December 2004

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A gift that keeps on giving

Did you know that colleges rely on external funding, including gifts, as a significant part of their revenues? The most current issue of The Digest for Education Statistics, published by the Department of Education’s National Center of Educational Statistics (http://nces.edu.gov), shows that only 43 percent of a private, nonprofit, doctoral degree-granting institution’s income comes from tuition.

To operate, these colleges rely on external funding, with approximately 9 percent of their annual revenue from gifts. (The balance comes from federal and state grants, services and endowment investments.)

In schools that confer health-related doctorates, tuition accounts for less than 16 percent of total revenues — making external funding even more important.

In general, chiropractic colleges depend on tuition and clinical fees for their revenue. In the absence of other significant external funding, donations and planned-giving strategies become even more important to them.

If you have given some thought about making a significant gift to your favorite chiropractic charity or college but haven’t acted because of concern over future financial needs, consider planned giving. Gifts made through this arrangement allow you to make significant charitable contributions and simultaneously take into account your own financial needs or those of loved ones.

GIVE AND GET BACK

The concept is simple: You make an irrevocable gift to a charity of your choice. In return, you (or your beneficiaries) receive life income.

In general, the process of planned giving works like this:

• You gift cash or appreciated assets to an eligible nonprofit college or other charity’s life income gift plan.

• You or your designated beneficiary receive income from the charity, either for life or an agreed upon term of years.

• You claim an immediate income tax deduction for a portion of your gift.

• When payments to you or your beneficiaries are no longer required, the college or charity receives the remaining principal of your gift.

You can fund your gift with cash or appreciated assets, such as artwork, real estate or even antiques — making these gifts an attractive proposition for both the donor and the charity.

Life-income gift plans are available in a number of “sizes and shapes” to allow donors to find one with a good fit to their personal circumstances. Unlike a donation made through your will, you receive the satisfaction of supporting

The most common types of planned gifts include gift annuities, pooled funds and trusts.

• Gift annuities. When you give to a gift annuity, you (or a designated friend or family member) receive a fixed payment either for life or for some other mutually agreed upon time period.

• Pooled income. In this type of program, the charity accepts gifts from many donors and places the funds into a communal fund. The charity then regularly distributes to each donor his or her proportion of the fund’s earnings.

• A charitable remainder trust. In this type of gift program, a trust is set up to receive donations, either as a fixed amount or a percentage of the trust’s principal, and payments are made from the trust.

You have a variety of ways in which to make a planned gift — and you can even designate how the gift will be used. You can choose to support the mission of your college by making your gift available to the school for its unrestricted use or you can focus your gift on a select program or specific purpose of your choosing.

Recognizing the importance of this support, some colleges have planned-giving calculators on their Web sites. These calculators allow you to enter relevant information and determine the terms for a gift and compare different gift strategies.

The calculator provides information on the income and possible tax benefits available. Web sites often have links to the institution’s planned-giving department, where you can ask questions and receive advice on how to proceed.

Not all gift strategies are available at every school or charity. Contact the nonprofit charity or college you wish to support to find out what planned-giving programs are available. Then consult with your tax adviser, financial-service professional and attorney to see how such gifts fit into your financial circumstances.

Your gift, combined with others, can make available scholarships, teaching resources and advanced facilities to train a new generation of chiropractors while making it possible for deserved students to enter the profession regardless of their economic background. In the end, regardless of how you structure such a gift, take comfort in knowing that you are supporting your favorite cause with a gift that keeps on giving.

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