Legacy gifts: Creating a lasting impact

What are legacy gifts? 

Legacy giving, also known as planned giving, refers to the process of arranging charitable donations as part of a financial or estate plan. These gifts can take effect during or after your lifetime and can take many forms — from simple bequests in a will to more complex financial arrangements that can provide you with tax benefits and income. 

With legacy gifts, you can create a large, lasting impact that reflects your values and passions. It is a meaningful way to extend your influence long into the future. 

Ways to leave legacy gifts to create lasting impact 

There are numerous ways to structure legacy gifts, with each method offering different advantages related to tax benefits, income potential and asset management. The following is an overview of the primary legacy gift methods. Please consult with an attorney or financial planner to decide which option is right for you and your family.

Simple Gifts 

Bequests: Bequests are straightforward gifts made through a will or living trust, specifying a certain dollar amount, percentage of estate or specific property to be donated to charity after your lifetime. Legacy gifts most often come in this form, requiring only a simple addition to your will.

Retirement plans: Naming a charity as a beneficiary of your retirement accounts like 401(k)s or IRAs can be very tax efficient. These assets are typically subject to both income and estate taxes when left to heirs, but charities can receive them tax-free.

Life insurance: You can name a charity as beneficiary of your life insurance policy, or transfer ownership of a paid-up policy to a charity during your lifetime. This could allow you to make a significant future gift while maintaining current financial security and potentially receiving immediate tax benefits.

IRA distribution: Qualified charitable distributions from IRAs allow those 70½ or older to donate up to $100,000 annually directly to charity without recognizing the distribution as income. This satisfies required minimum distribution requirements while supporting charitable causes tax-efficiently.

Real estate and property: Real property can be donated through a will, transferred with a retained life estate, or given outright during your lifetime. This option works well for people with real estate who want to make a substantial contribution while potentially reducing estate taxes.

Appreciated securities: Donating stocks, bonds or mutual funds that have increased in value allows donors to avoid capital gains taxes while typically receiving a charitable deduction. This makes appreciated securities an efficient asset for charitable giving compared to cash donations.

Gifts that pay income 

Charitable remainder annuity trusts: These trusts provide fixed income payments to your designated non-charitable beneficiaries for a term of years (or your lifetime), with the remainder going to charity. These irrevocable trusts offer immediate tax deductions, potential capital gains tax avoidance and secure income for donors or their designated beneficiaries.

Charitable remainder unitrusts: Similar to annuity trusts, remainder unitrusts provide variable income based on a fixed percentage of the trust's value as revalued annually. This offers potential for increasing payments during inflationary periods while providing immediate tax benefits and eventual charitable support.

Pooled income funds: These charitable investments combine gifts from multiple donors, providing variable income based on fund performance. Donors receive immediate tax benefits and ongoing income while joining with others to create a larger charitable impact.

Remainder annuity trust: This specialized trust arrangement provides fixed-dollar payments to non-charitable beneficiaries for a period of years, after which the remaining assets transfer to the designated charity. It offers tax advantages while ensuring both family members and charitable causes receive support.

Charitable gift annuities: These contracts between individuals and charities provide fixed payments to the donor for life in exchange for significant eventual legacy gifts. The donor receives immediate tax benefits, reliable income and the satisfaction of supporting a favorite charity.

Options for legacy gifts that protect a donor's assets 

Charitable lead trusts: These trusts provide income to charity for a specified period, after which the remaining assets pass to the donor's heirs. They're particularly effective for people seeking to transfer appreciating assets to family members with minimal gift or estate tax.

Retained life estates: You can transfer the deed of your real estate property to charity while retaining the right to live in or use the property for your lifetime. This arrangement provides immediate tax benefits while allowing you to maintain your lifestyle, and ensures your property ultimately supports your charitable intentions.

Bargain sale of property: Selling property to a charity below market value combines a charitable gift with a financial transaction. The donor receives cash for the sale price and a charitable deduction for the difference between the sale price and fair market value, providing both liquidity and tax benefits.

Other non-cash gifts 

Appreciated assets: Tangible personal property like artwork, collectibles or other valuable items can be donated directly to a nonprofit organization, and the donor may receive a tax deduction for the full fair market value.

Donor-advised funds (DAFs): These charitable giving accounts allow donors to make contributions over time. DAFs simplify charitable giving while providing maximum tax advantages and flexibility for donors who want ongoing involvement in their philanthropy. You can always designate a charity of your choice as a beneficiary of your DAF. 

Making your legacy gifts to Room to Read 

However you choose to structure your legacy gifts, the choice to make a long-term investment in a mission you care about is a powerful vehicle for change. 

Education stands as the single most effective pathway to breaking cycles of poverty, reducing inequality and creating sustainable progress for communities worldwide. By making a legacy gift, you can become part of Room to Read's transformative mission to end illiteracy and gender inequality by ensuring quality education is accessible to children around the globe.

Room to Read's long-term goals focus on creating systemic change in educational outcomes, particularly for children in historically low-income communities. You can help establish libraries and ensure children have safe and accessible learning spaces, publish books for children and adolescents in local languages, train teachers in literacy and life skills instruction, and support all children to pursue lifelong learning and make informed decisions. These programs create ripple effects that extend for generations, as educated children become adults who earn more, lead healthier lives and ensure their own children receive education.

By including Room to Read in your estate plans or other planned gifts, you're not simply making a donation — you're creating an enduring testament to your belief in education as the foundation for a more equitable world. Your legacy gifts will join with others to build a future where illiteracy no longer limits human potential, where poverty doesn't determine a child's opportunities and where gender equality in education is the norm rather than the exception.

For more information about leaving a legacy gift to Room to Read, please visit www.roomtoread.org/legacygiving or contact Legacy Giving Manager Caitlin Nagel at legacy@roomtoread.org.   

Start planning your legacy gifts

To explore options for legacy gifts, you can begin by reflecting on your values, financial situation and philanthropic goals. Consider these steps: