A gift that will impact generations
A Bigger Life for So Many Littles
Planned gifts are quickly becoming a vital part to ensuring children get the support they need for generations to come.
There are many variations of planned giving, but the most basic ones include:
Bequests: These make up the majority of planned gifts. Anyone can make a bequest to a nonprofit through their will or estate plan. Donors can allocate a specific amount of money to give after they die, such as a lump sum or a percentage of their total wealth, or they can choose to give the remainder of their estate to a nonprofit after all of their other bequests are paid.
Charitable gift annuities: This is an agreement in which the donor gives a significant gift to a nonprofit, receives a tax deduction at the time of the gift, and then receives payments from the nonprofit during their lifetime. The nonprofit may invest the money and after the donor's death, the nonprofit can use the remaining funds.
Charitable remainder trusts: Charitable remainder trusts are tax-exempt, irrevocable trusts that make annual payments to the beneficiaries for a certain amount of time, and then donate the remainder to a nonprofit.
Pooled-income funds: These are charitable trusts that are established by nonprofit organizations. Donors contribute to the fund, the nonprofit invests the contributions, and it pays dividends to the donors during their lifetimes. The fund distributes the remaining assets to the designated charity or charities.
Both Charitable Gift Annuities and Charitable Remainder Trusts are investment and retirement strategies that provide a benefit to both the donor and organization, but also provide the economic security donors may need.
Types of gifts donors can make to a charity may include:
- real estate
- closely held corporations
- tangible personal property
- IRAs or 401(k) plans
- life insurance
- estate gifts
- private foundation conversions
BIG BROTHERS BIG SISTERS YOUTH MENTORING ENDOWMENT
The Big Brothers Big Sisters of the Mississippi Valley board of Directors created the Youth Mentoring Endowment in 2007 to insure that the organization has tools available to supporters who wish to make planned gifts to our organization. The Endowment is managed by the Community Foundation of the Quad Cities. The assets of the Endowment are specific to Big Brothers Big Sisters, but are pooled with other funds to maximize return potential and diversification.
HOW ENDOWMENTS WORK?
Endowment gifts are intended to be restricted long-term investment tools for the organization. The gift is made to the organization, who then places it in a restricted investment fund managed by the Community Foundation of the Quad Cities. The fund and its assets belong to Big Brothers Big Sisters, but are pooled with other fund assets under the control of the Community Foundation for investment purposes. This practice allows for the benefits of diversification, mitigation of risk and lower fees. The Board of Directors and Investment Committee of the Community Foundation of the Quad Cities determine the investment strategy for the combined funds.
It is the goal of an endowment to continue to build the assets in the fund to generate larger investment returns. It is the investment returns, not the base asset in the fund, that are distributed and used by the organization to meet strategic and operational needs. Only in very extenuating circumstances will a base asset in an endowment be used for operational expenses.
Each year, a distribution is available from the Endowment to meet our ever-changing needs, empowering us for opportunities like enhancements of facilities and equipment, long-term planning, responding to unmet needs, or meeting an unexpected shortfall in normal operating support. Typically, an annual distribution will be in the 5 to 8% of the funds returns for that investment year. The remaining returns are reinvested in the fund to grow the core asset. Over time, with gains in market performance and additions to the fund from new investments and assets, the annual distribution amount grows and becomes a larger part of the organizations operating income.
Examples of successful use of endowments can be seen through the college and university system. Over time, endowments have become a significant part of the college/univeristy system revenue stream to withstand annual fundraising and economic conditions. Big Brothers Big Sisters hopes to use a similar strategy with our endowment, to grow the base asset of the fund, which in turn will provide a significant and consistent annual revenue source to our organization through its investment performance and growth.
BBBS AND YOU GET BENEFITS FROM PLANNED GIVING
All gifts to the Big Brothers Big Sisters Youth Mentoring Endowment are tax deductible to the full extent of both federal and state law. In addition, Iowa taxpayers may qualify for an Endow Iowa Tax Credit for 25% of the value of your gift. In addition, this Fund:
Increases giving opportunities through gift annuities, gifts of stock, real estate gifts, charitable remainder trusts, and other complex forms of gift arrangements.
Provides BBBS a secure, permanent source of funds for the enrichment of programs and for the stability of our services.
Eliminates costly and time-consuming audit and tax reporting requirements.
Improves investment opportunities and provides BBBS access to the Community Foundation's staff expertise.
A Planned Giving Story from the Leave a Legacy Project of the Community Foundation of the Quad Cities.
Bonnie and John Leinart are hands-on people, who have enjoyed successful careers- she with Trinity Health Systems, and he with John Deere. When choosing recipients for charitable giving, they prefer hands-on, helpful organizations- especially Big Brothers Big Sisters of the Mississippi Valley.
Both John and Bonnie have served as “Bigs” (adults who mentor children) and both have served on the board of Big Brothers Big Sisters. John has served as board chairman and in doing so helped foster the rapid growth of the organization. During his nine-year tenure, the organization grew from 200 to 1,400 “Bigs” helping the same number of “Littles” (the youth they serve) in 14 counties. The programs continue to maintain programming in the region.
“Directly helping children is the best investment people can make in their community”, says Bonnie. Together, she and John decided to include Big Brothers Big Sisters in their will, earmarking a generous unrestricted gift to the organization after their lifetimes. Because the Leinarts have not restricted the use of their gift, the organization will have the flexibility to meet whatever needs may exist at that time.
Big Brothers Big Sisters President Jay Justin said, “The Leinarts are incredible. They make things possible for us, even in challenging times. They have inspired so many people”.
John said, “We are blessed with healthy children and grandchildren, but there are so many kids out there at risk, who need adult guidance. This group’s screening process ensures safe and wholesome relationships, from which children can really benefit. We are happy to help future Littles with this gift. And our own children have been a part of this decision to give back to the community.”