Making A Gift

How do I make a gift to the Rochester Area Foundation?

How to Make a Gift

Our donors help us build our community. The Rochester Area Foundation is a place for people of good will to invest in our community. Those who choose to use the Foundation know that funds are wisely managed and used to support programs that invigorate new ideas. You may want to look at our Lifetime Giving chart. This chart is a measure of the confidence our benefactors have shown in the Foundation's community influence.

Creating and building endowments is one way for you to be part of the solution today and into the future. Endowment funds offer the flexibility of preserving the wishes of donors, plus meet the changing needs of the community over time.

Benefits to donors

  • Charitable impact: By working with contributions from many donors, gifts of all sizes leverage their impact on the community. In addition, over the years, each permanent gift will support grants totaling many times the original contribution.
  • Performance and flexibility: The spirit and intent of each donor's charitable wishes is honored through the generations, regardless of the shifts and changes within our region. If the intended purposes of your gift become obsolete, the Foundation's authority to amend provisions of your fund will ensure that the fund will continue to meet challenges as they emerge in the future.
  • Peace of mind: Creating a fund or contributing to an existing fund is a simple process. Once complete, you retain the satisfaction of giving while the Foundation takes care of the paper work. The Foundation's Board of Trustees prudently manages the funds. Because funds in a community Foundation are pooled for investment purposes, donors have the advantage of a diverse investment mix. You can add new gifts at any time, which is a real advantage in tax planning.
  • Personal benefits: Because the Rochester Area Foundation is a public charity rather than a private foundation, you receive the maximum available tax benefits for charitable contributions. Those who create donor-advised funds receive a tax credit in the year the gift is given and then may suggest distribution from the fund over a longer period of time.
  • Accountability: Annual reporting through an independent audit and filing tax returns, public disclosure of all grant activities and careful selection of members for the Board of Trustees assure continued use of funds in the public interest.
  • Choose a type of fund: An unrestricted fund allows the Foundation to use its discretion in distributing grants to innovative and worthwhile programs. Or you may prefer to designate your funds for a specific purpose or to benefit a specific charitable organization. You also may choose to advise the Foundation regarding prospective grants from your fund.
  • Choose a name for your fund: Most funds are named for the donor's family or as a memorial to someone special. You may prefer anonymity or a name that reflects your fund's charitable purpose.

When to create a fund

There are many times for individuals, families and corporations to make gifts - large or small - to the Rochester Area Foundation.

  • Giving now: The charities you support now can continue to be supported during your lifetime and in perpetuity through the establishment of a fund with the Rochester Area Foundation.
  • Future giving: There are many attractive arrangements for giving future or deferred gifts. Deferred gifts give you the benefit of a current tax deduction in exchange for the commitment of funds to a charitable purpose or purposes at some later date, often after your death. The result may be an increase in current spendable income for you or your family and later a substantial fund to help others through the Rochester Area Foundation. The remainder interest in real estate, charitable remainder trusts, charitable lead trusts and gifts of life insurance all can be used to create funds in the Rochester Area Foundation.
  • Bequests through wills and trusts: After providing for your loved ones, you will want to consider creating a fund at the Rochester Area Foundation or adding to the one you already have. Estate taxes are saved and the good works you care about during your lifetime continue to benefit through a living memorial established with the Rochester Area Foundation.

What Types of Gifts can I give to the Foundation?

What can you give?

Almost any kind of asset can be used to start a fund, including:

  • Cash
  • Securities traded on major exchanges
  • Closely held stock
  • Real estate, including a residence or farmland
  • Insurance policies and variations or combinations of the above

The foundation will be glad to discuss gifts with you. Those that cannot readily be converted to financial benefit of charity or that carry unusual potential liability may not be accepted.

We're willing to offer assistance and work with you

The Rochester Area Foundation will be happy to work with you and with your attorney, trust officer, accountant or other financial advisor.

We invite you to call us at (507) 282-0203 or email raf-info@rochesterarea.org.


How do I create a lasting legacy?

Create your own Lasting Legacies

Connecting donors' dreams and interests with the needs in the community they care about is the cornerstone of the Rochester Area Foundation.

Focusing on the donor provides a unique opportunity to encourage civic engagement. Giving through the Foundation is made easy and flexible.

Because the Foundation has an in-depth understanding of the area's challenges, it is well positioned to connect donors' interests to real community needs, allowing donors to be proactive and intentional with their giving.

Making giving easy for donors

The Rochester Area Foundation makes it easy for donors to set up their funds and offers them many ways to give. Starting a fund is simple. Tax benefits begin as soon as the fund is established and continue with each additional gift.

Donor-advised funds offer superior flexibility. Donors add to their fund at any time and in any amount and recommend grants from their funds at any time.

