Auerbach Central Agency for Jewish Education

About Us

Financial Resource Development
Planned Giving

Some Creative Ways of Giving
That Could Benefit Both You and
The Auerbach Central Agency for Jewish Education

There are many vehicles that can be used to effectuate a gift to ACAJE. Please use the online Information Request Form to have us contact you about Planned Giving options.

Types of Gifts.

Charitable Giving With Your Retirement Plan

Recently released IRS Regulations make it more advantageous for you to name ACAJE as the beneficiary of your individual retirement account or other qualified retirement plan accounts upon your death. Previously, naming a charity as your beneficiary had the effect of increasing the amount of minimum lifetime distributions that had to be made from your retirement account after reaching age 70-1/2. The Regulation change allows you to spread your lifetime minimum distributions over a longer period of time (up to 26 years) and still name ACAJE as beneficiary of the amount remaining in your account at your death.

Your retirement assets may be the “cheapest” assets to leave to ACAJE at your death. This is because retirement assets are subject both to Federal estate tax and to Federal income tax. At the highest marginal tax rates, your retirement assets can be diminished by up to 73% by these taxes. On the other hand, by naming ACAJE as beneficiary, 100% would be received by ACAJE at your death.

Proposed legislation would, if enacted, allow you to withdraw funds from your retirement account tax-free in order to make a charitable donation. ACAJE would receive these assets free of Federal income tax and your estate would be entitled to a deduction against the Federal estate tax.
Charitable Gift Annuity

A charitable gift annuity can be advantageous for an older Donor seeking a steady stream of income. This involves a gift of cash or appreciated assets to ACAJE pursuant to an agreement whereby ACAJE agrees to pay you (or someone you designate, such as your spouse) an annuity for life or for the joint life of you and your designated beneficiary. At your death, the assets pass to ACAJE without probate or estate tax. The annuity rate is set by ACAJE based on your age and prevailing interest rates. A formal trust instrument is not required. A charitable gift annuity results in an immediate income or estate tax deduction. In addition, a portion of the annuity paid to you by ACAJE is income tax free for a period of time.
- Potential Donor, age 75, would like to donate $100,000 toward ACAJE’s endowment fund but is not willing to give up the income that this money generates.
- The Donor transfers $100,000 to ACAJE and receives a contract to receive an annual annuity of $8,250 per year payable in quarterly installments for the rest of his life. This generates an income tax deduction of almost $42,000 which may save up to $12,000 in income tax.
- $4,700 of the $8,250 per year is received by the Donor tax-free. The estimated payout in 12.4 years (the donor’s life expectancy) is over $102,000. The tax-effected payout rate is 11.4%.
- At the Donor’s death, the property passes to ACAJE with no probate fees or estate tax.
- The combination of partially tax-free income from the annuity payments and the initial charitable deduction make this technique quite attractive. The annuity amount is fixed and will not change regardless of current investment or market conditions.
Lifetime Gifts

Lifetime cash gifts are the most simple and straightforward way to make a charitable gift. Cash gifts have the advantage of great flexibility and also give you immediate and maximum tax deductibility.

Other assets may be gifted to a public charity, although the tax law favors gifts of intangible property, real estate and personal property related to the charity’s purposes.

Proposed legislation would allow taxpayers who do not itemize their deductions to claim a charitable deduction to reduce their income tax. The possible repeal of the Federal estate tax would make lifetime giving more advantageous.

Endowment Gifts
- Potential Donor would like to donate $1M toward ACAJE’s Endowment Campaign, but does not have immediate access to the entire amount.
- Donor gives ACAJE $670,000, which ACAJE invests in an endowment fund earning 8% per year. The gift could come from Donor directly or through Donor’s Private Foundation. In 5 years the balance of the fund will grow to $1M.
  
  Result to Donor:
  - Credit for $1M gift to ACAJE
  - Immediate tax savings of $200,000
  Result to ACAJE:
  - ACAJE receives a $1M endowment gift.

Lifetime Gifts of Appreciated Property

The tax benefits of contributing appreciated long-term capital gain property, such as stocks or bonds, can be quite significant. Subject to the adjusted gross income ("AGI") limitations described below, contributions of appreciated long-term capital gain property (which is not "unrelated use property" as defined below) will generate a charitable deduction equal to the fair market value of the property on the date of the contribution. Thus, you can make a larger gift for less cost.

In addition to the maximum tax deduction, you will avoid a tax on the built-in gain that you would have paid had you sold the property. As a result, ACAJE will be able to sell the property and retain the proceeds undiminished by any tax imposed on the built-in gain.

