Glossary of Planned Giving Terms

As used in planned giving, refers to the factors used to calculate the value of lifetime payments to individuals or organizations.

Appreciated Property
Securities, artwork, real estate, or any other property that has risen in value since the donor acquired it (by purchase or inheritance). Generally, appreciated property may be donated at full fair market value with no capital gains cost.

A contractual arrangement to pay a fixed sum of money to an individual(s) at regular intervals. The charitable gift annuity is a gift plan that secures a fixed lifetime income to the donor and/or another individual.

Adjusted Gross Income (AGI)
The sum of an individual’s taxable income for the year – the total at the bottom of the first page of the 1040. Individuals may deduct charitable cash contributions up to 50% of AGI; they may deduct gifts of appreciated securities and appreciated property up to 30% of AGI.

An assessment of the value of a piece of property. Donors contributing real or tangible personal property (art, books, collectibles, etc.) to charity must secure an independent appraisal of the property to substantiate the value they claim as a charitable deduction.

The donor’s purchase price for an asset. Mrs. Quinn bought stock for $100 per share and sold it for $175. Her cost basis in the stock is $100 per share.

The recipient of a bequest from a will or a distribution from a trust.

A transfer of property to an individual or organization under a will.

Capital Gains Tax
A federal tax on the appreciation in an asset between its purchase and sale prices.

Cost Basis
See Basis, above.

Endowment Fund
The permanently held capital of a non-profit used to support ongoing projects and meet institutional opportunities.

Estate Tax
A federal tax on the value of the property held by an individual at death (paid by the estate, not the recipients of the bequests). In contrast, state inheritance tax is applied to the value of bequests passing to beneficiary/ies; it is also paid by the estate before the distributions are made.

The person named in a will to administer the estate.

Fair Market Value
The price that an object of property would bring on the open market.

The individual transferring property into a trust.

Income Interest
In a trust, the right to receive income payments for lifetime or a term of years not to exceed twenty.

K-1 (also W-2)
The IRS forms that charities send to their life income gift participants noting the income paid them by their gift plans during the tax year.

Life Income Gift
A planned gift that pays income to the donor and/or other beneficiaries for lifetime, then distributes the remainder to charity.

Personal Property
Securities, artwork, business interests and other items of property – as opposed to real property, land and the structures built on it.

In a trust, the portion of the principal left after the income interest has been paid to the beneficiary(s). A charitable remainder trust pays income to the donor or other individuals and then passes its remainder to the charity.

A legal term for the individual or organization who receives the trust principal after the income interest has been satisfied.

The individual making the will.

A transfer of property by the grantor to the care of an individual or organization, for the benefit of the grantor or others.

An individual or organization carrying out the wishes of the person who established the trust, paying income to the beneficiary(s) and preserving the principal for ultimate distribution.