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Local council endowments are important because they blend the visions of their donors with the needs and objectives of Scouting. One of the exciting things about an endowment gift is the bond, the relationship that is created between the donor and the Council.
Local Council donors can make their endowment gift in a number of ways and using a variety of gift techniques. It can always be made directly to a local council endowment fund during life. If the gift is one of cash, marketable securities or similar types of property, the donor may qualify for membership either in the James E. West Fellowship, the 1910 Society, or the Founders Circle, depending on the size of the gift. Others choose to endow a particular Council staff position or program, an endowment option previously used only by colleges and universities. Also, many donors designate their council endowment fund as beneficiary of their estate through their will, or as remainder beneficiary of their planned gifts.
For example, many donors receive a charitable gift annuity from Scouting and, by doing so, receive quarterly annuity payments from the BSA for the rest of their lifetimes. However, they choose a local council endowment fund to receive the gift when the annuity ends, creating a perpetual source of support for the council in the name of the donor or other loved one. Please contact your local council to discuss the many exciting and innovative ways that you can create an endowment gift to support Scouting in your community.
Income Producing Gift Plans
Several gift plans enable you to make a gift to Scouting while providing income for yourself or others. You also may increase your spendable income through tax benefits and diversification of assets. These plans, each offering distinct advantages, allow you to make your gifts in ways that will best meet your personal needs and achieve your financial goals.
All the plans offer current income tax deductions, and all provide the opportunity to avoid or reduce capital gains tax if appreciated property is used to make the gift (even under the new Tax Act of 1997). Many planned gifts will also help you reduce or eliminate gift and estate taxes. With many of the plans, the remainder of your gift is available to the local council only after the income payment period that you select has ended. You also designate how the Council will ultimately use this gift.
Although most donors create these gift plans during their lifetime, they can also be established through your will. These testamentary gifts may greatly reduce estate taxes, and accomplish other personal and financial goals, such as passing ownership of business assets to other family members at significant tax savings.
Careful planning with the council, our Regional Endowment Counsel, and your financial advisers is important in evaluating the timing and suitability of these plans for your situation. We would be pleased to provide you details of the personal benefits and financial implications of either a lifetime or testamentary gift using any of the income-producing plans. Just contact your local council, BSA Regional Office, or the Finance Support Division at the BSA National Office (available directly through this website)
When you want the flexibility of a variable annual income
The unitrust is a charitable income trust. When you make a gift into the trust, you and/or another beneficiary you select will receive income either for life or for a term of years (your choice), immediate income tax deductions for setting up the trust. Eventually, the council or Scouting program of your choice will receive the principal of the trust.
Your income from the unitrust may vary from year to year, since the income is based on a trust principal that is revalued annually. As the principal grows, your income from the trust will grow as well, protecting your trust income against inflation. If you have assets that are difficult to value, though, there may be other gift plans better suited to your situation.
Many donors use the unitrust to make gifts of real estate. If you use real estate to fund the trust, you will begin to receive the income when the property is sold and the trust has reinvested the proceeds of the sale in income-producing assets. Because you receive income only after the property is sold, you may elect to receive additional income later to "make up" for the payments not made to you before the property was sold.
You can make additional gifts to a unitrust at any time. Whenever you add to the trust, it usually results in higher annual income and additional tax deductions. A unitrust can pay income for one or more lifetimes, or or a specified term of years (up to twenty years). These trusts are often used to generate retirement income, pay for educational expenses, or provide support for children and parents.
When you want a predictable amount of income every year
The annuity trust is very similar to the unitrust, except that it provides an annual income that does not fluctuate with the market. You receive a fixed percentage of the initial value of the assets placed in the trust. This arrangement is ideal for donors who want their annual trust income to be steady and not tied to market performance.
As with the unitrust, the annuity trust can pay income for one or more lifetimes, or for a specified term up to twenty years. Of course, even though the donor can specify the amount of annual income to come from the trust, the annuity must be a reasonable amount so that the trust principal remains sufficient to generate the income payments. Your advisers can provide you with guidance on a percentage appropriate to your needs and based on a reasonable market forecast.
The charitable remainder trust is the broader name for the two types of charitable remainder trusts just discussed -- the unitrust and the annuity trust. As mentioned above, they are often used by donors to Scouting to attain their personal financial objectives while also making a significant gift to the local council of their choice. The type of remainder trust best suited to you depends on your individual needs.
Pool your gift with others for maximum effect
The BSA Pooled Income Fund has been compared to a charitable mutual fund, since your gift to Scouting is "pooled" with others in the fund. You receive professional management of your money (without cost to you), and allows you to diversify your income sources and portfolio. The pooled fund investment philosophy is to obtain a competitive yield with moderate growth and relative stability of the annual income return.
You may choose to receive the lifetime income from your share of the fund, or may select one other individual as beneficiaries -- though all income beneficiaries must be at least 40 years of age at the time you make your gift. The income is paid quarterly. When the income stream from your gift ends, the remainder of your gift becomes available for use by the local council that you selected. You receive a current income tax deduction for the remainder value of the gift at the time your gift is made.
Your initial gift to the BSA Pooled Fund must be at least $5,000, but you may make additional gifts of $1,000 or more to the pooled fund as often as you desire. Each gift will increase your annual income and provide you with additional charitable income tax deductions.
If receiving tax-free income is a priority, then you should consider one of the other trust vehicles such as the charitable gift annuity. Pooled funds are not allowed to receive or invest in tax-exempt securities.
BSA NATIONAL GIFT ANNUITY PROGRAM
Simple to create, and income payments begin either now or in the future
The BSA Charitable Gift Annuity is among the easiest and most popular methods of making a planned charitable gift. Here is how it works: you make a gift of cash or readily marketable securities to Scouting. The minimum gift is $2,500 for each annuity you establish. The Boy Scouts of America then guarantees the payment of a fixed annual income based on the size of your gift. These payments can be made to one or two individuals of your choice, including yourself.
The income is paid quarterly, and begins immediately. You also receive an immediate income tax deduction, based on the remainder value of your gift. An additional advantage is that part of the annual income you receive will be tax-free return of principal. It is important to remember that the annuity rate and the value of the gift, and therefore the amount of your deduction, increase with the age of the annuitant(s). This makes the immediate charitable gift annuity even more attractive for older benefactors.
A variation of the gift annuity is the deferred payment gift annuity. It is designed to appeal to those who could use a current income tax deduction but don't need the additional income right now. You may make your gift for a deferred annuity in a single transfer, in a series of transfers, or in periodic transfers during especially high income years. The income will be paid to you quarterly, starting on a future date you specify. The benefits of the deferred annuity are the same as for the immediate charitable gift annuity; however, deferring the income usually results in a greater deduction and even larger annual payments than the regular gift annuity.
Your local council will receive the remainder of your gift at the end of your lifetime income interest. As with all gifts, you may designate which local council will ultimately benefit, and even specify a specific use for your gift.