Planned Giving Options
There are a number of tax-advantaged ways in which people can provide needed support for their park or friends group while
enriching their lives through philanthropic activity. There are three types of planned gifts. The first are current outright
gifts, the second are revocable deferred benefits and the third are irrevocable deferred benefits.
Current Outright Gifts
Stock, real estate, and tangible personal property, given for the current use and enjoyment of a nonprofit organization, are
considered planned gifts. These gifts require significant contemplation and planning, unlike annual fund gifts, which are often made
spontaneously in response to a mail appeal and satisfied by writing a check from income.
Appreciated stock is the most common type of noncash gift and is a tax-wise way to make a planned gift to a park. Nonprofit
organizations prefer gifts of publicly-traded stock rather than closely-held stock because it can be sold quickly and have a
readily ascertainable fair market value. Closely held stock is corporate stock that is held by small number of shareholders and are
generally not traded to the public. It may be difficult to value and subject to restrictions or it may not be salable if a buyer cannot
An appeal for the donor is that gifts of appreciated securities held longer than one year are exempt from capital gains taxes and for
outright gifts entitle the donor to a tax deduction equal to the fair market value of the securities at the time the stock is transferred.
If the donor chose instead to donate the proceeds from the sale of the stock, they would be required to pay capital gains tax. By donating
stock instead of proceeds from the sale of the stock, the donor is reaping two tax benefits: a charitable deduction, and avoiding capital
A landowner may wish to donate a home or a portion of his/her property to a park or the friends group which serves the park. In some cases
the donor may wish to retain use of the property for a term that is specified in the gift agreement, (e.g. a term of up to 25 years or
for the rest of their life). At the conclusion of the term, all rights in the property are transferred to the friends group or park, whichever
is specified in the agreement. A gift of this kind may result in both an immediate and a long term tax benefit for the donor, and also ensures
the property will serve a public use for future generations.
Retention of a term of occupancy will reduce the amount of the deduction the donor can claim based on the length condition and term of the
continued occupancy. If the property is located outside the park and donated to a friends group, it may be sold or exchanged for property
within the park boundary. The donor may receive a charitable tax deduction for the present value of the remainder interest given to a
qualified nonprofit organization.
However, prior to accepting the gift, there are a number of issues that should be addressed. The following is a list of questions the park
or friends group should ask when considering a gift of real estate:
- Are there liens or encumbrances on the real estate?
- Is the donor the sole owner, or is the property jointly owned with others?
- Will the park or friends group be able to sell the property within a reasonable period of time, and if not, does it have funds
available to pay for annual the insurance, taxes, and maintenance during the interim?
- Will the park or friends group retain the property and use it for its exempt purpose?
- Will environmental remediation be needed, and if so, who will cover the cost or be responsible?
- Will the donation maintain the integrity of NPS programs and operations?
Before accepting any gift of real property for ultimate conveyance to the United States for the benefit of the National Park
Service, the friends group should consult with the NPS Regional Land Resources office to review the proposed acquisition for any legal,
title, environmental or ethical issues that could potentially bar acceptance of the gift by the United States.
Parks and many friends groups require board approval before accepting gifts of real estate. Most organizations have limited interest
in entering into the real estate management business so acceptance of a gift of real estate is often predicated on the ability to readily
sell or exchange the property, if located outside the park boundary,
within a reasonable period of time.
Donors often choose to give their most highly appreciated property, thereby entitling the
donor to a charitable income tax deduction equal to the current fair market value of the
property. Furthermore, if the donor gives appreciated assets to the park or friends group
and the organization sells those assets, capital gains tax may be avoided due to the park
or organization's tax-exempt status.
Parks and friends groups may give general but not specific advice to donors on the
potential tax benefits of a charitable donation of real property to the United States or
other qualified recipient. Potential donors should consult independently with a qualified
tax consultant or the Internal Revenue Service on the valuation and tax advantages before
making a final decision to donate.
Charitable Lead Trust
A charitable lead trust is a trust arrangement that pays current annual income to a park or
friends group for a specified period of years, with the trust principal reverting to the
donor or the donor's family when the trust expires. The donor's estate taxes are reduced
and the property is not taxed to their family. The annual income payment by the trust is
similar to an outright gift of cash, for the park or friends group is free to use the cash as
soon as it is received, subject to any restrictions placed on the gift by the donor. Because
a charitable lead trust is one of the most sophisticated planned giving tools, it is wise to
consult an experienced charitable estate planner prior to entering into this type of
Endowment funds generate interest income for immediate use, while the principle
remains intact and is not invaded or diminished. The primary function of the endowment
is to build a pool of assets that will benefit the park. Endowment gifts may be made
outright, through testamentary instruments, or through deferred gifts that are established
now, but benefit a friends group and ultimately the park at a later date. Endowment funds
can be used to establish or expand park programs. Often an endowment is created by an
initial gift and others contribute subsequent gifts to build the corpus of the fund from
which interest is generated.
