There are almost as many ways to donate to the Knox County Foundation as there are charities you can support.

Deciding When to Give
The first decision a prospective donor to the Foundation must consider is when to give. A donor can elect to give during one’s lifetime or defer their gift as part of their estate planning. Choosing to give today allows a donor to witness the benefits their gift brings to the charity and the community.  Also, depending on the fund type, it can allow a donor to participate in the grant selection process that can adapt as their philanthropic interests change. Other donors may be concerned whether their retirement income will be sufficient if they make a substantial gift during their life. If this is an issue, a donor could elect to bequest a gift through their will. A bequest allows a donor to ensure their charitable intent will be fulfilled while mitigating the concern of unexpected changes in lifestyle or income during their lifetime.

Giving by Bequest
If a donor decides that giving by bequest is the best solution, they can add wording to their will which explains how the gift is to be determined including whether the gift is a set amount or a percentage of the estate. The language in the will can include information explaining the types of assets to be distributed including cash and equities, retirement plan assets, life insurance or real estate. A prospective donor to the Knox County Foundation can establish a fund, including a signed fund agreement, in advance and reference contributing to their fund within the will. Using this method, if the donor changes their mind about potential charitable beneficiaries, they can simply change or create a new fund agreement rather than amend their will. It is always recommended to work closely with an attorney when creating or amending a will.

Giving Today: Check, Stock, or Other Securities
Donors who want to give today have an expanding array of options to donate. The most common and easiest method of donation is through a gift in cash. When making a donation by check, there are no complicated rules to follow and for many taxpayers, the contribution can result in an appealing income tax deduction. Many donors may find donating appreciated stock or other securities a more tax beneficial option. Donating long-term appreciated stock or similar investments can result in a tax deduction of the fair market value of the donated holding.  In addition, the taxpayer donating the investment does not have to pay capital gains tax on any appreciated holding gains.  If a donor has appreciated stocks or other securities in their portfolio, they should discuss with their tax accountant whether contributing those assets can generate a higher tax savings.

Qualified Charitable Distributions
As IRAs continue to grow in popularity as a retirement tool, many donors are now taking advantage of qualified charitable distributions (QCD) as described in IRS regulations. When an individual reaches the age of 70 ½, they are required to begin taking minimum distributions from their IRA.  Electing to give a QCD directly to the Knox County Foundation can result in many tax benefits that could save the donor income tax. The primary benefit of QCDs is the entire amount withdrawn is excluded from gross taxable income. Under the new tax laws, some donors may not fully utilize a charitable deduction because they do not have enough to itemize on their tax return. Other donors may be subject to charitable gift percentage limitations or itemized deduction phase-outs that limit the benefit of a donation. A QCD could potentially allow a taxpayer to avoid these income tax pitfalls. Also, because a QCD is not included in adjusted gross income, it could possibly result in less social security income subject to tax as well as less income subject to state income tax. On an annual basis, an individual donor could contribute up to $100,000 ($200,000 combined for spouses) through a qualified charitable IRA distribution.

Charitable Gift Annuities or Retained Life Estate Agreements
Depending on a donor’s tax and estate planning situation, more complex planning devices such as charitable gift annuities or retained life estate agreements may be beneficial.  A charitable gift annuity is a contract between an individual or couple and a qualifying non-profit organization.  The annuity is funded by the donor using cash or other assets including securities. In return, the donor receives a steady stream of payments for the rest of their life.  At the end of the donor’s life, the charity receives the remainder of the gift proceeds.  In addition to the income stream, donors may also be eligible to take a tax deduction at the time of the original gift.  The tax deduction is determined based on the estimated amount of the original gift that will go to the charity after all annuity payments have been made. A retained life estate agreement allows a donor to establish a gift of property such as a home while allowing the donor to remain living in or using that property during their lifetime. With a retained life estate agreement, a donor can receive an immediate tax deduction in the year the gift is made, and the Knox County Foundation receives the property at the end of the retained life estate term, usually the donor’s lifetime.

Due to current income and estate tax laws, charitable giving can generate substantial tax savings. Since these laws can be very complex, the Knox County Foundation strongly recommends donors considering significant gifts work directly with their attorney, accountant, and financial advisor to ensure all tax implications are properly addressed. The Foundation will work with donors and their advisors to ensure their philanthropic legacy is maximized with proper tax and estate planning.