Below is a list of frequently asked questions regarding charitable giving through the Santa Barbara Foundation. If you do not find the answers you are looking for here, email us or call at (805) 963-1873. Please request to speak to a Philanthropic Services team member.
What assets can I use to make a gift to the Santa Barbara Foundation?
Generally speaking, during your lifetime you can make an outright gift of cash, securities, or other property (for example, real estate or personal property).
Through your will or with a distribution from a retirement plan or life insurance policy, your gift can be designated to the Santa Barbara Foundation in accordance with your wishes.
What 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 through plans such as a charitable gift annuity, charitable remainder unitrust, or annuity trust.
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 Santa Barbara Foundation 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!
- Gifts of personal property are fully deductible so long as they are relevant to our mission. Contact us and we can advise you.
- Bequests do not generate a lifetime income tax deduction. They are exempt from estate tax.
- Similarly, life insurance distributions to the Foundation are not income-tax deductible, but are exempt from estate tax. If you have made the Foundation 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 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 asset minus the present value of the income interest you retain.
I want to set up a life insurance policy, name the Santa Barbara Foundation as beneficiary, but retain ownership of the policy. Can I deduct the premium payments I make?
No. The Internal Revenue Service would not consider that a "completed gift." They would consider that, as the owner of the policy, you could change the beneficiary designation to a friend or family member. The Foundation must be made the irrevocable owner of the policy for gifts off-setting premium payments to be deductible.
I have heard that transferring gifts of IRA assets to charity are advantageous. Why?
Qualified retirement plans such as individual retirement accounts, 401(k)s, 403(b)s and Keoghs allow individuals to defer paying taxes on a portion of their income until the assets are withdrawn during retirement years. However, after a person's death, these accounts are often exposed to income and 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 causes you care about through the Santa Barbara Foundation.
Can I transfer my IRA to the Santa Barbara Foundation 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 the Foundation. 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.
I am 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 Santa Barbara Foundation, 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.