Year-End Gifts Benefit You and Glenmary!

This article was prepared for Glenmary's friends to provide information about current developments in tax and financial planning. Legal and tax principles pertaining to an individal situation should be discussed with one's own tax advisor.

With the busy and much-anticipated Christmas season soon upon us, attention naturally turns to giving gifts. Thoughts focus on family, friends and colleagues—and the search for appropriate expressions of appreciation, friendship and love. Inevitably, we tend to focus on what is really important in life.

It’s also natural for organizations like Glenmary to pause and consider the role that friends like you play in enriching and advancing our mission. Your gifts, and the gifts of people like you, continue to make a difference in the lives of many. You have kept us strong and viable as a religious community. During this past year, gifts have enabled Glenmary to keep our mission doors open in 11 states in Appalachia, the South and Southwest.

In the midst of this season of reflection, it’s helpful to remember that incentives for making charitable gifts continue to be a significant factor in our nation’s tax laws. Generally speaking, any person who itemizes deductions will benefit from making charitable contributions.

Gifts of cash as well as of stocks, bonds, mutual funds and other assets offer attractive tax benefits when it comes time to file your income tax return for this year—but only if you take action before the end of the calendar year.

As you consider a special year-end gift, ask yourself the following four questions:
• To which institutions do I want to make a special gift by year-end Dec. 31, 2006?
• How much do I want to give?
• What is the most advantageous way to give?
• When is the best time for me to give?

In deciding whether you want to make a gift to Glenmary, you may want to consider the following points.
Gifts are essential in helping Glenmary achieve its basic mission and purpose. Gifts, particularly those given at year-end, help Glenmary minister to the Catholic minority, establish new churches in counties where there has never been a Catholic presence, welcome new members into the Catholic Church and reach out to those in need.

Gifts received this year will be used toward the continuation of these efforts. While larger gifts are a source of significant help, smaller gifts also provide worthwhile assistance.

We understand that your gift to us is an act of faith. It signifies your trust in us to use your gift wisely. We pledge that we will use it as you intend it to be used.

While we do not rank this as a primary motive for giving, your gift is also tax deductible. The U.S. government encourages gifts to not-for-profit institutions by allowing you to receive a tax deduction for your gift.

How Much Do I Want to Give?
Consider these questions to determine what size gift you might give:
• How much have I given this year?
• Does this amount meet/exceed my intended target for charitable contributions for the year?
• Have my circumstances changed in a way that I can contribute more?

Types of Charitable Gifts
Gifts by check or cash
Generally, if your gifts are in cash, you are allowed to give up to 50 percent of your “contribution base,” which usually equals adjusted gross income. If your cash gifts exceed 50 percent of your adjusted gross income in any year, tax law permits you to carry over the excess and deduct it over the next five years (subject to the same 50 percent limit each year) if you need that long.

Gifts of securities
It is usually beneficial to give securities which have grown in value since they were purchased. These appreciated securities are generally deductible at the full present fair market value if you have held them more than one year.

If you hold securities that have different cost bases, donate the lowest cost basis securities. This growth or appreciation since the securities were purchased is not taxable to you; therefore no capital gains tax will be assessed. Such gifts are deductible up to 30 percent of your adjusted gross income, and you may carry over any excess not deductible in 2006 to be deducted over the next five years. (Gifts of appreciated assets do not qualify for the waiver in the Katrina Act and are still subject to a total tax deduction not to exceed 30 percent of the itemizer’s adjusted gross income.)

Gifts of real estate
Real estate appreciates significantly over time and, therefore, can be an attractive gift. A gift of real estate that has appreciated in value generally produces the same benefits to the donor as that of appreciated securities.

For income tax purposes, the value of the gift is the fair market value of the property on the date of the gift. There is no tax due on the appreciation in value over the donor’s basis in the property (usually the purchase price). A qualified, independent appraiser must determine, at the donor’s expense, the value of the property. Gifts of real estate generally avoid capital gains tax and will avoid recapture of any depreciation.

