Gift planning terms to know

 

1789 Scholarships: Named in honor of the year Georgetown was founded, these donor-funded scholarships are critical to fulfilling the university’s single highest philanthropic priority: ensuring access and affordability for all admitted undergraduate students. 1789 Scholarships include loan relief for students with the highest demonstrated financial need.

 

Annual fund: A designated fund for Georgetown’s different units and campuses, composed of restricted and unrestricted current use funds given by the philanthropic community. Examples of annual funds at Georgetown are the Georgetown Fund, the Law Annual Fund, and the Men’s Basketball Fund.

 

Annual giving: The act of giving expendable gifts to Georgetown every fiscal year; participation demonstrates the donor community’s collective engagement and commitment.

 

Appreciated securities: Investments that have increased in value from the time they were purchased, including publicly traded stock and mutual funds. Learn more »

 

Bequest: A provision in a will or trust that makes a gift of money, real estate, or personal property to an individual or charity. Bequests can be written as a specific amount or item, a percentage of an estate, or all or a percentage of the residue of the estate. Learn more »

 

Capital gains tax: A government tax on the profit made from selling property or investments. “Capital gain” is calculated as the total sale price minus the original cost.

 

Charitable gift annuity: A contract between a donor and a charity that pays an individual a fixed amount for life in exchange for an upfront gift of cash or appreciated securities. To create a charitable gift annuity at Georgetown, a donor makes a gift of $10,000 or more and then receives an income tax deduction in the year the gift is made. Georgetown, in turn, pays one or two beneficiaries a fixed amount for life. The amount left when the charitable gift annuity terminates becomes the gift to Georgetown for the purpose identified by the donor. Charitable gift annuities can begin making payments immediately or be deferred to a future date. Learn more »

 

Charitable lead trust: A creative way to pass assets to loved ones while reducing or eliminating gift or estate taxes and making a gift to charity. A charitable lead trust uses the assets that were initially contributed to the trust to make annual payments to a charity for a term of years (usually 10 to 20). At the end of the term, the remaining trust assets pass to the beneficiaries without passing through the donor’s estate. An added benefit of a charitable lead trust funded during a donor’s lifetime is that you will be able to see the impact of your gift at Georgetown. Charitable lead trust can also be created through a will or trust. Learn more »

 

Charitable remainder trust: An irrevocable trust that generates an income stream for beneficiaries for life or a term of years with the remainder going to charity when the trust terminates. Charitable remainder unitrusts distribute a fixed percentage based on the value of the trust assets (revalued annually) and additional contributions are permitted. Charitable remainder annuity trusts distribute a fixed amount each year, which is determined when the trust is funded. Trusts can be funded with cash, appreciated securities, real estate, or other assets and may provide significant tax or estate benefits. Learn more »

 

Complex asset: A non-publicly traded or other illiquid asset. This includes privately held business interests (e.g., private company stock, partnership interests, private equity, hedge fund interests, pre-IPO shares) and other non-publicly traded assets (e.g., restricted stock, commercial and residential real estate, artwork and collections, oil and gas royalty interests, patents, copyrights). Gifts of complex assets are subject to a review and approval process at the university. Learn more »

 

Current use gift: Also called an expendable gift. A contribution that may be expended in part or in full at any time by the university—for instance, gifts to annual funds.

 

Deferred charitable gift annuity: An appealing option for some donors who do not seek additional current income but are looking for a strategic way to increase future income. In establishing this type of gift annuity, you would choose a date in the future to receive the first payment; the deferral results in an increase in the annuity rate and an increased income tax deduction.

 

Donor-advised fund: A charitable giving account established at a public charity. A donor creates a donor-advised fund with cash or appreciated property and receives an immediate charitable income tax deduction for contributions made to the DAF. The funds are then invested for tax-free growth, and the donor can recommend grants to any IRS-qualified public charity. Donors can use their DAF to make gifts immediately or can use it as a “savings account” for future gifts, or name Georgetown as a remainder beneficiary of the fund.

 

Endowed faculty chair/professorship: Endowing a chair or professorship assures that the donor’s area of interest will be part of an institution in perpetuity. The endowed position, in turn, provides resources and prestige to attract and recognize outstanding faculty and research.

 

Endowed fund: A gift that is invested in perpetuity, in which the earnings from the invested assets provide permanent financial support, often for a specific purpose directed by the donor.

 

Endowment: The permanent capital of a university—an aggregation of assets invested to support its educational mission in perpetuity.

 

Estate tax: A tax levied on the value of the estate of a deceased person before distribution to the heirs. Estate tax may be assessed at the federal and state levels..

 

Fair market value: The price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.

 

Fellowship: A gift that provides support for a graduate or postdoctoral student.

 

The Georgetown Fund: The beneficiary of unrestricted gifts through Georgetown’s annual giving program. Georgetown directs 100% of Georgetown Fund gifts to 1789 Scholarships for undergraduate students.

 

Gift agreement: Outlines the purpose, form, schedule, and administration of gifts.

 

Income tax deduction: An amount that you can deduct from your taxable income to lower the amount of taxes owed.

 

IRA qualified charitable distribution (QCD): Donors who are age 70.5 or older can direct up to $108,000* each year from a qualified IRA to charity. QCDs avoid income tax and count toward the donor’s annual required minimum distribution (if applicable) with the added bonus of providing a gift to charity. *Indexed annually for inflation. Learn more »

 

Life income gift: An arrangement that provides income for life or a fixed term of years to beneficiaries while also leaving a gift for charity in the future. Life income gifts may generate a charitable deduction and avoid capital gains (if funded with appreciated securities or real estate).

 

Living trust: An estate planning option created during your life that allows you to place your assets in trust while continuing to use and control them. Living trusts can be revocable or irrevocable, and avoid probate.

 

Outright gift: A gift transferred immediately from a donor to an organization. This category can include cash, securities, real estate, tangible personal property, matching gifts, and gifts-in-kind.

 

Planned gift: A gift to charity made during lifetime or at death as part of a donor’s overall financial and/or estate planning. Planned gifts often require more planning than a traditional gift by using a more complicated gift arrangement and/or involving a complex asset often realizing additional tax benefits.

 

Pledge: A promise to make future contributions to an organization. For example, some donors make multi-year pledges promising to give a specific amount spread across several years.

 

Principal: The amount donated to fund an endowment; the principal is invested and generates income in perpetuity.

 

Restricted fund: A gift that is restricted in its use by the donor.

 

Scholarship: An award of financial support for a student.

Unrestricted fund: A gift that may be used for any purpose and usually goes toward operating expenses or a particular project of the university’s choosing. Unrestricted gifts allow Georgetown to direct support where it’s needed most.

 

This is not intended as, and should not be considered as, legal, tax, financial, or other professional advice. Georgetown strongly encourages you to seek independent professional advice to find the right giving strategy for your goals and circumstances.