Gift of Marketable Securities

Potential Donor owns marketable securities worth $10,000 with a cost of $2,500 and would like to make a donation to ACAJE.

		Cash to ACAJE	Tax Savings to Donor @40%
If:	Donor sells stock and donates proceeds (after payment of 20% capital gains tax), to ACAJE	$8,500	$3,400
If:	Stock is donated to ACAJE which sells the stock tax-free	$10,000	$4,000
	Benefit of stock donation	$1,500	$600

Charitable Residue and Bequests

Through a letter of intent, you can declare your intention to make a gift to ACAJE in your Will.

Pledge/Letter of Intent
"Intending to be legally bound hereby and in consideration of the gifts of others, I hereby pledge the sum of $__________________ due:
- on or before _______________________ (insert date)
- on my death
to Auerbach Central Agency For Jewish Education to be used for its general purposes.”

A testamentary gift can take the form of a bequest (a specified dollar amount or specified property), a gift of a percentage of your estate, or a charitable residue (a gift of the remainder of your estate after other bequests have been satisfied).

Bequest
"I give to Auerbach Central Agency For Jewish Education:
- ________% of my estate
- the sum of $___________
- the residue of my estate
- the following property owned by me (insert exact description)
to be used for the general purposes of Auerbach Central Agency For Jewish Education."
Life Insurance/Zero Coupon Bonds

Through these two vehicles, an individual can create a large legacy for little out-of-pocket cost. Gifts of new life insurance policies allow a donor to make contributions of the premium amount which is tax deductible. Contributions of existing policies will generate a tax deduction generally equal to the cash surrender value of the policy.

Gift of Life Insurance
- Potential Donors, husband and wife, are in their early 60's. They would like to leave $1M of their estate to ACAJE. For approximately $25,000 per year for 8 years, they can purchase an insurance policy which will pay ACAJE $1M upon the death of the survivor of them.
  
  Result to Donors:
  - Credit for 1M gift at a cost of only $200,000.
  - Tax savings of $80,000 spread over 5 Years.
  Result to ACAJE:
  - $1M gift received on death of the survivor of the donors.
With zero coupon bonds, a donor can purchase the bonds at a discount, donate them to ACAJE and get an income tax deduction for the current value of the bonds.

In either case, your charitable gift will be considered as the face value of the life insurance policies or zero coupon bonds.
Charitable Remainder Trust

A charitable remainder trust is a way of giving property of substantial value to ACAJE without giving up the income derived from that property. You establish a trust and determine the term (measured by one or more person’s life as a fixed term up to 20 years), the amount of the income interest (at least 5% of the trust's initial value), and whether you will retain the income interest, or gift it to other individuals.

The income interest can be either a fixed dollar amount per year (Annuity Trust) or based upon an annual percentage of the trust's principal (Unitrust). Upon termination of the stated term of the income interest, the trust will terminate and the remainder interest of the trust will irrevocably pass to ACAJE. The lower the payout rate, the greater the charitable deduction.

Charitable Remainder Trusts can be established during a Donor’s lifetime or upon a Donor’s death, and has the following advantages:
1. The Donor may make a substantial gift to charity, thus satisfying his donative intent.
2. The Donor may make a charitable contribution and still retain an income stream from the gifted property for himself and/or for his beneficiary or beneficiaries.
3. The Donor will receive an immediate federal income tax deduction (if the trust is established during his lifetime) or a federal estate tax deduction (if the trust is established upon his death) equal to the fair market value of the remainder interest.
4. The Donor can dispose of appreciated assets without recognition of gain, thereby increasing his before and after tax return on his investment in such assets.
5. The Donor might even enhance the annual return on his investments. It is possible that the Donor’s annual income will actually be increased if a gift of low yielding property is made to a Charitable Remainder Trust. CRT’s are often used as a non-qualified retirement benefit to accumulate income for a period of time, with payout after retirement.
6. Since the CRT is exempt from income taxation, it will be able to generate income undiminished by income taxes payable upon the sale of appreciated assets contributed by the Donor. This is perhaps the most important aspect of a Charitable Remainder Trust. It permits the tax-free sale of appreciated assets donated to the Trust and the tax-deferred re-investment of sale proceeds. The Donor receives taxable income only to the extent of the annual payment received from the Trust.
Gift to Charitable Remainder Trust
- Potential Donor, Age 75, owns a $200,000 parcel of rental real estate, originally purchased for $100,000 but with a $25,000 tax basis after depreciation deductions and would like to donate it to ACAJE but is not willing to give up the $15,000 per year of after-tax cash flow that the property generates. If Donor sells the property, he would net only $160,000 after capital gain and recapture taxes. Donor contributes the property to a Charitable Remainder Trust, retaining a lifetime annuity of $15,000 per year (a 7.5% return). The trustees sell the property and invest in tax-free investments.
  
