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July 1, 2003
Gifts are a substantial part of the donations received by the Central Washington Catholic Foundation to support its charitable programs. These gifts usually involve tax and other forms of financial and estate planning activities. Often a donor creates and funds the gifts using significant assets.
Because of (i) the size of most gifts; (ii) the responsibilities the Foundation often incurs for asset management and, in some cases, serving as trustee; and (iii) the liabilities incurred for beneficiary payments, the Foundation establishes these policies and guidelines to assure that our planned gifts are a productive and positive aspect of our fund raising efforts.
General Policies
Protection of Donors' Interests
The Foundation, its volunteer and staff representatives shall always consider the interests of our donors as the first priority in gifts. This shall include, but not be limited to the donor's financial situation and philanthropic interests, as well as any tax or other legal matters discovered by our representatives while planning for a gift. A donor shall not be encouraged to make a gift that is inappropriate, in light of the donor's personal or financial situation. A donor may expect any representative of the Foundation to reflect the dignity and respect the charitable purposes of the Foundation.
Confidentiality of Information
Information learned by any representative of the Foundation about a donor or the donor's assets or philanthropic intentions shall be held in strict confidence. Donors will be encouraged to notify the Foundation of their gifts, including bequests, and all such information will be kept confidential unless written permission to release it is obtained from the donor or his or her counsel.
Legal Counsel
The Foundation shall seek the advice of legal counsel in all matters regarding giving which involve any agreement, which is binding on the Foundation. All gift agreements provided to a donor by the Foundation will be created by or reviewed by legal counsel. Each prospective donor shall be urged to seek the advice of independent legal counsel prior to the Foundation acting in any way as a party to a planned gift. A donor who chooses not to engage counsel must acknowledge this decision in a written statement addressed to the Foundation before it may accept a gift.
Neither the Foundation nor its volunteer or staff representatives may give legal, accounting, tax, or other advice (which is usually reserved to the donor's counsel) while acting on the Foundation's behalf. This policy does not preclude any duly licensed person representing the Foundation from advising a donor or such donor's counsel regarding a gift with appropriate disclosure to the donor and to the Foundation.
Authority for Negotiation
The Executive Director for the Foundation is authorized to negotiate gift agreements with prospective donors. The Director may delegate such authority to another officer of the Foundation.
Authority for Approval
Giving agreements must be approved in writing. The Executive Director and the present Chairperson of the Board of Trustees are authorized to sign giving agreements that have been approved as provided. Any responsibility assumed by the Foundation in relation to a gift must be consistent with the policies of the Foundation. The Foundation may act as trustee, co-trustee, successor trustee, charitable remainderman, and charitable income recipient. The Foundation may enter into charitable gift arrangements, authorized under law, by contract and bargain sale.
Executive Director
The Executive Director is authorized to approve and accept, on behalf of the Foundation, any gift made by will or other estate planning instrument which is unrestricted in nature and funded with cash, publicly traded securities, or other financial instruments with a ready market, gifts of real property, interests in an operating business or gifts that are restricted to designated purposes.
The Executive Director is authorized by the Board of Trustees of the Foundation to approve the following agreements without regard to gift amount:
1) Any gift in which the Foundation will receive the charitable interest, or a portion thereof, and in which the Foundation neither is named as trustee nor has other fiduciary responsibilities or liability.
2) Charitable remainder unitrusts in which the Foundation is named as trustee (see Trusteeship, below) and funded with cash, publicly traded securities, or other financial instruments with a ready market, where the unitrust percentage does not exceed the then current Applicable Federal Rate as defined in the Internal Revenue Code and regulations.
3) Trusts in which The Foundation is named as trustee and funded with cash, publicly traded securities, or other financial instruments with a ready market, where the annuity trust percentage does not exceed eight percent (8%) and otherwise qualifies under the federal government's "five percent probability test."
4) Charitable lead trusts in which the Foundation is named as trustee and funded with cash, publicly traded securities, or other financial instruments with a ready market, which are qualified trusts under law.
5) Gifts by contract, particularly life insurance, through which the Foundation will receive a future benefit, so long as the Foundation is not required to expend funds from sources other than the donor to maintain the contract.
The Executive Director is authorized by the Board of Trustees of the Foundation to approve agreements, as listed above, which are funded with real property or an interest therein so long as the donor provides:
1) An appraisal or market evaluation of the value of the property (fair market value) furnished by a licensed real estate broker or agent for values up to $1,000,000 in the case of a remainder unitrust.
