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Estate Planning Council of Central New York


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The Financial Advisors Program allows donors to recommend a financial advisor or firm to invest charitable funds created at the Central New York Community Foundation. The investments for these charitable funds are managed by financial advisors or firms outside of our primary investment pools.

Program Benefits This program offers a number of benefits for financials advisors and donors: a. Asset Retention: Advisors can retain and manage client charitable assets at their financial institution on an ongoing basis on behalf of the Community Foundation. b. Non-managed Assets: Non-managed client assets, such as real estate, closelyheld business interests, personal property and art can be converted into charitable funds that are managed through the program. c. Philanthropic Services: Financial advisors can offer philanthropic consulting services to their clients by connecting them to the Community Foundation – adding value to their investment services and client relationships. With more than 80 years of experience, we are able to bring significant community knowledge to bear in crafting creative approaches to clients’ charitable goals and objectives. Program Policies and Criteria The Community Foundation’s Board of Directors has approved a policy statement for the Financial Advisors Program. Program highlights include: a. Fund Minimum: This program is open to funds with minimum balances of $500,000. Funds with balances less than $500,000 may be invested in one of several other investment options we maintain listed on page 2.



Investment Allocations Strategies: We have adopted four model investment allocation strategies reflecting a variety of risk tolerances, time durations and philanthropic purposes. These include: Short Duration Fixed Income, Core Fixed Income, Balanced and Growth strategies. Reporting and Benchmarking: Our Finance Committee and investment consultant will periodically review investment performance of funds managed through the program against applicable benchmarks.

Identifying Clients Who Qualify Some typical examples of clients appropriate for this program include those who: a. Are planning to sell a private company or have high capital gains tax exposure b. Are contemplating life transitions— whether they are retired, have no children or are involved in estate planning decisions c. Want a charitable tax deduction now with the flexibility to make grants over time d. Want to grow charitable contributions tax-free over time e. Desire to create endowments benefitting multiple nonprofit organizations f. Desire to give something back to Central New York communities g. Are involved in multiple charities, civic causes or issues h. Want to engage their children or family members in philanthropy (315) 422-9538

: Financial Advisors Program (cont.)

Types of Funds A variety of client charitable goals and objectives can be achieved through the Community Foundation’s charitable fund options. a. Community Fund: Grants from our unrestricted Community Fund support the broadest range of charitable needs and issues in our region, now and in the future. b. Designated Funds: Donors designate specified charities to receive support on an ongoing basis. This option is popular in cases involving small charities, multiple charities or where there is a desire to endow and monitor charitable programs funded by the donor. c. Donor Advised Funds: A popular alternative to a Private Foundation, Donor Advised Funds allow a donor, family, business or group to recommend grants from a charitable fund administered by the Community Foundation. d. Field of Interest Funds: For donors looking to support a particular field of interest (e.g., arts, environment), geographic area (e.g., Madison County, Auburn) or population (e.g., single mothers, individuals with disabilities), a Field of Interest fund is structured to support effective charitable programs in particular fields that change over time. e. Scholarship Funds: Funds can be created to focus on a particular a high school, college, scholastic discipline or professional field. We are the largest non-academic manager of scholarships in Central New York. Bequests and Planned Gifts Clients can name a fund to benefit from a percentage of their estates, as the remainder beneficiary after other gifts are made or utilize other gift options. a. Charitable Trusts: Clients can establish a Charitable Remainder Trust or Chari-



table Lead Trust and name the Community Foundation as the beneficiary for the purpose of creating any type of charitable fund and purpose. Private Foundation Termination: A client might consider terminating an existing Private Foundation in order to simplify their giving or address succession planning issues. Retirement Plans: Naming the Community Foundation through a retirement plan beneficiary designation can be a very tax-efficient way to make a charitable gift.

Other Investment Options We maintain several investment pools and options. a. CNYCF Permanent Investment Pool: The permanent investment pool is our primary investment vehicle, representing about $100 million in commingled invested assets for most of our 500 component charitable funds. This pool’s current allocation is: 55% equities, 22% fixed income and 23% alternatives. b. CNYCF Short Term Liquidity Pool: This investment pool is appropriate for funds with short-term horizons for grantmaking purposes or donors desiring no market exposure for their funds. c. American Funds Mutual Funds: For funds with balances of less than $500,000, donors may request an allocation to a portfolio of American Funds mutual funds. A donor’s financial advisor is listed as the referral source of record with American Funds. d. Socially Responsible Investments: For donors desiring particular social screens or investment approaches outside these options above, we can craft personalized investment structures reflecting their goals. (315) 422-9538

What is a Community Foundation? • • • • • •

Discussing Philanthropy With Your Clients

   

Discussing Philanthropy With Your Clients (cont.)

