As we have noted in the first article of this series, the three most significant motivating factors behind a donor’s gift are a compassion for those in need; a belief in the cause and the tax effectiveness of the gift.
Charities and “not for profits” need to develop an understanding of and respect for the donor’s legacy objectives; whilst donors need to ensure the form, size and pace of their gifts, reflect their familial, financial and estate planning comfort zone.
That “comfort zone” may mean an attachment to charitable donations which are more sentimental in form and perhaps more representative of their interests and asset base, than tax efficient. For example, an artist may want to donate gifts in kind or their portfolio of paintings. A real estate developer may want to donate rights to property. A rare books collector may want to donate their library.
It is incumbent upon the charity to support whatever decision the donor has taken, having encouraged full and complete family and professional advisor discussion and ensured any tax credit is based upon a current valuation of the residual interest being passed to the charity.
To the extent that Charitable Annuity and Charitable Life Insurance Gifts can reduce the net cost of the donation and magnify the effect to the Charity as outlined in Articles 4 & 5; both the Charity and the Donor can expose their donation capital to less risk.
Donating in Cash and via Will Bequests should and will continue to be major and useful forms of giving. From a multiplier effect however they can be likened to throwing a golf ball off the first tee of a golf course; it may travel 50 yards, where as a driver will propel that same golf ball over 200 yards.
Charitable Annuities and Charitable Life Insurance can be akin to having your own personalized driver in your bag to accelerate and magnify the impact of your donation.
In the end, any gift by any donor to any charity is a reflection of gratitude and hope. Always, the donor gains more than he or she gives away:
“Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chaos to order, confusion to clarity. It can turn a meal into a feast, a house into a home, a stranger into a friend.” ~Melody Beattie