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Stock Transfer

Transferring shares of stock to GICF is a win-win for both the donor and GICF. Here are a few examples of the benefits you might see, but consult a tax professional as your situation may be different:

1. Stocks that have risen in value will generate a taxable capital gain when sold. Donating those appreciated assets removes that tax liability and gives you the full value of the shares as a deduction. Click HERE to read a more detailed description of the process and benefit.
2. Stock without a well documented basis value may effectively have a basis of $0, meaning that the entire value of the shares, and not just the gain, would be the taxable capital gain. Donating these shares will remove that problem from your portfolio.
3. Rebalancing a portfolio involves selling one class of assets, such as stocks, and buying another class of assets, such as bonds, in order to achieve the desired ratio of stocks to bonds, such as 60/40 or 70/30. Donating shares will avoid paying capital gains tax when stock is sold.

IRA Qualified Charitable Distribution, or QCD

Donors aged 70.5 years or older with a Traditional IRA can make a Qualified Charitable Distribution (QCD) by transferring securities or funds directly from their IRA to GICF. A normal IRA distribution (or withdrawal) is treated and taxed as ordinary income, so is a taxable event. By making the withdrawal as a QCD, the withdrawal isn’t taxed, and isn’t even included as income, which can be an important consideration with regard to Social Security and Medicare IRMAA calculations.

In addition, if the donor is subject to taking Required Minimum Distributions (RMD), the QCD satisfies some or all of the RMD. The RMD is an IRS requirement to force taxable withdrawals, but if the RMD is taken with a QCD, the requirement is satisfied, but without the tax liability.

It is very important to note that the QCD transfer must be initiated at the institution holding the IRA, and that they transfer the shares or funds directly to the charity. If not done properly, the IRS will see the withdrawal as an ordinary distribution and not a QCD, with no tax benefit to the donor. There are annual maximums to QCD, so please consult with your tax and investment advisors to know how this will benefit you.

Legacy Giving

Assigning funds and assets from your estate to GICF when you pass is a very flexible and effective way to make tax advantaged donations to GICF. Here are a few examples, but, again, consult your tax and legal representatives to learn how it applies in your situation:

1. Charitable Bequest: Add simple bequest language to your will to send your gift to GICF, such as “I bequeath _________ (dollar amount or % of estate) to Grace International Children’s Foundation, a nonprofit organization under the laws of Texas with a principal business address of 5121 FM 359, Richmond, Texas 77406; and a federal tax identification number of 94-3418677.”
2. Designate GICF as a Beneficiary: Including GICF as a beneficiary of your retirement account, life insurance policy, pension plan, or donor-advised fund is perhaps the easiest way to create a legacy gift. Your financial advisor can help explain how this gift can benefit you and your loved ones, while also reducing estate and income taxes.

Legacy giving considerations:

• The taxable withdrawal requirements of your IRAs survives you, adding a tax burden on your heirs. By specifying GICF as beneficiary of your IRAs, all of the donated IRA value will be applied to the benefit of GICF.
• Stock transferred to your heirs receives a step-up in basis, meaning that there is not a tax burden passed on to your heirs. For this reason, it may make sense to direct most or all of your IRAs to GICF while passing on most or all of your stock to your heirs.
• GICF can be listed as a beneficiary alongside your other beneficiaries, such as spouse and children, at your desired percentage.
• The federal estate tax is quite punitive if your estate is large enough to be subject to it. If your estate is close to the threshold, donations to charity are one way to decrease your taxable estate size to avoid the tax.

Endowment

Purpose:
GICF has created an endowment fund for the express purpose of providing long-term financial stability for Lulwanda Children’s Home. Fluctuations in the USDollar to UgandaShilling exchange rate, as well as cost inflation in Uganda, will periodically create situations in which the funds donated in the US do not fully cover the budgeted expenses in Uganda. It is our hope that distributions from the endowment will allow us to continue rescuing, loving, and changing the futures for Ugandan orphans well into the future.

Governance:
The GICF USA Board will govern the funding, investing, spending, and termination of the endowment fund in support of Lulwanda Children’s Home in Uganda.

Funding:
The endowment fund will be funded from donations specifically designated for the endowment. Funds from our operations, advanced education, and emergency fund accounts will not be used to build up the endowment fund.

Investing:
The endowment funds will be invested in a mix of growth and fixed-income index funds with the goal of preserving capital and generating about 5% in distributable dividends and interest annually. The growth portion will target increasing the capital to match inflation. The endowment capital will not be withdrawn from the fund.

Spending:
Dividends and interest will be distributed from the endowment fund to be spent at the discretion of the GICF USA Board to support the mission of GICF, generally through the General Operations account.

Termination:
The endowment fund is intended to provide supplementary support for GICF and LCH as long as both entities remain in operation. If the GICF USA Board were to decide that it could no longer support LCH, the endowment fund capital would be transferred to the emergency fund to provide a ‘soft landing’ for the children receiving support in a manner to be decided by the GICF USA Board.