     

Ten Reasons To Partner with the Community Foundation


Typical Community Foundation Clients are:


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Advanced Charitable Brainteasers:  Common Problems and Uncommon Solutions November 1, 2011 Bryan Clontz, CFP® President Charitable Solutions, LLC   (404) 375‐5496

Brought to you by:

All Materials Copyright 2011, Charitable Solutions, LLC

Agenda EIGHT ADVANCED CHARITABLE CASE STUDIES 1. Life‐Changing Baseball Coach:  Commodities for  College 2. Artwork to Ireland: Thankfully People Buy Modern Art  3. Corporate Real Estate Give‐Back: Employees Retrained  4. 4 Doctors’ With a Good Investment:  Believe It or Not! D t ’ With G d I t t B li It N t! 5. Religious Conversion: Stabilizing a Family Foundation 6. Asset Compression and Anonymity:  Lesson Learned 7. Pledge Fulfilled With Leveraged Dollars:  Saving Face   8. S‐Corporations and Roach Motels:  Tax Arbitrage is a  Beautiful Thing

Charitable Brainteaser #1 – Situation LIFE‐CHANGING BASEBALL COACH: COMMODITIES FOR COLLEGE •Client’s son barely graduated high school •Went to small Midwestern university on baseball scholarship •Immediately, coach positively changed son’s life  •Son is 27, graduated from Princeton and VP in father’s  Commodity Trading Business •Father wants to create a Scholarship Fund to honor coach •Doesn’t want Fund if coach leaves or retires •Father’s assets are limited except for three seats on the NYMEX Source: Spectrem Group and Reality Times, June 2004

Charitable Brainteaser #1 – Solution NYMEX Seat

Father Wants to

Family Donor Advised Fund:

Thank Baseball

Son Named


Successor Advisor

Made Grants to Coach’s Current School for Baseball Scholarships

Charitable Brainteaser #2 – Situation ARTWORK TO IRELAND: THANKFULLY PEOPLE BUY  MODERN ART • New York client owns multiple pieces of inherited art  currently in storage • Originally intended to bequeath art to local church Originally intended to bequeath art to local church • Now he wants to make a $500,000 donation to an Irish  charity’s endowment with no US‐affiliate • Ideally, he would like to keep the money with his  investment advisor for the next 10 years

Charitable Brainteaser #2 – Solution Two Paintings

Donor Seeks to Support Irish Charity

Donor Advised Fund Sells Art at Sotheby’s for $500,000 Money Manager Named Investment Agent

5% Distributed Annually to US-Based Donor Advised Fund Specializing in International Grants

Charitable Brainteaser #3 – Situation CORPORATE REAL ESTATE GIVE‐BACK: EMPLOYEES  RETRAINED • Fortune 500 corporation shut down domestic textile mill  production and outsourced jobs retraining  • Goal was to create a foundation to provide job Goal was to create a foundation to provide job‐retraining and social service grants to effected employees • Critically important to maximize tax savings and minimize  administrative burden • Would consider funding with cash or shuttered mill  property

Charitable Brainteaser #3 – Solution Public Corporations Wants to Support Displaced Employees

Mill Real Estate

Corporation Donor Advised Fund VP/Community Affairs Named Fund Advisor

Grants to Multiple Southeastern Rural Communities for Job Retraining and Social Services

Charitable Brainteaser #4 – Situation DOCTORS WITH A GOOD INVESTMENT: BELIEVE IT OR NOT! • Four doctors owned their medical building with virtually  zero cost‐basis • A regional REIT offered to purchase it every year • Doctors wanted to retire and sell practice to six junior  D t t dt ti d ll ti t i j i doctors • Junior doctors wanted long‐term lease • Each doctor was charitably‐inclined but wanted to  maximize tax savings and receive a life income • Two were particularly concerned about disinheriting  children/grandchildren with donations

