Community Foundation for Oak Park

Donations

The Community Foundation subscribes to the Donor Bill of Rights.

Of course, the Community Foundation accepts simple cash donations. No donation is too small. And all donations qualify as itemized deductions on Schedule A when filing federal and California tax returns. Through an established relationship with the California Community Foundation, a long-established foundation with $1,300,000,000 in resources, we can also handle donations of stocks, real estate, closely-held business interests, and other non-cash assets.

You may donate to the Community Foundation through the Web.

Structured Donations

Through that relationship with the California Community Foundation, our Community Foundation will also cooperate with donors who wish to use structured donations — either cash or appreciated non-cash assets — as part of their strategy to reduce income and estate taxes.

• A single donation — with an immediate charitable deduction — can establish a life annuity that will pay you an income for the rest of your life. The annuity can start immediately, or it can be deferred as part of your retirement plans. Optionally, the income can be paid jointly to you and your spouse (or some other person) as long as either of you lives. After you (and your joint recipient) die, the balance is paid into a donor-defined fund to endow your chosen charitable cause.
• A large IRA or other tax-deferred retirement savings plan can be heavily taxed on your death. However, making the Community Foundation the beneficiary of your IRA could avoid that penalty while securing 20 years of payments to your heirs and still leaving a balance for a donor-defined fund.
• With a life estate, you donate your home to the Community Foundation and receive an immediate charitable deduction. However, you also receive the right to continue living in your home for the rest of your life. After your death, your home is sold and used to create a donor-defined fund as you specified when you originally made the donation.
• A charitable lead trust also gives you an immediate deduction for your donation of cash or income-producing assets. The income is used by the Community Foundation through the rest of your lifetime. When your heirs reach a certain age, the trust is dissolved and paid to those heirs.
• Various forms of charitable remainder trusts involve a donation (with an immediate deduction) and income back to the donor. This significantly reduces income taxes (including capital gains taxes) and estate taxes while providing for retirement income and income to heirs. The balance remains to create a donor-defined fund.

Yes, you could create your own private family foundation. However, not only are there substantial setup costs, but the tax laws impose additional burdens — including a 2% federal excise tax on investment income. Further, the financial records of a private foundation become public, exposed to the whole world. Structured donations and our donor-defined funds avoid both the costs and publicity of a private foundation.

Anyone considering a structured donation or a donation of a non-cash asset for the purpose of reducing taxes should first consult a tax professional. Once a tax professional recommends the use of a special donation to a charity, please consider the Community Foundation for Oak Park.

Safety: While structured donations usually require only a single act by the donor, they require a long-term commitment by the charity. Our relationship with the California Community Foundation includes using the latter to administer our structured donations. Thus, our commitments are backed by $1,300,000,000 in resources held by a charity that has a history of more than 90 years of handling special donations and that has been licensed by the California Department of Insurance to underwrite annuities and similar products.

Efficiency: A structured donation is, of course, applied to charitable purposes. The Community Foundation for Oak Park operates entirely through unpaid volunteers. We own or rent no offices, operating out of the homes of our officers. Through our efficient, bureaucracy-free operation, we maximize the resources applied to your charitable goals.

Local Control: The Board of Trustees of the Community Foundation is selected entirely from residents of Oak Park. We understand our community and its needs. We can ensure that your charitable goals are met through our donor-defined funds program. However, for donor-defined funds, we do not restrict the geographical scope only to Oak Park.

Privacy: Unlike many other charities, the Community Foundation's privacy policy prohibits us from disclosing information about our donors except when forced to do so by law. We do not make commercial use of your name, address, phone number, amount donated, or any other information about you.

Costs

The California Community Foundation levies a 0.5% annual administrative fee on the principal of most structured donations but only after actually receiving the donation. Additionally, their banks levy annual trust or investment fees on the principal; depending on the type of structured donation, bank fees vary from 0.6% to 1.0%. From each structured donation, the California Community Foundation also recovers the actual costs of legal services and (for real estate and securities) transfers.

