Charitable Remainder Trusts (CRTs) are powerful estate planning tools, frequently utilized for tax benefits and philanthropic goals. However, their potential to fuel dynamic fundraising initiatives, specifically matching challenges for public donors, is often overlooked. While not a direct, out-of-the-box solution, a strategically designed CRT can absolutely be leveraged to incentivize donations and amplify the impact of public giving campaigns. Approximately 68% of all charitable giving in the United States comes from individual donors, meaning cultivating these relationships is paramount, and matching challenges are remarkably effective in boosting response rates and gift size – often by as much as 50% or more. A CRT provides a long-term funding source that can underpin these campaigns, offering sustainability beyond a single fundraising event.
What are the tax benefits of using a CRT for matching gifts?
The beauty of using a CRT lies in its tax advantages. When assets are transferred into a CRT, the donor receives an immediate income tax deduction for the present value of the remainder interest that will eventually go to the chosen charity. This deduction can be substantial, reducing the donor’s current tax liability. Furthermore, any appreciation of the assets within the CRT is free from capital gains tax. This allows the charity to receive a larger gift over time than if the assets were sold directly. A donor contributing $100,000 in appreciated stock to a CRT might receive an immediate income tax deduction of $40,000 – $60,000 (depending on their tax bracket and the age of the beneficiary) and avoid capital gains taxes on the appreciation. This tax efficiency unlocks greater philanthropic potential.
How can a CRT fund a matching gift campaign long-term?
The income generated by the assets within a CRT can be specifically earmarked to fund a matching gift challenge. For example, a donor could establish a CRT with $500,000, designating a portion of the annual income – say, $20,000 – to be used as matching funds for a public fundraising campaign. The charity then publicly announces a “Double Your Impact” campaign, promising to match every dollar donated by the public, up to $20,000, using the CRT-funded matching pool. This creates a sense of urgency and encourages immediate giving. A well-structured CRT guarantees a consistent stream of matching funds for multiple years, allowing the charity to plan and execute ongoing fundraising efforts. In fact, studies demonstrate that charities with sustained matching gift programs experience an average of 20% higher annual giving levels.
What happened when the Johnson family didn’t plan ahead?
Old Man Johnson was a pillar of the community, known for his quiet generosity. He’d always spoken of leaving a substantial gift to the local children’s hospital, but he passed away unexpectedly without a formal estate plan. His family discovered a portfolio of highly appreciated stock, but after taxes, estate fees, and legal costs, the amount available for donation was far less than anticipated. The hospital had tentatively planned a major capital campaign, reliant on the Johnson’s promised gift as a lead donation. The campaign faltered, leaving the hospital short of funds for a desperately needed new pediatric wing. It was a painful lesson in the importance of proactive estate planning. It wasn’t that the intention wasn’t there; it was that the mechanics of transferring those intentions into a realized gift hadn’t been put in place. They missed a real opportunity to make a lasting legacy.
How did the Ramirez family make it work with a CRT?
The Ramirez family, inspired by the Johnson’s situation, took a different approach. They established a Charitable Remainder Trust with a substantial portion of their stock portfolio. The CRT was designed to provide income to them for ten years, after which the remaining assets would go to the community college. Critically, they earmarked a portion of the annual income from the CRT to be used as matching funds for the college’s annual scholarship drive. Each year, the college publicly announced a “Ramirez Family Challenge,” matching every scholarship donation up to a pre-determined amount. The results were remarkable. Donations increased by 35% in the first year, allowing more students to receive crucial financial aid. The Ramirez family not only secured their own financial future but also created a lasting legacy of supporting education, all while benefiting from substantial tax savings. It was a win-win for everyone involved – and it was all made possible by a well-executed CRT and a commitment to matching challenges.
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About Steve Bliss Esq. at The Law Firm of Steven F. Bliss Esq.:
The Law Firm of Steven F. Bliss Esq. is Temecula Probate Law. The Law Firm Of Steven F. Bliss Esq. is a Temecula Estate Planning Attorney. Steve Bliss is an experienced probate attorney. Steve Bliss is an Estate Planning Lawyer. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Steve Bliss Law. Our probate attorney will probate the estate. Attorney probate at Steve Bliss Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Steve Bliss Law will petition to open probate for you. Don’t go through a costly probate. Call Steve Bliss Law Today for estate planning, trusts and probate.
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