2) A statement from an independent licensed real estate broker or agent that the property is readily marketable, for cash, at the proposed fair market value.
3) An assessment of the property regarding environmental regulations and liabilities showing The Foundation will not incur more than a generally accepted normal business risk by taking the property as owner or trustee.
4) Sufficient information to accurately determine the ownership of the property and any mortgages or liens that may be filed against the property.
5) The Foundation shall not accept encumbered property that would cause the Foundation or any charitable trust to be disqualified as a charitable entity. 6) Assurances from the donor that he or she will act as required by applicable laws and regulations to ensure the resulting trust or other planned gift will qualify as a charitable entity.
7) The gift is the entirety (100%) of the property or there is a commitment from the donor or other owners to immediately sell the nongifted interests in such property.
The Executive Director is authorized to approve outright gifts, charitable gift annuities, and bargain sales that are funded with encumbered property or an interest therein so long as there is a reasonable expectation that the property can be readily sold and the Foundation will not have more than $50,000 at risk to remove the debt entirely. The Executive Director may recommend to the Board of Trustees that a debt against donated property not be removed to conserve capital.
The Executive Director is authorized to approve agreements funded by the gift of business interests or portions thereof so long as the gift is consistent with state and federal law, the business is not engaged in activities or practices that would cause harm to the image or purposes of The Foundation, the donor offers adequate assurances or there is independent information that establishes that there are no environmental hazards present, and there is a reasonable expectation that the business or portion donated to The Foundation can be readily sold at fair market value. It is not the intention of the Foundation to hold or own an interest in any operating business not directly associated with charitable development purposes for any period of time other than that required for an expeditious sale.
The Executive Director may request the consideration of any gift that is not provided for in these policies by the Foundation for the purpose of consideration of the request (as long as it is permitted under applicable law and regulation). Should the Executive Director determine that the Foundation cannot act in the time necessary to satisfy the prospective donor, he may convene a meeting of the Foundation's legal counsel and the Executive Board Officers. This may deem necessary, to hear and consider a proposal by the Executive Director. Approval of a giving agreement shall be sufficient to authorize the Foundation's acceptance of such agreements.
Stewardship / Trusteeship
To encourage the establishment of charitable trusts, the Foundation may, as is allowed under law, act as trustee and absorb the costs of trusteeship of those trusts, so long as the remainder interest primarily benefits the Foundation. These costs include, but are not limited to, the costs of investment management of trust assets, audit and accounting fees, custody and other administrative fees, and fees paid to co-trustees or successor trustees should the Foundation, in its sole discretion, determine that sharing the responsibilities of trusteeship would be in the best interests of The Foundation or the trust beneficiaries.
According to regulations issued by the Internal Revenue Service, the following fees shall not be absorbed by the Foundation: legal fees, accounting or other fees necessitated by the nature of assets donated to the trust, or the direct costs of investing trust assets such as commissions paid for the sale of securities or real property. A trust must allocate at least fifty percent (50%) or more of its remainder interest to the Foundation in order for it to be considered as primarily benefiting the Foundation and not cause the Foundation to compete with commercial trustees.
The Executive Director shall ensure that all assets held in trust are invested so as to produce results consistent with the mutual best interests of the donors and the Foundation. The Executive Director shall report, as directed by the Board of Trustees regarding the state of these investments.
Following the approval of a gift, the Director shall determine and report to the full Board of Trustees for approval a course of action for the investment of trust assets. Insomuch as it may be accomplished according to law and regulation, the Director may utilize the services of financial professionals who serve the donors who establish charitable trusts. The Director is authorized to terminate said relationships should they no longer serve the best interests of the Foundation or the beneficiaries, or conflict with the Foundation's duties and responsibilities as trustee.
In the event that a donor who establishes a charitable trust has no preference for trust investments, the Foundation may utilize the services of the investment manager engaged to manage the Foundation's own assets or to utilize other services to accomplish the objectives of the trust.
In its role as trustee, the Foundation shall abide by the provisions of any trust document, which is approved as provided in these policies. Unless approved by the Executive Director after receiving advice from the Foundation's legal counsel, only trust documents prepared by the Foundation's counsel may be offered to donors and their advisors.
