Planned Giving

One of the easiest ways to make a planned gift is to include Rockford Art Museum in your will or trust. You can arrange for the museum to receive a specific dollar amount or a percentage of the remainder of your estate (a residuary bequest).

Sample Language to share with your financial planner or attorney—

To Make an Unrestricted Bequest
“I give (the sum of _____ dollars), or (all or % of the residuary of my estate) to Rockford Art Museum, 711 N Main Street, Rockford, Illinois, in support of the museum’s general purposes.”

To Make a Bequest to the Museum’s General Endowment
“I give (the sum of _____ dollars), or (all or % of the residuary of my estate) toto Rockford Art Museum, 711 N Main Street, Rockford, Illinois, to the museum endowment.”

Even though the 2018 Tax Law made significant changes to the tax code, there continues to be many different strategies for making charitable contributions to the Rockford Art Museum. One that is gaining popularity and is particularly appealing for those who have an Individual Retirement Account and are over age 70.5, is the Qualified Charitable Distribution concept which can result in a wonderful tax savings strategy.

Rather than writing a check directly to Rockford Art Museum you can simply direct any amount (up to $105,000 per year) out of your IRA via a direct transfer from the IRA custodian to Rockford Art Museum. Any amounts you direct count towards the annual required minimum distribution (RMD) amount and you will not be required to include in income like you normally would. Thus you avoid paying federal income tax on this distribution. This has the impact of reducing your Adjusted Gross Income, which has the potential of creating additional tax benefits as well (less Medicare premiums, more deductible medical expenses, potentially less social security subject to taxation, qualifying for the local county real estate freeze if there is one, reducing your state income tax obligation, etc.). Since you do not have to include these distributions to charity in income, you also don’t get the Schedule A charitable deduction – you can’t have it both ways, but the benefits of not including in income typically outweighs the charitable deduction. For those of you who take the Standard Deduction and do not itemize, you receive no tax benefit from your charitable donation. Recall the 2018 Tax Act substantially increased the Standard Deduction for all taxpayers.

Another important note is this charitable strategy can also be utilized from Inherited IRAs, assuming the inherited IRA account owner satisfies the age requirement of 70.5 or over.

Donating stock, ETF, or mutual fund shares to Rockford Art Museum allows for a charitable deduction, while also eliminating capital gain and associated capital gains tax from the sale of the security. An ideal security for this strategy is one that is highly appreciated and/or has an unknown basis. To help maximize the tax benefits, the donor should transfer the appreciated securities directly to Rockford Art Museum and should not sell the securities first to avoid paying long-term capital gain taxes (up to 23.8% federal dependent on your taxable income + potential state tax). Another consideration to maximize the tax benefits is to the time the donation in a higher than normal income year to help lower your taxable income for that year.

Deductions on donations of long-term appreciated securities are limited to 30% of your adjusted gross income. If you donate more than 30% of your adjusted gross income in a single year, you can carry your deduction forward to subsequent years. The IRS allows a five-year carryforward period for the deduction. Any unused deduction is lost at the end of five years, or upon death. It generally does not make sense to donate short-term appreciated securities, as your deduction will be limited to the security’s cost basis.

It is best practice to initiate the transfer process of appreciated securities to charity by mid-November to ensure that the donation is credited to the given tax year. Keep in mind that not all funds are able to transfer and that the receiving firm may have requirements that prohibit certain transfers.

Please click the link below for the Stock Transfer Instruction Form for appreciated security donations and Charles Schwab DTC and transfer details. Rockford Art Museum Stock Transfer Instructions