Charitable Brainteaser #4 – Solution $1.2 million/20% Interest

Four 7 Percent Charitable Remainder Trusts

Four Doctors

for Life

Owned $6.0 Million Medical Building

Four Donor Advised Funds Children Successor Advisors $1.2 $1 2 million/20% illi /20% IInterest

$1 Million Insurance Trust #1

Multiple Grants


to Multiple Charities

Insurance Trust #2

Charitable Brainteaser #5 – Situation RELIGIOUS CONVERSION:STABILIZING A FAMILY FOUNDATION  • 5 years ago, grandfather wanted a 100% charitable estate  tax deduction without irrevocably giving the assets to  charity • Now, two children and four grandchildren are on  h ld df d h ld foundation’s board – one grandchild married outside of  faith and upset her brother • She feels ostracized and can’t make grants to new church • Family foundation had not met 5% payout requirement  and also wanted to grant to an environmental charity but  application expressly excluded environmental groups

Charitable Brainteaser #5 – Solution 26-Year Charitable Lead Annuity Trust/

Donor Advised Fund

Family Foundation

for Daughter

2 Parents/4 Children

Daughter Made Grants on Her Terms and Family Foundation Flowed Anonymous Grants Through Fund

Charitable Brainteaser #6 – Situation ASSET COMPRESSION AND ANONYMITY:   LESSON LEARNED • An overly optimistic client was named capital campaign chair for  church – promised completion in 24 months • As a warehouse developer, he held a number of triple‐net lease  properties which he wanted to tax‐effectively transfer to his  children • 23.9 months into the campaign, he called to say the campaign  was $300,000 short and he needed some solutions • Also, his 80‐year‐old mother planned to contribute $500,000 to  the church campaign for a charitable gift annuity (income for  life) but was concerned about default risk

Charitable Brainteaser #6 – Solution 13-Year Zero-Out Charitable Lead Annuity Trust

Donor Advised Fund for Anonymous Campaign Gift

Funded With Family Limited Partnership/ Triple-Net-Lease

Church Foundation


Single Premium Immediate Annuity

Mother’s 8% Charitable Gift Annuity

Charitable Brainteaser #7 – Situation PLEDGE FULFILLED WITH LEVERAGED DOLLARS: SAVING FACE  • 65 entrepreneur pledged $10 million to name a business school in  1999 • Company collapsed in 2006 and he had $7 million remaining on the  pledge • School said either $7 million now or $15 million in an irrevocable  estate gift • Client had an $4 million IRA, $13 million stock portfolio and a $5  million life insurance policy ($2 million in cash) originally purchased in  1985 as a cross‐purchase business buy‐sell (underperforming) and  about $300K in cash  • Client does not want pledge fulfillment to negatively impact three  children

Charitable Brainteaser #7 – Solution Donor 1035-Exchanges Old

Donor Needs to

Policy For Better Performing

Complete School

$15 Million Death Benefit/


$4 Million Cash Value

$100K from IRA – Tax-Free

Donates Policy to University Funds with IRA Contribution and

$2 Million Life Insurance Trust For Three Children

$2 million Appreciated Stock

Charitable Brainteaser #8 – Situation S‐CORPORATIONS AND ROACH MOTELS: TAX ARBITRAGE  IS A BEAUTIFUL THING • Investment advisor’s firm is a S‐Corp and he wants to  sell $500,000 to new partner • State income tax rate is 8% State income tax rate is 8% • Investment advisor is charitably‐inclined • Advisor wants to use the S‐Corp stock if possible to  make a contribution to consumer credit counseling • S‐Corp has zero cost‐basis and all gain is categorized  as unrelated business taxable income to the charity  (UBTI)

Charitable Brainteaser #8 – Solution Advisor Contributes

Public Charitable Trust

S-Corp to Trust-Form

With a Donor Advised Fund

Public Charity in

Sells to New Partner/15% Gains

Florida (Income

Tax Reduced by 50% for Deduction

Tax-Free State)

Charity Receives Net 94% of Gift as Grant Donor Receives a 100% FMV Deduction Vs. Sale and Gift Netting 77% to Donor and Charity


40.80% 42.90%


Financial and Wealth Advisors




24.10% 26.00%

Fundraisers / Nonprofit staff

19.80% 16.10%

Peers or Peer Networks







35.90% 35 90%


18.10% 15.10% 15.20%

Community Foundation Staff Bank or Trust Co. Staff








9.90% 7.10%

Coaching Program

4.00% 3.70% 0%









The following slides were developed by Lee Hoffman, President/CEO, Planned Giving Design Center from data derived from  "The 2010 Study of High Net Worth Philanthropy" Sponsored by Bank of America and researched and written by The  Center on Philanthropy at Indiana University



Endowment Fund


Donor‐Advised Fund at Comm. Fdn.,  D Ad i d F d t C Fd Bank or Other Org.