Also, donors need not worry about the trouble of recordkeeping, reporting and accounting, which are all handled by the Foundation.

Five steps to create your own named fund

Decide on the name of your fund.

Based on your personal philanthropic goals, decide the charitable purposes of your fund. Will you use the fund to grant to a variety of non-profit organizations of your choice, or do you want to focus on a particular cause or activity?

Work with the Rochester Area Foundation staff and your professional advisors to customize and sign a two-page document to establish the fund.

Transfer cash, stock, real estate or other assets to your fund. This is a tax-deductible contribution.

Enjoy the ability to make gifts to charitable organizations of your choice.


Planned Giving

Receive income for life with a gift

Planned gifts to the community through the Rochester Area Foundation are received at a time that the donor designates or plans – thus the phrase “planned gifts.” Examples of planned gifts are “life income” gifts.

The Charitable Gift Annuity and Charitable Remainder Trusts are two types of life income gifts. These trusts allow you to make a gift to the community during your lifetime and still retain the income from the gift.

In both the Unitrust and the Annuity Trust, a trust fund is established that ultimately will be used to benefit the community in ways that meet your charitable objectives. However, in exchange for your gift, you and/or your designated beneficiaries will receive for life an income based on the value of the trust fund. The major difference between the Charitable Remainder Annuity Trust and the Unitrust is the method used to determine income payments.

The Annuity Trust pays a fixed dollar amount annually that is established when the trust is created. The Unitrust pays a fixed percentage of the trust assets, which are valued annually.

Different, yet similar

Except for the difference in payment method, both the Annuity Trust and the Unitrust have similar characteristics:

  • An annual income is paid to you or one or more beneficiaries you name during their lives.
  • You receive an immediate federal income tax deduction in the year the trust is established.
  • If you use appreciated securities or other property to fund the trust, you may avoid capital gain tax on the appreciation.
  • The trust pays no tax on future capital gain.

But most importantly, you can create a permanent legacy through the Rochester Area Foundation that will endure and will benefit the charitable causes important to you.


Private Family Foundation vs. Rochester Area Foundation Donor Advised Fund

Issues for Individuals to Consider

 

Private

RAF

Ultimate & Absolute Control

Advantage

Disadvantage

Tax Deductibility

Disadvantage

Advantage

Mandatory Distributions

Disadvantage

Advantage

Tax on Growth

Disadvantage

Advantage

Reporting

Disadvantage

Advantage

Disqualified Persons

Disadvantage

Advantage


Individuals may elect to transfer part or all of their assets to a community foundation for establishing a donor-advised fund which retains the individuals or family name and philanthropic goals. Community foundations have three distinct advantages over private foundations: deductibility of gifts, control of assets and reporting requirements.

Deductibility of Gifts:

The income tax deductibility of charitable gifts to a community foundation is higher. For example, gifts of cash are deductible up to 30% of adjusted gross income (AGI) for private foundations and 50% of AGI for community foundations. Also, donations of appreciated property and securities to a private foundation are currently limited to cost basis instead of the “fair market value.” For community foundations the deduction rises to 30% of AGI based on full fair market value.

Control of Assets:

A private foundation must distribute at least 5% of the fair market value of the investment assets annually. Otherwise, there is a 15% tax on undistributed income. This tax rises to 100% if the distributions are not made during a resolution period. This provision can be especially problematic if a private foundation is holding non-income producing assets such as bare land or non-dividend paying stock. No such mandatory provision applies to a community foundation.

There are certain self-dealing restrictions affecting ownership (20% for a donor or family member, or 35% for an unaffiliated third party) of any business within a private

foundation. This provision generally prevents a private foundation from holding closely held business interests. Again, with a community foundation, this issue does not apply. Private foundations may face consequences for imprudent investments that jeopardize the charitable purpose of the foundation. The Treasury Department can require 5% excise tax and a 200% penalty. Once again, this is not the case for an advised fund within a community foundation. Finally, a private foundation pays a 2% tax on annual income (lowered to 1% in some instances). With community foundations there is no tax on the income generated by the funds under management, thereby shielding donations from governmental erosion through taxation.

Reporting Requirements:

Private foundations are required to do more extensive reporting than community foundations. Like community foundations, private foundations are required to submit annual tax returns to the Attorney General, as well as the Internal Revenue Service. Private foundations must also post annual notices in a general circulation newspaper indicating that the foundation’s tax return is available for inspection by any citizen who requests it within 180 days of circulation. A copy of the advertisement must then go to the IRS. These specific reports often become a matter of public record that leads to solicitation requests from the charitable community at large.

Summary:

The Rochester Area Foundation offers virtually all the benefits of charitable giving through a private foundation without burdensome paperwork. As a community foundation, we avoid many of the requirements which private foundations face ... while providing the independence donors seek in fulfilling their charitable and tax planning objectives.