Donor's Gifts
Charitable Intent of Donors
It is the policy of the Foundation not to enter into gift arrangements that do not reflect at least some donative intent on the part of the donor. The Executive Director will document in the file for each planned gift the scope and nature of the donative intent expressed by the donor.
Restricted Gifts Donors may choose to restrict the use of their gifts to any purpose consistent with the charitable purposes of the Foundation. So long as the restriction is general in nature and not contingent on specified future acts. The Executive Director may accept these restrictions and bind the Foundation to its provisions. Donors may offer successively less limiting restrictions if they wish. Each donor will be asked to agree that, should the restrictions they choose not be appropriate at the time of the maturity of their gift because of changes beyond the control of the Foundation; the Foundation may use the gift in a manner that meets the then current greatest need. Types of Gifts
In general, the Foundation may accept any gift that is provided for in law or custom so long as such gift is consistent with the other provisions of these policies and guidelines. The Executive Director and his/her advisors may determine that the Foundation will emphasize or concentrate its efforts on encouraging one form or type of gift. The below list of the gift types will be encouraged and accepted by the Foundation. At all times, the preferences of the donor shall be more important than the Foundation's preference for charitable gifts.
- Outright Gifts
This is the most preferred gift form because of the immediacy of its usefulness in our work. Outright gifts should always be encouraged first when possible. Outright gifts may take the form of cash and gifts of property.
- Bargain Sales
This gift form creates an outright gift of part of the value of property because the donor's sale price is less than the fair market value. Usually, a donor sells property to the Foundation and the Foundation, in turn, sells the property to another buyer.
- Charitable Remainder Trusts
A charitable remainder trust allows a donor to give property or cash that will be used by a third party (the trustee) to earn an income, which is paid to income beneficiaries (usually the donor or donors), for life or a period of years. At the end of the income payment period, the trust principal is distributed to the Foundation.
- Unitrust
The unitrust, which provides an income, based on a set percentage of the trust principal, which is chosen by the donor at the outset. Each year the trustee of the unitrust multiplies the value of the trust fund by the percentage chosen and pays that amount in annual, semi-annual, quarterly, or monthly payments. This is the most flexible charitable trust arrangement and is the arrangement of choice for most donors.
- Annuity Trust
The annuity trust provides a fixed dollar income, which is chosen by the donor at the outset. The payments do not change and will come from trust principal should earned income not be sufficient. Payments may be annual, semi-annual, quarterly, or monthly.
- Charitable Lead Trust
The trustee of a charitable lead trust (also known as a charitable income trust) pays the income of the trust to the Foundation or other charities and, at the end of a fixed period; the trust corpus is transferred to one or more non-charitable beneficiaries. These gifts can produce dramatic gift and estate tax savings, providing a way for a donor to be philanthropic and preserve assets for family or other heirs.
- Life Estate Contracts
This arrangement allows a donor to make a gift of the remainder interest (that which is left after the donor's lifetime) in a personal residence or farm to the Foundation, and reserve to him or herself a life estate (the privilege to live in the home for life). These gifts are contracts. The donor agrees to pay all property taxes due, maintain the residence and to provide adequate insurance. The Foundation may accept an outright life-estate gift or one made in exchange for a gift annuity.
- Gifts of Life Insurance
A donor may give a paid up life insurance policy to the Foundation, naming the Foundation as both owner and irrevocable beneficiary. A donor may give a life insurance policy to the Foundation that is not paid up if the policy has a current gift value or if the Foundation is assured that there is a reasonable expectation that the donor will continue to make gifts that will be at least equal to the cost of premiums for that policy. Should a contributed life insurance policy require additional premiums to remain in force, the full Board of Trustees may determine the prudence of accepting such contributions. The donor shall be made aware that the Foundation cannot guarantee that policies needing premium payments will be maintained.
- Bequests
Gifts made by will are encouraged and accepted as provided in these policies. The Foundation may act as trustee for charitable trusts and gift annuities established by will so long as the non-charitable interest in the trust or annuity so established does not exceed twenty years.
- Revocable Trusts
The Foundation may act as trustee of revocable trusts, which will benefit the Foundation with a remainder interest. The trust or the donor shall pay any fees or charges unless the trust is made to be irrevocable. Revocable trusts are extremely valuable when donors are being encouraged to make large planned gifts in the future.