Charitable Remainder/ Lead Trust/ Gift  Annuity






Private Foundation 12.00% 3.40% 0% Currently Have

10% 20% 30% 40% 50% 60% 70%

Would Consider Establishing in 3 Years






Thank you for Coming! Bryan Clontz, CFP® President Charitable Solutions, LLC   (404) 375‐5496 Peter A. Dunn President & CEO Central New York Community  Foundation (315) 422‐9538

[Divider Page] Tab: “Resources”

Advanced Charitable Brainteasers: Common Problems, Uncommon Solutions Case Study Legal/Tax References Guide Legal/Tax Issues in Case Study #1 – Commodities for College Donor Advised Fund Grants to Scholarship Fund - Under the Pension Protection Act provisions, sponsoring organizations may make grants to natural persons from amounts not held in donor advised funds and may establish scholarship funds that are not donor advised funds. A donor may choose to make a contribution directly to such a scholarship fund (or advise that a donor advised fund make a distribution to such a scholarship fund). Capital Gain vs. Ordinary Income Asset – IRC 170(b)(1)(A) as well as (a) and (e) related to deductibility limitations. Legal/Tax Issues in Case Study #2 – Thankfully People Buy Modern Art Tangible Personal Property Donated to a Non-Use Related Charity – Deduction is limited to adjusted cost basis – IRC 170(e)(1)(B)(i). Collectibles Tax – IRC 170(e)(1)(B)(ii) states that the federal capital gains tax rate is 28%. Potential Excess Benefit Transaction with Investment Advisor – A new Pension Protection Act provision is that the entire amount of the payment be treated as the amount of the excess benefit differs from the generally applicable rule of section 4958, which provides that the excess benefit is the amount by which the value of the economic benefit provided exceeds the value of the consideration received. Expenditure Responsibility for International Grant - In general, expenditure responsibility requires that a foundation make all reasonable efforts and establish reasonable procedures to ensure that the grant is spent solely for the purpose for which it was made, to obtain reports from the grantee on the expenditure of the grant, and to make reports to the Secretary regarding such expenditures, see Sec. 4945(h). Legal/Tax Issues in Case Study #3 – Corporate Foundation Look-Alike Public Charity vs. Private Foundation Tax Rules – IRC 170(b)(1)(A) outlines the rules relative to public charity deductibility, and IRC 170(b)(1)(B) outlines the rules relative to private foundation deductibility. The rules relating to the contribution of long term capital gain property limitations to a public charity are covered here IRC 170(b)(1)(C)(i) and Reg 1.170A-8(d)(1).


C-Corporation Deduction Rules - IRC 170(b)(2), IRC 170(d)(2) and Reg. 1.170A-11(c) cover the 10% of net income deduction limitation and the five year carry forward provisions for any unused deduction. Legal/Tax Issues in Case Study #4 – Doctors with a Real Estate Investment Partial Interest Gifts - IRC 170(f)(3) disallows any partial interest gifts. The exceptions can be an entire undivided interest (IRC 170(f)(B)(iii) or qualified split-interest contributions like charitable remainder trusts – see IRC 664(d)(2). Qualified Appraisal Requirements and Substantiation – Pension Protection Act Definitions Qualified Appraisers The provision defines a qualified appraiser as an individual who (1) has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements to be determined by the IRS in regulations; (2) regularly performs appraisals for which he or she receives compensation; (3) can demonstrate verifiable education and experience in valuing the type of property for which the appraisal is being performed; (4) has not been prohibited from practicing before the IRS by the Secretary at any time during the three years preceding the conduct of the appraisal; and (5) is not excluded from being a qualified appraiser under applicable Treasury regulations. Qualified Appraisals The provision defines a qualified appraisal as an appraisal of property prepared by a qualified appraiser (as defined by the provision) in accordance with generally accepted appraisal standards and any regulations or other guidance prescribed by the Secretary. See Reg. 1.170A-13(c)(1)(i) and Reg. 1.170A-13(c)(3)(i). Charitable Remainder Trust Provisions – Charitable remainder trusts are discussed at length in Chapter 13. Flip unitrust provisions can be seen in Reg. 1.664-3(a)(1(i)(c)-1.6643(a)(1)(i)(f). Irrevocable Life Insurance Trust – This trust, if designed properly, allows for the death benefit to be both income and estate tax free - IRC 2042(1) and(2). Legal/Tax Issues in Case Study #5 – Stabilizing a Family Foundation Charitable Lead Annuity Trust – For a comprehensive overview of charitable lead trusts, see IRC 170(f)(2)(B), 2055(e)(2)(B) and 2522(c)(2)(B). Private Foundation Qualifying Grant – The 5 percent minimum distribution rule is covered here IRC 4942(e). Grants to public charities, like community foundations component funds, qualify as distributed income.  

