A Good Plan

If you could live forever, what would you do? Travel around the globe? Research a cure for cancer? Finally write that novel? We can’t live forever, but there is a way to have a lasting impact on our community well beyond our own mortal limitations through planned giving.

Many in The 330 are familiar with the name Edwin Shaw from area medical facilities. His name and legacy have lived on well past his death in 1941 largely due to his thoughtful planned giving. Just a few years before he died, Shaw drafted a will that included a bequest of more than $1 million to create an institution, the Akron Community Foundation, that would assess the changing needs of Greater Akron over time and make sure charitable money went toward organizations and individuals meeting those needs.

“In perpetuity, we hold the charitable dollars of the community. And many of those dollars are established through estates,” says Margaret Medzie, vice president and chief development officer of the Akron Community Foundation.

Shaw’s planned gift started the Akron Community Foundation in 1955, and now the foundation helps charitably minded individuals pay it forward with their own planned gifts. Medzie and her colleagues at Akron Community Foundation help us break down the planned giving puzzle.

What Is Planned Giving?

Planned giving, in essence, means making arrangements for how your estate will contribute to a charitable cause of your choice, either during your lifetime or after you’re deceased. The actual gift can take many forms — from a lump sum of cash to a piece of property to a life insurance policy — but the idea is all the same: planning so the charitable causes you value will continue to benefit from your generosity.

“We really have two major arms of our business,” Medzie says. “One is with donors who are interested in establishing long-term charitable legacies.” These are typically donor-advised funds, which are an alternative to private foundations. Basically, the donor recommends whom they’d like to help, like scholarship recipients or a local women’s shelter, and the foundation helps them navigate the paperwork and legalities involved.

“Our other arm is really the community impact arm,” Medzie says, referring to vetted local nonprofits that benefit from charitable funds managed by the foundation.

What Do People Give?

“No one comes to us with the same set of charitable inclinations or assets that they are willing and able to set forth as charitable,” Medzie says.

While you can give assets such as stock, cash is always a good charitable gift. Some things do not make good planned gifts, like collections of beloved items or property that is difficult to sell. “Anything that’s a physical object is difficult for the foundation to take because obviously it means we have to liquidate it, [and] that can get a little dicey,” says Laura Fink, director of development and professional adviser relations at Akron Community Foundation.

The planning part of giving is paramount, as you can make your gift part of an overall wealth management strategy during your lifetime. “There are gifts that pay income to people while they’re alive and then make a gift upon their death,” Fink says. Charitable gift annuities and charitable remainder trusts are examples that fall into this category of life income gifts.

There are other planned giving options that aren’t posthumous. “There’s also a lead trust [where] the charity gets the money first, and then when you die, it goes back to your estate and dismantles there,” Medzie says.

The bottom line is that there are as many ways to plan a gift as there are charitable people out there, so talking with a financial adviser is crucial. It’s important to remember that Akron Community Foundation is a nonprofit charity composed of some 600-plus individual funds — but they are not real estate agents or financial advisers.

“Akron Community Foundation can assist you in discussing ideas pertaining to life income gifts,” Fink says. “There are a variety of tools to choose from, so we do ask to bring their advisers into a conversation because that’s where it can get really complicated.”

Who Gives Planned Gifts?

It might sound like planned giving is the domain of the uber-wealthy, but that is not necessarily the case.

“Oftentimes, people look for large gifts from high-net-worth individuals,” Fink says. “There are people who live very modestly during their lifetime but have made plans well in advance to take care of the kinds of stuff they love the most.”

Betty Axline is a good example. According to Tracy Burt, Akron Community Foundation’s senior director of marketing and communications, Axline spent her 40-year career as a secretary. Every year, she donated her last hour of pay to Akron Community Foundation’s Millennium Fund for Children, a partnership with the Akron Beacon Journal that makes grants to qualified programs aimed at improving children’s lives. Despite her modestly lived life, her 2014 will included a gift of more than $300,000 to start the Betty R. Axline Fund, a discretionary fund that Akron Community Foundation can disperse as they see fit to support the well-being of Summit County residents.

“Anybody can do a planned gift,” Fink says. “It just takes planning.”

What’s more, your children and grandchildren can build on your family’s generosity and secure a better future for themselves and the community. “In what we call legacy agreements, we allow second and third generations to continue the work of the original donor after they pass,” Medzie says.

Why Plan a Gift?

Besides assuring that your estate continues to contribute to the causes and organizations you value, a planned gift is a smart way to help your family avoid some difficult decisions and unpleasant financial burdens when you die.

“Planned giving is an easy way for families to bypass tax consequences,” Medzie says. “And again, their professional advisers will know exactly what those taxable consequences will be for the survivors and where they could avoid them through making a charitable gift.” A possible tax consequence is the estate and income taxes incurred when an individual retirement account is bequeathed to a family member.

How Does One Plan a Gift?

Your planned gift will be a component of your will, so you’ll need to discuss how you’d like to do it with your lawyer or financial adviser as they help you draft that document. It may be a good idea to include Akron Community Foundation in that conversation, as they understand some of the nuances that can make the process easier.

For example, Fink suggests specifying a percentage of your estate as a gift, rather than a lump sum. “Oftentimes, when people make these post-mortem plans, they don’t know how much money they’re going to have left.”

No matter what fluctuations your net worth experiences as you go through living your life, designating a percentage of your estate as a planned gift ensures a specific portion of it will go to charity.

Where Does the Money Go?

“Name a Summit County nonprofit, and I’m pretty sure we’ve given at least a grant to it within the last year or few,” says Burt. Funds at Akron Community Foundation support myriad organizations in Summit County, from the Akron-Canton Regional Foodbank to Akron Public Schools College and Career academies to Downtown Akron Partnership.

“Our community investment side of the house does a lot of vetting of the organizations to ensure that the return on the investment is strong,” Medzie says. Any group receiving funds from Akron Community Foundation must be a viable 501(c)(3) nonprofit that is in good standing with the IRS and able to accept charitable donations.

Akron Community Foundation knows The 330 and what it needs. “We like to refer to ourselves as community experts in the nonprofit arena,” Medzie says. “We do a lot of homework here in the community, and we have a very broad knowledge base of where the needs are, where the gaps in funding are. We’re able to shepherd and steward our donor-advised fundholders into strategic charitable giving.”