For donations involving life annuities, 0.5% is levied annually on the remaining principal. In addition, there are third-party investment and trust costs.

Until the California Community Foundation makes the donation available for use by the Community Foundation for Oak Park, we charge no fee for these structured donations. After a donation becomes available to us, the terms of our donor-defined funds then apply.

See our Contacts page if you wish to make a donation.

Employer-Based Donation Programs

The Community Foundation qualifies as the recipient of corporate matching-donation programs. Indeed, we have already received such donations, which multiple the value of the donor's gift. The Foundation has also been the beneficiary of donations made through employer payroll withholding programs, including a program where the withheld donations were initially directed to the United Way for subsequent distribution to the employee's intended charity.

Donations received through these employer-based programs can be directed to the Community Foundation's general fund, to a special fund (including a new donor-defined fund created specifically for that purpose), or to an activity committee. For further information, please contact the Foundation.

Donation Acknowledgements

The IRS will not accept your cancelled check as substantiation of a charitable cash donation of $250 or more claimed on your federal tax return. The Community Foundation acknowledges all such donations with a letter on Foundation stationery. Our letter contains all the information the IRS might need for you to substantiate your generosity.

Starting in 2007, a new federal law requires substantiation of all charitable donations, no matter how small. For amounts less than $250, canceled checks, check images returned by your bank, and receipts from charities will be sufficient. Diary entries, check registers, and copies of checks (e.g., carbonless copies from your checkbook) will not be sufficient. If you need a receipt for a donation of less than $250 to the Community Foundation or to one of our activity committees, please request it when you make your donation.

Claiming non-cash donations totaling more than $500 on your federal tax return requires that you file Form 8283. In some cases (primarily a non-cash donation with a claimed value of more than $5,000), you must have Form 8283 endorsed by the recipient charity. The Community Foundation will endorse a completed Form 8283, but we can neither complete the form for you nor endorse a blank Form 8283. If a non-cash donation is made to an activity committee, the Foundation's endorsement might be delayed while receipt of the donation is verified.

Donate a Car?

The Community Foundation has never accepted the donation of depreciated assets, especially automobiles. As reported by the California Attorney General, charities receive an average of less than a third of the money realized by selling donated automobiles; the used-car brokers receive two-thirds. Also, despite claims to the contrary, the Blue Book value of a donated automobile will often not be allowed by the IRS if the vehicle is sold for a lesser amount. (This also applies to other non-cash assets donated to charity.) Finally, because of tax fraud in some automobile donation programs, the IRS recently announced that claiming such a donation might trigger a tax audit.

Remember, if you donate a stock that has risen in price since you bought it, you may itemize a donation based on the stock's value at the time of the donation, even if you paid far less for it. (This places a special tax advantage on the donation of such stock. For details, see the excellent description presented by the Vanguard Group.) On the other hand, if you donate an automobile that is now worth less than what you paid when you bought it, you only get to itemize a donation based on the automobile's value at the time of the donation, even if you paid far more for it. And the value of the automobile is usually determined by the IRS according to its actual sales price after the donation.

• If tax-avoidance is your primary motivation for donating a car, don't! There are no taxes due on the sale of a car that is worth less than its cost. The taxes you save on other income will be less than the cash you could have realized by selling the car, even if you priced it low for a quick sale.
• If benefiting a chosen charity is your primary motivation for donating a car, don't! The charity will receive more if you sell the car cheaply and donate the net proceeds.

If you still think you might want to donate a car to charity, be careful. First read the section in IRS Publication 526 on donating cars, boats, and airplanes. Be aware of the following:

• To qualify as an itemized deduction on your tax return, you must pass ownership of the car to the charity and not to a broker, agent, or service.
• Various Blue Book price lists do not apply for determining the amount of an itemized deduction when donating a car that does not run.
• When a charity sells a donated automobile, it must report the net proceeds to the IRS. The donor's itemized deduction is limited to that amount.
• If the donation of a car is disallowed as a deduction by the IRS, the IRS might assess extra penalties as if an abusive tax shelter had been claimed.

Last updated 3 January 2008