Anonymous Grants – Private foundations must disclose all grants on the 990-PF tax return. Community foundations also have to disclose the amount and organization of all grants, however, they are aggregated from all the sponsoring organizations component funds. The public charity 990 tax return does not require each grant to be “attached” to specific funds. Legal/Tax Issues in Case Study #6 – Asset Compression and Anonymity Charitable Lead Annuity Trust Valuation – The IRS approved a CLT funding with limited partnership interests, as the partnership’s income comprised solely of passive investment income. Thus it was not a business enterprise and the income was not unrelated business taxable income (UBTI) – see PLR 9810019. Charitable Gift Annuity – Complete coverage of gift annuities can be found at Reg. 1.170A-1(d)(1), Rev. Rul. 55-388, 1955-1 CB 233; Rev. Rul. 80-281, 1980-2 CB 282 – in particular the tax deductibility of the qualified installment bargain sale transaction. Charitable Gift Annuity Reinsurance Provisions – Qualifying reinsurance provisions can be found in 170(f)10 charitable reverse split dollar rules. There have also been two relatively recent PLRs 200847014 and 200852037 that allow for some flexibility in the reinsurance design. A number of additional articles can be found at and the American Council on Gift Annuities – Legal/Tax Issues in Case Study #7 IRA Rollover – A qualified charitable IRA rollover, outlined in IRC 408(d)(8)(A), allows an individual 70 ½ and older, to make a direct contribution of up to $100,000 of their retirement account to a public charity (excluding donor advised funds and supporting organizations). It was extended through December 31, 2011. The direct distribution is not included in income. Charitable Gifts of Life Insurance – Since nearly all life insurance gain is ordinary income, the deduction is limited to the lesser of fair market value or adjusted cost basis – see IRC 170(e)(1)(A). Legal/Tax Issues in Case Study #8 Charitable Gifts of S-Corp Stock – Chris Hoyt wrote an excellent article on S-Corp at . It is also covered in IRC 512(e). Trust Tax Law for Charitable Contributions – IRC 512(B)(2) allows for a trust to take a charitable income tax deduction up to 50% of its Unrelated Business Taxable Income (UBTI). Further, a trust is taxed at individual rates for recognized long-term capital gains at the 15 percent federal rate.

Valuation cost, disposition process

Patents, royalties, copyrights

Art, coins, antiques

Restricted stock should be coordinated with an experienced broker. Qualified replacement stock from an employer retirement plan/ESOP can work well for both outright and planned gifts. New PPA 2007 rules severely tighten partial interest art gifts. Capital gains taxes remain at 28% federal so there is an extra tax benefit in tangible property donations. 2004 Act reduced attractiveness of patent/royalty gift to basis.

Work best as testamentary gifts to receive step-up in basis.

These assets are typically held in partnerships or LLCs so those rules apply as well.

Life insurance can be an excellent wealth replacement tool for any planned or outright gift. Premiums can be paid with appreciated property.

For LLCs and Partnerships, appraisal discounting may apply.

Additional Comments Real estate represents nearly 50% of privately held wealth, estimated at twice the entire stock market. Yet only 2% of all charitable gifts are real estate. Private company contributions are very popular prior to a market sale. S-Corp gifts to a trust are tax-effective prior to sale or to a corporation if held. Charities usually want the LLC interest for liability protection. Multiple shareholders make this option difficult.

