Ways to Give

Donating property or securities directly to Seattle Pacific University may carry some very attractive tax benefits. Take a moment to read about them, then give us a call at (206) 281-2702. We'll discuss the options with you and help you determine if this means of creative stewardship is a good fit in your circumstance.

Keeping the Whole Gift to Give as You Wish

Imagine you're mailing a present to a loved one. One delivery company promises to deliver your gift free. The other company says it will keep one-third of your gift as pay. Does it matter which company you choose? Of course it does! You want your entire gift to arrive safely.

The same holds true in giving appreciated property. How the gift is "delivered" can be as important as the gift itself. Unless care is taken, up to one-third of a donation may go to the IRS, but there are easy ways to sidestep this problem.

As you know, the federal government claims a portion of nearly all income, including the appreciation of your investments and property. So if you intend to donate real estate that has increased in value, the IRS will claim a portion of the profits when you sell your property. The same holds true for stocks that have appreciated in value. When you cash in, so does Uncle Sam.

Gifts of real estate given to SPU will help us to engage our culture and change our world, while providing you with substantial tax benefits.

Yet this tax doesn't need to diminish your charitable giving. The answer is simple: don't sell. Donate the property or securities directly to SPU. Because the University is tax exempt, it can sell the property or stock tax-free. This saves you the paperwork of selling while substantially increasing the size of your gift. And because SPU receives the full market value, your charitable deduction will be substantially larger than if you had sold the property yourself.

There are several options for giving appreciated property or stock. Below are a couple of examples of how this might work in a real life situation. Please bear in mind that the dollar amounts listed are for demonstration purposes only. Tax laws change yearly so please contact us for a free consultation and discuss your plans with your financial or tax consultant.

A Gift of Real Estate
A Gift of Appreciated Stock
Bargain Sales Option
Donating Partial Interest
Gifts of Personal Property Other Than Real Estate or Stocks

A Gift of Real Estate

Maximize the impact of your gift. Let us show you how.

Karl B. owns a duplex rental in the Seattle area. Lately, the assessed value of the land has skyrocketed, and so have his property taxes. Rent income barely covers his costs. In addition, managing tenants and maintaining the duplex is growing tiresome. He wants to enjoy retirement with his wife, not spend it mending plumbing. Karl decides that now is the time to fulfill two dreams: 1) to set up an endowed engineering scholarship in memory of his grandfather, and 2) to leave the duplex behind, get into his R.V. and head to the Grand Canyon.

Karl discusses his plans with one of SPU's planned giving experts. The planned giving officer asks Karl whether he needs a giving plan that offers supplementary retirement income (for information on planning a gift that provides supplemental retirement income see the brochure "Planning Your Gift" or contact one of our planned giving officers). No, Karl answers, he doesn't really need the extra income, and prefers to see the engineering scholarship launched right away. The giving officer explains that Karl needn't bother with selling the house or dealing with tenants. By giving the duplex directly to SPU, Karl will even avoid the capital gains tax of $33,600 on the property's appreciation.

He originally bought the duplex for $50,000 and it's now worth $145,000. If Karl were to sell the property himself, he would be left with only $111,400 to establish the scholarship fund. But if Karl donates the property directly to SPU, the entire value would go towards engineering scholarships and he would receive a charitable deduction for the full $145,000. Consequently, his charitable deduction of $145,000 is $33,600 larger than if he had sold the property himself and donated the after-tax profits. Each year now, Karl can take a deduction equal to 30 percent of his adjusted gross income and carry the remainder over for up to five years.

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A Gift of Appreciated Stock

Marjorie T. plans to make a donation to SPU's new Chapel/Performance Arts Hall in memory of her late husband, Tom. She knows how important Seattle Pacific was to him, especially some of the professors who encouraged Tom and got him started in a career.

To fund the gift, Marjorie would like to sell some stock that is now worth $10,000. Marjorie bought the stock for just $500 in 1956.

Before selling, Marjorie wisely decides to check with one of the planned giving officers at SPU. "If you sell the stock yourself," she is told, "you'll pay a hefty tax on the amount of growth the stock achieved since 1956. In your 28 percent bracket, that's a tax of $2,660 on the $9,500 capital gain, leaving you with just $7,340 to give to the chapel fund. However, if you donate the stock directly to SPU, there's no capital gains tax and all the money will go towards the chapel. Plus you'll save a total of $2,800 on your taxes because of the charitable deduction. With those savings, a $10,000 gift ends up costing only $7,200".

Gifts of real estate given to SPU will help us to engage our culture and change our world, while providing you with substantial tax benefits.

A long-term owner of stock or property is likely to reap major tax benefits through donating. After the year of the gift, the charitable deduction can be carried over up to five years, creating long-term advantages.

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Bargain Sales

Many SPU supporters would like to donate real estate or investments, but need to keep some of the money for personal finances. With help from a Seattle Pacific planned giving expert, a customized giving plan can be created to allow you to retain a specified portion of the profits.

One option is called the "bargain sale". The donor sells a property to the University for less than the fair market value, and receives a charitable deduction for the difference. Selling a $100,000 home for $50,000 would yield a charitable deduction for the $50,000 "bargain". If the home was originally purchased for less than $50,000, the capital gains tax would be computed according to the profit received by the donor. The portion of the total capital gain given to the University is not taxed.

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Partial Interest

Another option is to donate partial interest to the University. SPU becomes owner of a specified percentage of the property's value. The donor receives a charitable deduction in the year of the gift, plus his/her share of the profits when the property is sold.

Example: Janet R. wants to sell her $120,000 home and move to a Florida condominium for her retirement years. She would like to donate some of the proceeds to SPU and keep $50,000 to help purchase the condominium. She bought the house for $30,000 10 years ago. Janet calls a planned giving officer at SPU and asks, "Isn't there a way to give SPU some of the value of my home?"

Making gifts of appreciated assets has an extra benefit to you, the donor.

"Of course," the officer answers, "there are two ways. You can either sell the house to us at a bargain price or give us a partial ownership of the house before selling". In the first scenario, Janet sells the house to SPU for $50,000, pays the capital gains tax of $10,500 and saves $19,600 due to the charitable deduction. Those three figures, combined, mean she has $59,100 to help fund her condominium. In the second scenario, she grants Seattle Pacific a 58 percent ownership of the house. Then SPU assists with selling the house for the best possible price. She receives a charitable deduction of $69,600 plus her share of the profit when the home is sold ($50,400). And because she owns only 42 percent of the home, her capital gains tax will be much lower.

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Gifts of Personal Property Other Than Real Estate or Stocks

Gifts needn't be as large as a home to be significant. Donations of such property as rare coins, baseball cards, boats, antiques, equipment or artwork can result in a charitable deduction. The size of the deduction depends on how the gift will be used.

Related use: If SPU uses the item as it was intended (e.g., a sculpture is displayed permanently in the University gallery) and the donor has owned the item for at least one year, a charitable deduction is taken for the gift's fair market value.

Unrelated use: If the property is put to an unrelated use (e.g., a necklace is donated with the intent that it be sold to benefit SPU), the charitable deduction is for the original purchase price of the item.

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