The NPS and its partner should agree in advance on how the funds will be used and
ensure that NPS has sufficient discretion for the use of the funds to meet its day to day
needs, consistent with the purposes for which the endowment was created.
Factors that should be considered in authorizing the creation of an endowment are:
- How and by whom the endowment will be administered;
- How endowment funds are to be used;
- Process of authorizing expenditures;
- Investment policy for the endowment funds;
- Funds accountability;
- Circumstances, if any, under which the corpus may be used; and
- Contingencies for the disposition of the endowment in the event of the
dissolution of the partner or the endowment.
The memory of an individual or group is honored through the donation of resources or
the establishment of a fund that reflects the gifts, values concerns of the individual or
group. Memorial gifts allows donors to pay tribute to a loved one or honor a milestone
while helping further efforts to enhance conservation, stewardship, and education
programs within a park. By supporting a memorial giving program, donors give a
priceless gift to a loved one as well as to current and future generations. Memorial gifts
to the parks can be made through a number of programs, including tree planting,
commemorative benches, and bike rack dedication programs.
Revocable Deferred Benefits
Revocable deferred benefits are another giving method that involve a promise by a donor
to make a gift in the future to an organization and may be revoked at any time prior to the
donor's death. The donor does not enjoy the benefit of a charitable income tax deduction
when the expectancy provision is created because there is no transfer of value during the
donor's life. The advantages are a substantial commitment when the donor no longer
needs the gift, a tax avoidance to the heirs of the estate and peace of mind. The most
common types of expectancies are bequests, retirement plans and IRA designations, and
life insurance designations.
A bequest is a provision in a will directing that specific assets, or a percentage of the
estate, be transferred to a designated tax exempt cause or charity at the donor's death.
Bequests appeal to donors because they are easy to understand, the assets remain with the
donor throughout their life and the value is conveyed when the donor no longer needs it.
Nonprofit organizations like bequests because they are easy to explain, require very little
cost to promote, and once in place are rarely revoked.
Bequests should be suggested to an organization's entire constituency since they can be
gifted by anyone for any amount. Ensure that the concept of planned giving and sample
will language are regularly included in your organization's communications with your
constituency. Standard language for some typical bequests to National Park Service areas is
If a donor wishes to make an unrestricted bequest to a National Park Service area, the
language in the will could be:
"Upon my death, my [Executor(s)/Trustee(s)] shall distribute [$ amount, specific items,
assets or residue of the estate] to the National Park Service, a tax-exempt United States
agency for the support of programs and projects in _______________ National Park
For a restricted bequest, the wording could be:
"Upon my death, my [Executor(s)/Trustee(s)] shall distribute [$ amount, or specific
items, assets, or residue of the estate] to the National Park Service, a tax-exempt United
States agency for the _____[name a park project(s) or program(s) ]________ in
_____________ National Park (Monument/Battlefield/etc.)."
A third option would be for the donor to make the gift to the primary park non-profit tax
exempt organization (e.g. Friends of Great Smoky National Park, Blue Ridge Parkway
Foundation, or National Park Foundation/National Park Trust who can also manage
restricted accounts for parks) for a specific park or park program with the following
"Upon my death my [Executor(s), Trustee(s)] shall distribute [$ amount, specific items,
assets, or residue of estate] to the ______________[Primary Park NonProfit Tax Exempt
Organization, National Park Foundation or National Park Trust], a charitable and nonprofit
corporation, or its successor, to establish a restricted fund for the support of
____[general operations, or specific project/facility/program] in _______________
National Park (Monument/Battlefield/Parkway/National Seashore, etc.)."
An existing will can be amended with the below suggested language as a codicil or
addition. Depending upon the state in which the donor resides, a codicil may need to be
executed just like the will. Check with local financial advisors, or the state Bar
Association for the applicable procedures.
"I hereby notify, confirm and approve my last will and testament of ____ 19 ____ with
the following modification:
My [Executor(s),/Trustee(s)] shall distribute ___[$ amount, specific items, assets, or
residue of estate]__ to the National Park Service, a tax-exempt United States agency, for
the __[general operations, or specific project/facility/program]___ in ____________
National Park (Monument/Battlefield/Parkway/National Seashore, etc.)."
While there are a number of do-it-yourself guidebooks on preparing wills, it is preferable to
have a will properly drawn up by a lawyer. This is especially true where substantial assets
are involved, or where there is a possibility the will could be challenged in court.
Gifts of will can also be earmarked as a percentage of a total estate, where gifts adjusts with
changes in the size of your estate. Gifts can also be made as a residue or specific percentage
of the residue of your estate - after specific gifts to loved ones have been made, a donor can
designate that the entire residue or percentage of the remainder shall go to one or more
Borrowing a lesson from hospitals and universities, some park and recreation agencies have
used wills clinics to encourage planned gifts. Click here for more information on the
types of wills clinics and
Planned gifts can also be encouraged through money management firms that offer wealth
management and estate planning seminars. Financial advisors can use park examples in
their seminars to market the concept of bequests to national parks and target professionals.