Restricted stock can easily be used for just about every planned gift ISOs can be excellent funding assets provided they are exercised and then held for over a year. Tangible property work fairly well for nearly all forms of planned gifts – cost basis deduction is an issue however. Testamentary gifts are ideal.

Life insurance is an excellent life-time or testamentary gifts (through beneficiary designation). Annuities are only attractive as testamentary gifts because of IRD. Very difficult but possible.

Limited partnerships are particularly good funding assets for Lead Trusts.

Ideal for FLIP-CRUT with no known liquidation event – other vehicles work for corporate redemption or market sale Same as Closely-Held

Planned Gift Issues Ideal for FLIP-CRUT, difficult for CRAT and CGAs because of marketability

Revenue or non-revenue producing This table has general information and should not be relied upon as tax, legal or financial advice. Copyright ©2007 Charitable Solutions, LLC and Bryan Clontz, CFP® (404) 375-5496

Collectibles/Art Deduction: Basis for non-related use/FMV for related use Intellectual Property Deduction: Varies

“In-the-money” option transfers trigger gain to the donor at ordinary income rates at the time of gift. Valuation, insurance, storage, transaction costs, complex structures like private operating foundations are sometimes uses

Unique Issues and Potential Traps Environmental liability, holding period management, accelerated depreciation, negative basis, debt (note “5-and-5 UBTI exception”), pre-arranged sale Thin to non-existent market, difficult valuation, self-dealing without independent appraisal, pre-arranged sale, S-Corp UBTI issues Same as Closely-Held and characteristics of underlying assets and potential capital calls, multiple shareholders/assets difficult May be difficult or expensive to appraise, characteristics of underlying assets, general partnerships have full liability, partnerships with negative basis Non-paid up policies, “StrangerOwned” or premium financed, or gifts with policy loans are more difficult. Paid-up whole life policies work well. Annuities trigger gain upon transfer. Valuation difficult, tax law very complex and state rules may govern (e.g., timber). Appraisal requirement, lock-up period

Qualified (ISOs) or nonqualified

Oil/Gas Working or NonWorking Interests, Timber, Other Minerals Section 144 or 145

Mineral Interests

Deduction: Varies Restricted Stock Deduction: FMV Stock Options Deduction: Varies

Paid-Up and Non-Paid Up Life Insurance – Variable or Fixed Deferred Annuities

General, Limited or Operating

Tax status may be corporate or partnership

Various Forms Residential, commercial, domestic or foreign, leasehold/life or remainder interest C-Corp or S-Corp

Life Insurance/ Annuities Deduction: Lesser of Adjusted Cost Basis or FMV

Deduction: FMV


Deduction: FMV

Deduction: FMV LLC Interests

Closely-Held Stock

Deduction: FMV

Asset Type Real Estate

Financial/Estate/Tax Planning Considerations for Top Ten Non-Cash Asset Contributions

Environmental, UBTI, liens, IRS penalties, accident claims, up-front due diligence expense, on-going holding costs, remediation or improvement cost, time-toreward ratio, fiduciary risk

Capital calls, indemnification clauses, lack of control with minority gifts, UBTI and specific issues related to underlying property

Virtually none except as it relates to complex foundation-owned, charityowned and investor owned contracts – so split interest gifts are allowed.

None other than potential capital calls

Post-contribution loss possibilities during restricted or holding period

None other than postcontribution holding expenses

Real Estate

Privately-Held Stock/LLC/ Partnerships

Life Insurance/ Annuities

Mineral Interests/ Intellectual Property

Restricted Stock/Stock Options


Review history of collection, document with pictures

Review all restrictions and option agreements

More than any other asset, having a welldesigned sales plan prior to acceptance is critical

IRS has listed a number of reportable transactions – be cautious to comply with reporting requirements. Also review the illustration or policy being considered and have a memo outlining the donor’s premium paying responsibilities and the charity’s options for non-compliance.

Risk Management/ Due Diligence Indemnification letter, environmental audit, survey, BPO or appraisal, insurance, site inspection with pictures, determine property’s history, develop sales plan - review all deeds, lease agreements, rental agreements, inspection reports, donor should complete disclosure checklist citing any known issues, outsource to another charity Indemnification letter, independent appraisal, review financials if appropriate, develop sales plan, review all entity documents

Work with broker /appraiser to assess value prior to acceptance


Marketability, appraisals

Work with agent to illustrate any nonpaid up (universal or variable life policies) at 2% under the current crediting rate.

