Everyone likes to end on a high note. For some, that means naming a charity in their estate plans, whether a specific bequest ($2,000 to the synagogue), a contingent remainder (all to family, then the Humane Society), an endowed gift (a perpetual scholarship), or a restricted gift (cancer research, pancreatic only).
Successful bequests take work. First, can you identify the charity? Can a stranger? Years from now, how will anyone know they’ve found the one you meant? Names and addresses change. An employer identification number is good, but a Secretary of State certificate of organization is better. For public entities, e.g., universities or medical schools, precise reference to the board of directors, school, or department may be necessary.
Second, did you identify the right entity? Many charities have separate operating and endowment organizations. Do you want to perpetuate a loved one’s memory with a named gift that will outlive us all? Or would you prefer to instead fund your alma mater’s toilet paper and floor wax needs for three days?
Third, will the charity accept the gift? Nobody wants your timeshares, flooded home or Section 8 rental property. Cash gifts may be rejected if they come with too many strings. Endowed or restricted gifts should be coordinated with a development office. A written agreement between you and the charity is sometimes required. If not, your Will typically must use approved language referencing an existing program. Major charities are happy to educate donors and feed their lawyers the right language.
Fourth, is a deduction available? IRS Publication 78 lists organizations eligible to receive tax-deductible charitable contributions. Visit https://apps.irs.gov/app/eos/ to search. If your charity isn’t listed, it may be registered under a different name. Group exemptions are another matter. Religious denominations often register the national office but not local churches. If Publication 78 doesn’t list the church you attend, ask for a copy of their group exemption letter.
Direct donations to foreign charities are not deductible, but there are alternatives. Deductible donations to U.S. “friends” organizations (American Friends of the Paris Opera) and U.S. registered international donor-advised funds (United Way International) may be forwarded to qualified foreign charities. However, if the foreign charity no longer meets the criteria at your death, the domestic charity will redirect, not refund, the gift.
This article was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.