  Result to Donor:
  - Credit for $200,000 gift to ACAJE
  - $15,000 tax-free annuity for life
  - $100,000 tax deduction, generating an immediate tax savings of $40,000
  - A 5% annuity generates tax savings of $53,000
  Result to ACAJE:
  - ACAJE receives $200,000 on the Donor's death, plus any trust earnings in excess of 7.5% per year
Charitable Lead Trust

Charitable Lead Trusts are the opposite of Charitable Remainder Trusts. Charitable Lead Trusts are now favored by today’s lower interest rates which increases the available charitable deduction and reduces the value of the remainder interest which is usually gifted to a family member.

A Charitable Lead Trust is a way of providing for the payment of a fixed annual income to ACAJE, and can be combined with a sizeable gift of the remainder interest to one or more individual beneficiaries at reduced gift and estate tax cost. You establish a trust and determine the amount and term of the charitable income interest, the type of income interest (annuity or unitrust), and whether you want to retain the remainder interest or gift the remainder interest to a non-charitable beneficiary or beneficiaries.

If the trust principal is invested in tax-free securities or you gift the remainder interest to a non-charitable beneficiary or beneficiaries, the trust income payable to ACAJE will not be taxable to you, in effect giving you a 100% income tax exclusion. Upon termination of the charitable income interest, the trust will terminate and the remainder interest of the trust will either be returned to you or will pass to the designated non-charitable beneficiary or beneficiaries.

A Charitable Lead Trust has three major benefits. First is the availability of an up-front income tax deduction is equal to the present discounted fair market value of the income interest payable to ACAJE, based upon current IRS actuarial tables. (If this option is chosen, the non-charitable beneficiary is taxable on the income earned by the trust each year.)

Second, a gift of the remainder interest to the non-charitable beneficiary will be based upon the present discounted fair market value of the remainder interest (determined at the time that the trust is established), based upon IRS actuarial tables.

Finally, if the trust assets appreciate at a rate greater than the payout rate, the excess appreciation will pass to the remainder beneficiary free of any further transfer tax.

A Charitable Lead Trust is particularly appropriate for use in situations in which the Donor and his family have no immediate need for more income than they currently enjoy and are able and willing to forego current income for the prospect of long-term capital appreciation with the additional benefit of asset protection. It is also used in a Will to generate up to a 100% charitable deduction!

Gift to Lifetime Charitable Lead Trust
- Potential Donor, who would like to pledge $100,000 to ACAJE, is negotiating the sale of her business at a substantial profit. Out of the proceeds of the sale, she creates a $400,000 Charitable Lead Trust which will pay ACAJE $20,000 per year for 5 years, after which the principal of the trust will be returned to her.
  
  Result to Donor:
  - Credit for $100,000 gift to ACAJE
  - Immediate $85,000 tax deduction shelters an equal amount of income - a tax savings of $34,000 on ordinary income, $17,000 on capital gains.
  - Return of trust principal after 5 years. If principal grows at 8% per year Donor would receive back $470,000.
  Result to ACAJE:
  - ACAJE receives $100,000 of tax-free income over 5 years.
Private Foundations

A separate non-profit organization can be established and controlled by you and members of your family. This vehicle can provide you with the ability to establish a substantial fund which can perpetuate your charitable contributions to ACAJE as well as to other public charities. A private foundation will provide a vehicle for you and your entire family to serve indefinitely on the Board of Trustees and to participate in the administration, investment, distribution and other facets regarding the use of your charitable contributions. For large restricted gifts, a private foundation may allow you to exercise a greater degree of control over your gift to ensure that it is used for the purposes given.

Contributions of appreciated marketable securities to a private foundation are eligible for a fair market value deduction under legislation passed by Congress last month. However, the contributions to Private Foundations are subject to certain restrictions regarding deductibility of contributions and the administration of the Foundation.
Supporting Foundations (Donor Advised Funds)

A supporting foundation is much like a private foundation, but is eligible for the maximum charitable contribution deduction as well as freedom from the restrictions applied to private foundations. Like a private foundation, a separate non-profit organization can be established for the benefit of or in furtherance of the purposes of ACAJE as well as other public charities. However, although you and members of your family may sit on the Board of a supporting foundation, you cannot control it.

Please use the online Information Request Form to have us contact you about Planned Giving options.

For more information or to discuss giving opportunities,
please contact Lisa Licht, Coordinator of Development and Marketing
at 215-635-8940, ext. 1217 or llicht@acaje.org.