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Gift Planning FAQS
 

What assets can I use to make a gift to the American Red Cross?
What sort of gift plans also return income to me?
What tax deduction will I receive for my gift?
I want to set up a life insurance policy, name the American Red Cross as beneficiary, but retain ownership of the policy. Can I deduct the premium payments I make?
I've heard that transferring gifts of IRA assets to charity are advantageous. Why?
Can I transfer my IRA to the American Red Cross to set up a life-income gift, and avoid income tax on the transfer?
I'd like to donate a painting. Will you determine its value for my income tax deduction?
I'm interested in establishing a charitable gift annuity. What financial provisions will you make for the income payments to me and my spouse?

What assets can I use to make a gift to the American Red Cross?
Generally speaking, during your lifetime you can make an outright gift of cash, securities or other property (e.g. real estate, personal property).

Through your will or with a distribution from a retirement plan or life insurance policy, your gift can be designated to the American Red Cross in accordance your wishes. Gifts of business and partnership interests are also accepted.
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What sort of gift plans also return income to me?
You have the option of making a gift that returns income to you, your spouse, or other individuals, such as a charitable gift annuity, or charitable remainder unitrust or annuity trust.
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What tax deduction will I receive for my gift?
Your tax benefits will depend on several factors: the type of gift, the time at which it is made, whether it is outright or deferred or has any income payments. In general, though, here are some guidelines:

  • Outright gifts to the Red Cross generate a full income-tax charitable deduction. Outright gifts of appreciated securities are deductible at fair market value, with no recognition of capital gains - - a great tax benefit!
  • Great of personal property, like art, books and collectibles, are fully deductible so long as they are relevant to our mission. For more information, e-mail garderk@redcross-cleveland.org or call 216.431.3215 so that we can assist you through every step of the process.
  • Bequests do not generate a lifetime income tax deduction. They are exempt from estate tax.
  • Similarly, life insurance distributions to the Red Cross are not income-tax deductible, but are exempt from estate tax. If you have made us the irrevocable owner and beneficiary of a policy during your lifetime, you may deduct annual gifts that offset premium payments (for more details on this point, see the question below).
  • The charitable deduction for a gift that returns income to you, such as a charitable gift annuity or a charitable remainder trust, is the fair market value of the gift assets minus the present value of the income interest you retain

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I want to set up a life insurance policy, name the American Red Cross as beneficiary, but retain ownership of the policy. Can I deduct the premium payments I make?
No. The IRS would not consider that a "completed gift" - they'd say that, as the owner of the policy, you could change the beneficiary designation to a friend or family member. We must be made the irrevocable owner of the policy for gifts offsetting premium payments to be deductible.
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I've heard that transferring gifts of IRA assets to charity are advantageous. Why?
Qualified retirement plans such as IRAs, 401(k), 403(b), and Keoghs allow individuals to defer paying taxes on a portion of their income until the assets are withdrawn during the retirement years. However, after a person's death, these accounts are often exposed to income or estate taxes, at a combined rate that could rise to 75% or even higher on large taxable estates. The tax will be paid at some point - by your estate and your heirs unless contributed to charity. In other words, by giving retirement assets to charity you receive double benefits. Your estate and heirs will not be taxed on the portion that goes to charity and you will support the Red Cross!
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Can I transfer my IRA to the American Red Cross to set up a life-income gift, and avoid income tax on the transfer?
Under present law, any lifetime distributions from an IRA are included in your taxable income, even if these funds are transferred to us. You do, however, receive a current charitable deduction when you establish a life income gift, which would partially offset the amount included in your taxable income. Proposed legislation would make the transfer tax-free, however. Watch our Website for updates.
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I'd like to donate a painting. Will you determine its value for my income tax deduction?
The IRS requires that donors of artwork and collectibles secure an independent appraisal of the items to establish fair market value. The appraisal has to be related to the gift, too - an insurance appraisal won't suffice. We can assist you on this point.
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I'm interested in establishing a charitable gift annuity. What financial provisions will you make for the income payments to me and my spouse?
Your charitable gift annuity will be treated as a general obligation of the American Red Cross, backed by all of our assets. We have an unbroken record in making timely payments to our annuitants, and that ongoing responsibility is a key element in our financial policies.
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3747 Euclid Avenue   Cleveland, Ohio   44115-2596
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