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: The act of gifting personal property or money through the provisions of a will or another estate planning instrument. 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: The simplest life income gift arrangement, a charitable gift annuity pays the donor a fixed income for life in exchange for a gift of cash or stock. To establish a charitable gift annuity at Georgetown, for instance, you would make a gift of $25,000 or more, taking an income tax deduction in the year your gift is made. Georgetown, in turn, would pay one or two beneficiaries designated by you a fixed income for life. Ultimately, the balance of your original gift would be applied to the purpose you have chosen at Georgetown. Charitable gift annuities can begin paying immediately upon establishment or can be deferred (see deferred charitable gift annuity below) or left flexible. Learn more »

 

Charitable lead trust: An irrevocable trust designed to provide financial support to one or more charities for a period of time, with the remaining assets eventually going to family members (or other beneficiaries) with reduced or no estate and gift tax. Charitable lead trusts can be funded during the lifetime of the individual creating the trust or by will and are often considered to be the inverse of a charitable remainder trust. Learn more »

 

Charitable remainder trust: An irrevocable trust that generates a potential income stream for the donor, or other beneficiaries, with the remainder of the donated assets going to a charity or charities. Charitable remainder annuity trusts distribute a fixed annuity amount each year, and additional contributions are not allowed. Charitable remainder unitrusts distribute a fixed percentage based on the balance of the trust assets (revalued annually), and additional contributions are permitted. 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). 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.

 

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 on an individual’s right to transfer property at death. It consists of an accounting of everything an individual owns or has certain interests in at the date of death, based on the items’ fair market value.

 

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: A reduction of income that is able to be taxed.

 

IRA rollover gift: (Also called a qualified charitable distribution.) Donors 70 ½ or older can direct up to $100,000 each year to charity from a qualified IRA. The distribution is tax-free and counts toward the donor’s required minimum distribution—with the added bonus of providing a gift to charity. Learn more »

 

Life income gift: Gifts that provide philanthropic support while also generating a charitable income tax deduction and an income stream for a donor or loved ones.

 

Living trust: A written agreement, established during an individual’s lifetime, designating responsibility for the management of a person’s assets. A trust involves three parties: the trust’s creator, the trustee(s) who agree to manage that individual’s assets as directed by the terms of the trust, and the beneficiaries.

 

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, made in lifetime or at death as part of a donor’s overall financial and/or estate planning. In contrast, gifts to an annual fund are made from a donor’s discretionary income; while they may be budgeted for, they are not “planned.”

 

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.

 

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.