Thin to non-existent market, difficult valuation, selfdealing without independent appraisal, S-Corp UBTI issues

Conflicts of interest, valuation, selfdealing, implied or expressed restrictions

Acceptance Issues

This table has general information and should not be relied upon as tax, legal or financial advice. Copyright © Charitable Solutions, LLC and Bryan Clontz, CFP® (404) 375-5496

Liability/Cost Exposure

Asset Type

Tax substantiation – 8283/8282, due diligence, execute transfer documents, donor communication, audit preparation Tax substantiation – 8283/8282, due diligence, execute transfer documents, donor communication, audit preparation, insurance, storage

Tax substantiation – 8283/8282, due diligence, execute transfer documents, donor communication, audit preparation

Tax substantiation – 8283/8282, due diligence, execute transfer documents, donor communication, audit preparation, manage policies annually to determine health. Put donor in contact with a qualified insurance appraiser.

Tax substantiation – 8283/8282, due diligence, execute transfer documents, donor communication, audit preparation, put stock certificate or assignment document in safe. Check in with company annually to see if there has been any material change.

Tax substantiation – 8283/8282, due diligence, change insurance/utilities, execute transfer documents, donor communication, audit preparation, manage disposition Note: One person should manage all illiquid assets.

Staff Role

1. Auction sale 2. Private buyer 3. Broker

1. Usually held to death 2. Cash surrender to company 3. Reduce paid-up 4. Sold to life settlement companies 1. Hold (not recommended unless strong income payments) 2. Sold via broker 3. Sold privately Sold with broker as soon as restriction is lifted

1. Sold back to entity 2. Sold in open market transaction 3. Sold to private unrelated buyer

Disposition Alternatives 1. Hold (not usually recommended) 2. Sell to private buyer (unrelated party) 3. List with broker

Gift Acceptance/Management/Disposition Considerations for Top Ten Non-Cash Asset Contributions

Planned Giving Design Center – Technical Report on Privately-Held Interests ( Gift Partnering with Entrepreneurial Donors, Ticconi, Peter Journal of Gift Planning, Volume 4, Number 3, 1 September 2000 , pp. 11-33(23) Charitable Gifts of Subchapter S Stock: How to Solve the Practical Legal Problems, Hoyt, Chris ( Tax Saving Opportunities for Charities Owning Subchapter S Stock, Peebles, Laura ( Issues to Consider When Making and Accepting Gifts of Restricted Stock, Franklin, J and Shevlin, D (

Life Insurance: The Good, The Bad and the Ugly, MacNab, JJ Journal of Gift Planning, Volume 5, Number 1, 1 March 2001 , pp. 17-44(28) Charitable Gifts of Life Insurance, Clontz, B and Brink, M. ( Navigating Stock Options and Other Stock Rights, Ott, D. and Lew, R. ( Planned Giving Design Center – Technical Report on Intangible Property ( Planned Giving Design Center – Technical Report on Tangible Property (

1. Understanding and Drafting Non-Profit Gift Acceptance Policies, Miree, Kathryn ( 2. The Hazards of Unmanaged Life Insurance Policies, Barney, A. (

Gift Acceptance/Management/Disposition

1. 2. 3. 4. 5.

Life Insurance/Stock Options/Collectibles/Intellectual Property

1. 2. 3. 4. 5.

Closely-held Stock/LLC/Partnerships

1. Planned Giving Design Center – Technical Report on Real Property ( 2. Gifts of Real Estate – ( 3. Gold in the ground: A Practical Guide to Developing and Accepting Gifts of Real Estate, Myerberg, Neal - Journal of Gift Planning, Volume 10, Number 2, June 2006 , pp. 11-43(33) 4. Real Estate Gifts--Beyond the Basics, Carovano, J.; Nash, Anne Journal of Gift Planning, Volume 7, Number 3, 1 September 2003 , pp. 5-41(37) 5. Contributing Mortgaged Property to Charity, Peebles, Laura – ( )

Real Estate

Additional Readings for Non-Cash Assets

Advanced Charitable Brainteasers: Common Problems and Uncommon Solutions  

November 1, 2011 Bryan Clontz, CFP® President Charitable Solutions, LLC

Advanced Charitable Brainteasers: Common Problems and Uncommon Solutions  

November 1, 2011 Bryan Clontz, CFP® President Charitable Solutions, LLC