Retirement Plans and IRAs
For many individuals, retirement plan assets represent the single largest asset in their
portfolios. Like a bequest, it is easy to understand and implement. This gifting
opportunity is simple and involves obtaining a beneficiary designation form from the
retirement plan administrator and naming a park or its friends group as the entire, or
partial, beneficiary of the retirement plan assets upon the owner's death. A donor may
achieve significant income and estate tax savings by naming a friends group or other non15
profit organization as the beneficiary of the retirement plan assets, with a tax savings as
much as 75 cents on the dollar.
Life insurance policies are a common way to provide for the security of an individual's
family. But if that security is already adequately provided, or is no longer needed for any
other reason, the policy may be easily changed to a designated park or park partner as the
beneficiary on a beneficiary designation form. If the annual premiums continue to be paid
by the donor, they are tax deductible as a charitable contribution. The proceeds, when
realized on the death of the donor, are removed as a taxable item from the estate.
Pooled Income Fund
Pooled income funds allow a donor to transfer assets (usually appreciated securities) to an
organization which "pools" and invests these assets with other gifts. The donor receives
income from the investment in proportion to their contribution. On the death of the donor,
their share of the fund passes to the organization. The management of pooled income funds
should be left to experienced money managers. As with trusts, the National Park Service
should only be involved with pooled income funds as the ultimate beneficiary.
Irrevocable Deferred Gifts
Irrevocable deferred gifts are transfers of cash or property not available for the
organization's use until a later date. Although the gift is complete, thereby entitling the
donor to a current charitable income tax deduction, the funds will not be available to the
park or friends group until the donor's death or the expiration of a specific term of year.
The most prevalent types of deferred gift arrangements are charitable gift annuities and
charitable remainder trusts.
Charitable Gift Annuity
A charitable gift annuity is a contract between the donor and a nonprofit organization
whereby the donor makes an irrevocable transfer of cash or property to the nonprofit
organization, which in return agrees to pay a fixed amount of money each year for the
lifetime of one or two individuals. The payout rate will depend on the number of
annuitants and their ages. The annuitants have the option to defer receiving their annuity
payments until some future date. A park partner can be named as a recipient of a
charitable gift annuity. The park cannot be named as a recipient because once the cash or
property is deposited into a federal account, the NPS does not have a mechanism to pay
out annuity installments to the donor.
Charitable gift annuities are popular among nonprofit organizations because they are easy
to explain to donors and require minimal administrative time and expense to implement.
Charitable gift annuities are attractive to donors who are interested in making a gift to
charity but are unable to make a current outright gift-they require an additional stream
of income for their lifetime in return for their gift.
Since most states regulate charitable gift annuities, it is important to become familiar with
state restrictions, regulations, and reporting requirements as they pertain to charitable gift
annuities before starting a program. The organization should review not only state
requirements where they are located but also requirements in the state where the donor
Charitable Remainder Trust
Through a charitable remainder trust, a donor gives assets (cash, appreciated securities and
or property) to a trustee who manages the assets in the trust. The donor and/or anyone they
name as a beneficiary receives an annual income from the trust, based either on a percentage
of the value of the trust (unitrust), or on a fixed dollar amount (annuity trust), for a term not
to exceed 20 years. On the death of the donor and/or other beneficiaries, or at the end of the
term, the assets remaining in the trust go to the designated organization. Charitable
remainder trusts offer income tax as well as estate tax benefits to the donor, the value
depending on the conditions placed on the trust and the age of the donor and beneficiaries.
The IRS states that at a very minimum, the trust must distribute at least 5% of the net fair
market value of its assets. If the donor or beneficiaries don't need the income one year,
they may elect to defer income through a "makeup provision". However, the trust's net
distributions must eventually equal 5% to be considered valid by the IRS. Most charitable
remainder trusts have payout percentages ranging from 5% to 10%, depending on the
number of income beneficiaries and their ages. Keep in mind that the higher the payout
percentage, the lower a donor's income tax deduction. Organizations that serve as
trustees can determine the payout percentage offered for each particular trust.
Park units should not become involved with charitable remainder trusts except as the
designated charitable beneficiary. The negotiation and management of a trust involves
special financial management skills and resources. Most cities and some countries have
Community Foundations that are willing to serve as the trust manager for parks or their
partner organization. Local banks and other financial institutions have trust departments that
can work with the donor in establishing a charitable trust to benefit a park. The National
Parks Foundation and the National Park Trust (part of the National Parks and Conservation
Association) can also serve as a negotiator and money manager on behalf of your park.
For more information on how wills and other instruments are used and established, consult:
- Community Foundation which is usually city, county or regionally based
- Local attorneys, bank trust officers, accountants, and other financial advisors
- The National Park Foundation, 1202 Eye St., NW, Suite
550 B. Washington, DC, phone: 202-354-6460
- The National Park Trust, 51 Monroe St., Ste. 110, Rockville,
MD, phone: 301-279-7275