Most gifts to the Barton Community College Foundation for the benefit of the College are simple, outright transfers of property. They can range from cash donations to stock transfers. Regardless of their size or method, however, all have tax advantages for the donor, with the added appeal that the College can put an outright gift to work immediately.
Gifts of Cash
The most common type of gift is the gift of cash - and with good reason. It is simple, straightforward, and as easy as writing a check. And, because charitable gifts qualify for federal tax deductions, the real out-of-pocket cost of a cash donation is usually less than its face value: you save whatever tax you would have owed on the amount of the gift. Likewise, some state tax laws offer additional deductions or credits for gifts to education.
For record purposes, a gift of cash is considered made on the date it is mailed or hand delivered. Please make checks or money orders payable to the Barton Community College Foundation, the designated fundraising agency for Barton Community College.
Gifts of Closely Held Stock
If you are a business owner and you contribute closely held stock, you may take a charitable deduction for the stock's appraised fair market value. Besides increasing your cash flow, you also avoid the potential capital gains tax on the appreciated value of the stock. The corporation may buy back the stock, but so long as the Barton Community College Foundation is not legally obligated to sell back the stock, you may enjoy significant tax savings.
Appreciated Property
Charitable gifts of appreciated property--whether Real Estate and or capital gain securities--can provide even greater tax benefits than a cash gift of equal value. You may take a charitable deduction for the full fair market value of the property, while avoiding capital gains taxes.
The IRS currently allows you to deduct the full fair market value of the property up to 30% of your adjusted gross income for the year. Any amount over that ceiling can be carried forward for future deduction, for up to five years, subject to the same percentage limitations.
A gift of appreciated property is considered made on the day the transfer is completed.
Gift of Tangible Personal Property
A gift of tangible personal property--such as art work, jewelry, antiques, books, coin or stamp collections, and so on--is deductible for its full fair market value (up to 30% of your adjusted gross income) if it meets two conditions: it must satisfy the "related use" standard, and it must be documented by a legitimate appraisal.
"Related use" means that the College must be able to use the gift in a way that is related to or furthers its educational mission. For example, books donated to the library will meet the standard. A painting will meet the standard if it is displayed for viewing at the Shafer Gallery, but will not if the Foundation sells it.
Property that does not satisfy the "related use" standard may still be deducted, but only for your cost basis in the property, subject to a limit of 50% of your adjusted gross income. The five-year carryover rule for the deduction applies in both cases. Please note, however, that in order to protect its tax-exempt status, the Foundation must severely limit the non-related-use gifts that it accepts.
A gift of tangible personal property is considered to be made on the date when ownership or legal title is transferred. To make the formal transfer, you may write up a simple "letter of intent to donate" that identifies the property and includes a signed statement of your intent to transfer it to the Barton Community College Foundation.
Bargain Sales
You may have property that has appreciated in value, but you only want to give part of that value to the Barton Community College Foundation. You may make a "bargain sale" of the property to the Foundation for less than its fair market value, usually your cost basis.
You receive back cash in hand to recoup your original investment, while getting a charitable deduction for the donated difference. You should note, however, that some of the cash recovered will be treated as a capital gain. Bargain sales require careful planning.
Please consult your tax adviser, legal counsel, or other financial planner, and contact the Barton Foundation Office for further information.