Gifts of personal property
Tangible personal property such as jewelry, works of art, stamp collections, antiques and other items may be given to Glenmary as charitable gifts. The donor may claim a federal income tax deduction for the full fair market value of the gift, as determined by an independent qualified appraiser, if we are able to utilize it in a manner that is related to our tax-exempt purpose and the donor has owned it for more than one year.

If the contribution cannot be put to use in a manner related to our charitable or educational function, only the donor’s cost basis, not the appreciated value, can be deducted, regardless of the donor’s holding period.

Gifts using qualified plans
The Katrina Relief Act creates an incentive for donors who wish to make large gifts funded by their IRA or other qualified donor plan. The donor would withdraw funds from their IRA, etc. (thereby increasing adjusted gross income) and then contribute a like amount of cash.

Under the new 100 percent of adjusted gross income limitation, the resulting deduction would eliminate any federal income taxes due on the withdrawal. Additionally, if the donor is over the age of 591/2, he or she would not have to pay a penalty for early withdrawal. As previously noted, such a gift must be completed by Dec. 31, 2006.

When Shall I Give?
Once you have determined you want to make a gift and you know about how much you will give, the question of timing becomes important. If you wish to claim your gift as a deduction in 2006, you must make sure that the gift is completed by Dec. 31, 2006.

Gifts of cash: A gift of cash by way of a check is considered paid if it is postmarked or delivered to a representative of Glenmary on or before Dec. 31, 2006. Pledges are not deductible until fulfilled. If making a gift using a credit card through our secure online giving site (please visit www.glenmary.org), it is essential that the credit card billing be posted to your account by Dec. 31, 2006. Gifts posted after that date will apply to your 2007 tax return.

Gifts of securities: Glenmary must take possession of the securities on or before Dec. 31, 2006. If you hold stock by means of a stock certificate (rather than in a brokerage account), the stock certificate, together with a properly executed stock power, must be delivered to our institution or placed in the mail to us (not mailed to the company or to the company’s transfer agent) on or before Dec. 31 for it to be deductible in 2006.

If mailed, we strongly recommend that the stock certificate be mailed in one envelope and the stock power in another.

If you hold stock in a broker’s account, you should consult with your broker as to how much advance notice your broker will need in order to complete a transfer of such stock to Glenmary in 2006.

If you are making a gift of appreciated securities, you should not direct your broker to sell the securities and distribute the cash proceeds to Glenmary because this will trigger capital gains tax for you. Rather, you should direct your broker to transfer the securities directly to us.

If you wish to give appreciated stock that you hold in a brokerage account, please remember several key points:
• Call us for the number of our brokerage account to which gifts of stock can be transferred.
• Give specific instructions to your broker regarding the date you wish to make the gift. (The official date of the gift is the date on which the stock is transferred into our account.)
• Notify us of the date, company name and number of shares transferred so we can track the transfer as necessary.

Gifts of real estate: As is the case with securities, the transfer of the real estate must be completed on or before Dec. 31 to claim a tax deduction in 2006. Please note that special rules and limitations may apply in the case of real estate that has previously been depreciated for income tax purposes.

If you will be in a lower tax bracket next year, you will save more by giving this year. If you expect to be in a higher tax bracket next year, you may want to make the gift early in January 2007 (although that would delay the time at which you realize your tax savings).

In Summary
Here are some helpful tips and options you and your family may wish to consider when planning your gifts for the remainder of the year.

To be deductible in 2006, cash, checks and property gifts must be delivered to us or postmarked by Dec. 31. If giving by credit card, the charge must be posted to your statement by Dec. 31.

Appreciated property must have been owned by you for more than one year in order to obtain a full fair market value charitable deduction.

In giving property, only securities and other property that has appreciated in value should be given. There is no tax advantage to giving property that has decreased in value; rather, it is better to sell depreciated property, transfer the sales proceeds to Glenmary, and take advantage of the capital loss on your income tax return.

If your contributions exceed the limitations of 30 percent for appreciated property and/or 50 percent for cash in 2005, the remainder can be carried over into each of the next five years, if necessary, until as much of the deduction is used as possible.

Also, gifts may be made to honor your family or to memorialize loved ones.

For more information about making a year-end gift to Glenmary, contact Planned Giving Office Susan Lambert at 800-935-0975 or slambert@glenmary.org.

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