead trust with income-producing real estate interests, oil and
gas interests, or closely held stock and ultimately transferring these
assets to future generations.
BSA GIFT ANNUITY PROGRAM AND POOLED INCOME FUNDS
Some donors want to make a major gift
to Scouting, but don’t want the ongoing responsibility of an advised
fund, or can’t afford the minimums required for charitable trusts. The
simplicity of a charitable gift annuity or a pooled income fund gift
may be just what they need to meet their objectives.
The BSA Gift Annuity Program
allows donors to make a gift to Scouting and, in return, receive
lifetime income – part of which is tax free – and a current charitable
income tax deduction. The annuity rate is guaranteed by the general
assets of the Boy Scouts of America, established at the time the gift
annuity is created, and will not change for the duration of the gift
annuity. Some donors choose to create a gift annuity (and a stream of
income) for a spouse or other family member. When the gift annuity
ends, after the lifetime of the annuity recipients, the remainder goes
to the local council(s) chosen by the donor. Larger gift annuity
remainders could also be designated to the BSA Foundation to create a
named fund in perpetuity.
The minimum gift to establish a
gift annuity is only $2,500. The donor may use cash, stocks, bonds, or
mutual shares to make the gift. Annuity beneficiaries must be at least
50 years of age at the time the gift annuity is established, and most
donors want their annuity payments to begin immediately. Many donors
also choose a deferred gift annuity – they get a tax
deduction now, but delay the annuity payments until a later date when
the income is most needed (e.g., at retirement).
The BSA Pooled Income Fund Program
is similar to the gift annuity program, but is more like a “charitable
mutual fund.” Donors contribute to the pooled fund and receive
“investment shares” in the larger pool. They receive lifetime income
and an income tax deduction in return for their gift. At the end of the
lifetime of the beneficiary (or beneficiaries), the “shares” are cashed
in with the proceeds going to the local council or councils of the
donor’s choice (or, again, to establish a new fund at the Foundation).
The minimum gift to participate in
the pooled income fund is $5,000. Donors may add to their gift in
$1,000 increments at any time – each addition increases their annual
income from the fund and generates another tax deduction. Donors may
use cash, stocks, bonds, or mutual shares to make the gift. Pooled fund
beneficiaries only need to be 40 years of age at the time of the
There are two differences between
the income stream from the pooled fund and the income from a gift
annuity. First, unlike the gift annuity, pooled fund income will not be
partially tax-free. Second, the income stream from the pooled fund will
vary from quarter to quarter, based on the actual investment
performance of the fund.
COMPARISON OF DONOR GOALS WITH
PLANNED GIVING VEHICLES
Typical donor goals
Income to donor or others
Income tax deduction
Capital gains and estate taxes
Attractive funding assets
Estate tax reduction
Provide for favorite Scout councils or programs
(But will reduce estate tax for large estates that owe it).
Reduce income taxes
Provide for Scouting
Residential real estate
Retirement plan beneficiary designation
Provide for charity while treating heirs equitably
No (unless pursuant to Pension Protection Act of 2006, and may avoid income tax compared to other gifts)
IRAs, other qualified plan assets
Charitable remainder trust (Unitrust or Annuity Trust)
Create income for self or others
Establish permanent charitable legacy
Variable (CRUT) or Fixed
Yes, based on value of assets contributed, minus present value of income payments
Appreciated low-basis stock or real property
Appreciated real property (if CRUT is selected)
Charitable lead trust
Transferring assets to another generation (non-grantor trust)
Income tax deduction (grantor trust)
Yes, income to charity or fund in BSAF
No (non-grantor trust)
Yes (grantor trust, but donor taxed on income stream)
Estate taxes are avoided, but gift tax may be due
Income-producing assets that are likely to greatly appreciate in
value, or will be passed to children (e.g. shares in closely-held
Gift annuities and pooled income fund gifts
Potentially increasing current income from existing assets
Simple, affordable way to provide an endowment gift to a local council
Yes, either predictable and part tax free (gift annuity) or a variable income stream (pooled fund)
Yes, for both.
Appreciated stocks with low dividends, or cash that could be invested for higher returns.
GIFT TRANSFER INSTRUCTIONS
For the Boy Scouts of America National Foundation
Electronic Transfers of Stock (Broker-to-Broker)
Step 1: Please have the broker transfer stock to:
National Financial Services Corporation
Boy Scouts of America -- Account #W18-123692 DTC Clearing #226
Step 2: Prior to the transfer, the donor, broker,
agent, or trustee should fax or email a description of the stock, any
specific use or purpose for the funds, and the anticipated transfer
date. Fax: BSA Cashier Services, 972. 580. 2108, or email email@example.com.
Mailing of Stock Certificates, Checks, Money Orders, & Cash Equivalents
Step 1: If actual stock certificates are being given, the stock certificate and a properly signed stock power should be mailed – in separate envelopes – to:
Tim Pierce, Cashier Services, S401
National Boy Scouts of America Foundation
1325 West Walnut Hill Lane
Irving, Texas 75015-2079
Step 2: Donor (or agent) will include instructions as to the use/purpose of the funds.
Electronic Transfer of Cash/Sales Proceeds from Stock
Step 1: If cash or sales proceeds from stock sold by
the donor's broker are being electronically transferred, please direct
Chase Bank of Texas -- Houston
Account Name: Boy Scouts of America
ABA # 113000609 -- Account Number: 07000451724
Step 2: Prior to the transfer, please fax or email a
notice to BSA Cashier Services describing the stock transfer, any
specific use or purpose of the funds, and the anticipated date of the
transfer. Fax: 972. 580. 2108, or email firstname.lastname@example.org.
Donor should discuss with his or her advisor the tax
implications of selling stock and contributing the proceeds, rather
than contributing the stock directly to the BSA or other charity.
Questions? Please call the BSA at 972. 580. 2230.