- Restrictions
A donor may choose to restrict a gift to create a quasi-endowment fund upon maturity. Those funds will be held in perpetuity and the income they generate will be used for the purposes designated by the donor provided that such purposes meet the criteria specified herein. Unrestricted endowment income shall be used as directed by the full Board of Trustees. Donors may designate their quasi-endowments to be Personal Quasi-Endowments, which will carry the name designated by the donors, and income from those funds will be given to the Foundation in the name so designated.
All Roman Catholic parishes, schools, organizations and institutions within our seven-county geographical area can be named for a fund of any size. The right to name a new Personal Quasi-Endowmentsother than for a parish, school, organization or institution within the Foundation will follow these guidelines.
- The Foundation will not discourage anyone from contributing to any fund(s) regardless of the size of the gift.
- A fund named for a deceased person(s) must be at least $25,000. The donor(s) can start this fund with a minimum of $10,000 and a pledge to donate the remainder within the one year.
- A fund named for a living person(s) must be at least $100,000. The donor(s) can start the fund with a minimum of $25,000 and a pledge to donate the remainder within the five years.
- Gifts under the amount needed to establish a fund named will be added to the parish, school, organization or institution designated by the donor.
Recognition
To express the Foundation's gratitude for this generous support, the Board of Trustees may authorize permanent recognition of this philanthropy.
Foundation Services, Costs and Compensation
The complex process of solicitation, planning and administration of gifts involves the donor's philanthropic, personal, tax, and financial considerations. For this reason, donors often seek the counsel of legal, tax, and other experts (gift planners) who represent clients in the planning process and in implementing gift decisions.
The Foundation will provide documents and other materials that will expedite the formation of planned charitable gifts. Those costs will be borne by the Foundation. The Foundation shall not pay any fee, directly or indirectly, for the right to receive a gift (because those they represent and to whom they are responsible and for whom services are provided should compensate gift planners).
No person in the employ of the Foundation may accept any compensation or material benefit from a donor as a result of the gift planning process.
Acceptance Policy
Cash
- Checks should be made payable to the Central Washington Catholic Foundation rather than to an individual who represents the Foundation.
Publicly Traded Securities
- The Foundation can accept readily marketable securities, such as those traded on a stock exchange.
- Gift securities are to be sold immediately. For gift crediting and accounting purposes, the value of the securities is the average of the high and low on the date of the gift. Closely Held Securities
- Non-publicly traded securities may be accepted after consultation with the Board of Trustees. The fair market value of the securities must be determined by a "qualified" appraiser.
- Prior to acceptance, the Central Washington Catholic Foundation should explore methods of immediate liquidation of the securities through redemption or sale.
- No commitment for repurchase or sale of closely held securities should be made prior to completion of the gift of the securities, as the transaction might be viewed by the IRS as a sale rather than a gift, with adverse tax consequences for our donor.
Real Estate
- Gifts of real estate should be reviewed by the full Board of Trustees before acceptance.
- The Donor should be responsible for obtaining and paying for an appraisal of the fair market value and an environmental audit of the property.
- Prior to presentation to the full Board of Trustees, a member of the staff must conduct a visual inspection of the property. If the property is located in a geographically isolated area, a local real estate broker can substitute for a member of the staff in conducting the visual inspection.
- Property that is encumbered by a mortgage should not be accepted.
Life Insurance
- The Central Washington Catholic Foundation should accept a life insurance policy as a gift only when it is named as the owner and beneficiary of the policy.
Tangible Personal Property
- Gifts of tangible personal property to the Central Washington Catholic Foundation should have a use related to the Foundation's tax-exempt purpose.
- Gifts of jewelry, artwork, collections, equipment, and software may be accepted after approval by the Gift Acceptance Committee.
- Such gifts of tangible personal property defined above shall be used by or sold for the benefit of the Foundation.
- The Central Washington Catholic Foundation must follow all IRS requirements in connection with disposing of gifts of tangible personal property and filing of appropriate tax reporting forms.
Charitable Trusts
- The Central Washington Catholic Foundation can act as trustee.
- The administration of these trusts should be performed by a bank trust department or other trustee selected by the donor.
Bequests
- The Central Washington Catholic Foundation should refuse to accept (disclaim) any bequest that might prove to be more of a cost than a benefit.
- The Foundation should refuse to accept (disclaim) any bequest that might prove to be contra (against) the Foundation's best interest.
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