PLANNED GIVING

Office of University Advancement
284 Rose Administration
Box 870122
Tuscaloosa, AL 35487
phone: (205) 348-4767
toll-free: (888) 875-4438
fax: (205) 348-8871
mailbox@advancement.ua.edu

The Choice of What to Give

Cash: A Popular Gift

The University of Alabama commonly receives gifts in the form of cash and checks. Cash gifts are convenient for many people and are easily recorded through canceled checks and receipts. Remember it is important to save all receipts to ensure maximum tax savings.

Non-Cash Gifts: Enjoy More Savings

University supporters often choose to make their gifts in forms other than cash. Examples include:

Securities (stocks, bonds, mutual funds)
Real estate
Retirement plans
Life Insurance Policies
Other items of value (jewelry, paintings, collections, antiques, automobiles, etc.)

After considering the properties you own, you may find that giving something other than cash is an appealing alternative. Giving non-cash property enables you to help UA while conserving cash for other uses and enjoying what may be greater tax savings than those provided by gifts of cash.

Giving Appreciated Property

If you have non-cash property, such as stocks and mutual funds, that has grown in value (appreciated) and been held long-term (currently more than one year), you can generally enjoy greater tax savings from giving such property than from giving an equivalent amount of cash. That's because a gift of appreciated property lets you bypass capital gain tax which could be due if you sold the asset. You are also entitled to a charitable deduction based on the property's current value, including the "paper profits" you have earned since you have owned it.

For example: Barbara is in the highest federal income tax bracket. She wants to give $5,000 to The University of Alabama. Should she give stocks, bonds, or mutual funds worth that amount, or sell them and give the cash from the sale?

If she gives $5,000 cash, she'll receive a deduction for $5,000, saving her $1,750 in taxes. If she gives stock valued at $5,000 that was purchased years ago for $1,000, she will achieve the following results:

A charitable income tax deduction for $5,000, saving her $1,750 in taxes (just like a cash gift), plus
Avoidance of capital gain tax on the $4,000 increase in value — a $600 savings (current 15% capital gain tax rate x $4,000)

All told, the after-tax cost of Barbara's gift of stock worth $5,000 is just $2,650. Comparing that to the $3,250 after-tax cost of giving cash, she decides to give the stock and thus make the same gift to the University at a savings of more than 26% more than the after-tax cost of the same gift in the form of cash.

Giving Property that has Declined in Value

If you have stock or other property that has decreased in value, you will normally save more in taxes by selling them and giving the proceeds. You may then be able to claim a capital loss on your tax return. You can also deduct the cash proceeds you give as a charitable gift. In doing so you may enjoy tax deductions that amount to more than the current value of the asset, while making a meaningful gift to The University of Alabama.

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