All endowments are professionally managed for both growth and income. In your personal financial planning, you may gain various tax and income benefits using one or more giving options to establish or add to an endowment. Here is a brief description of some of the methods:
Direct Gifts of Cash or Property. Endowments may be established with direct gifts of cash or other property with a value of $25,000 or more. Pledge terms of five years or less will be fully endowed upon attaining the $25,000 level. Examples of property gifts include appreciated stocks, bonds, commercial or residential property, and farmland.
Deferred Giving Methods. Gifts used to establish endowments can also be arranged through a variety of "deferred" giving methods. Even though funding is deferred until sometime in the future, all necessary agreements are prepared today, in exact accordance with the donor's wishes. Deferred gifts include charitable income arrangements, testamentary provisions, life estates, and life insurance.
Charitable Remainders. Endowments are sometimes funded with the charitable remainder of income arrangements such as a gift annuity. When the income obligation to the donors or other designated beneficiaries has ended, the charitable remainder may be designated to fund an endowment.
Will & Living Trusts. Testamentary gifts are an easy option for establishing a named endowment. The wording in a will or living trust can be simple, since all necessary language regarding administration of an endowment can be contained in a separate named endowment agreement. This way, if changes ever become necessary, donors avoid the burden and additional costs of making changes or adding codicils or amendments to the will. The Holy Rosary Healthcare Foundation staff is available to assist in developing the proper wording for the bequest.
Life Estates. Life estate arrangements offer benefits similar to testamentary bequests with the added benefit of allowing the donors to enjoy tax advantages during their lifetime. This unique estate planning method applies to gifts of a residence or farmland and, as with other deferred arrangements, may be used to fund a named endowment.
Life Insurance. For some members of our donor family, life insurance can be an economical way to fund a named endowment within the Foundation. For example, donors may contribute paid-up life insurance policies for which they no longer have use, most often because family needs and priorities have changed.
The reasons for establishing or contributing to an endowment within the Holy Rosary Healthcare Foundation are as varied as the projects they support.
Millie & Ken Hom Nursing Scholarship Endowment
This endowment scholarship program was established in 2005 by Mr. Ken Hom to honor his late wife, Millie, a true pioneer for nursing education. Each year, a $2500 scholarship is awarded to an individual with eastern Montana ties who is pursuing his/her nursing education. Any donor who is interested in assisting with nursing scholarships may contribute any size gift to this endowment. As the endowment grows, the number and size of scholarships will also increase.
Greatest Need Endowment
This endowment program is established to support a number of worthy health-related projects at Holy Rosary Healthcare and across eastern Montana. The Foundation Board of Trustees awards grants annually to projects showing the most promise for making a meaningful difference in enhancing the health of our region. As the endowment grows, the number and size of grants awarded also increases.
Can't fund an entire endowment, but want to make a difference?
If you have a desire to have a long-term impact on projects through the Holy Rosary Healthcare Foundation, contributing to an established endowment is a wonderful way to get involved. With this program, you don't need to fund an entire project, scholarship or other initiative through the Holy Rosary Healthcare Foundation in order to make a difference. Your gift is added to the established endowment.
Significant donor benefits with endowed giving through the Montana Charitable Endowment Tax Credit
Originally enacted in 1997, the Montana Income Tax Credit for Endowed Philanthropy encourages charitable giving to qualified endowments by offering incentives to Montana taxpayers.
An endowment is a fund held by a tax-exempt organization where the principal of the fund is not wholly expendable. Only the interest and appreciation earned in an endowment fund can be used for current operations.
Endowments are established to help Montanans meet long-term needs in our communities for education, social services, health care, economic development, the arts and more.
Planned Gift - Provides a credit against state income tax liability in the amount of 40% of the present value of any planned gift to a permanent endowment of a Montana charity up to a maximum amount of $10,000 per year per taxpayer. [Applies to individual or business entity taxpayers.]
Outright Gift - Provides a credit against state income tax liability in the amount of 20% of the present value of any outright gift by a business entity to a permanent endowment of a Montana charity up to a maximum of $10,000 per year per taxpayer. [Applies to corporations, small business corporations, partnership or limited liability company taxpayers.]
Frequently Asked Questions regarding the Montana Charitable Endowment Tax Credit
Q. What is the Montana Tax Credit for Charitable Endowment gifts?
A. Through this unique tax credit incentive, a Montana taxpayer receives a reduction on the taxes s/he owes - up to $10,000 per year - by making a qualified charitable contribution to a qualified endowment.
Q. Who can take advantage of Montana's Endowment Tax Credit?
A. Any person, business, or organization that pays income taxes to the State of Montana.
Q. How can I take advantage of this Tax Credit?
A. You can claim this Tax Credit against your Montana income tax liability.
- An individual taxpayer does so by making a gift of cash or property (in the form of a planned gift) to a qualified endowment to benefit a tax-exempt organization.
- A business or organization likewise does so by making a cash gift or a planned gift to a qualified endowment to benefit a tax-exempt organization.
PLEASE NOTE: To be sure that your contribution is a qualified one made to a qualified endowment and that you are able to take full advantage of this Tax Credit, you should consult a professional financial advisor or a representative of the nonprofit organization to which you are making your gift. Holy Rosary Healthcare Foundation is an approved nonprofit organization and has qualified endowments that meet this criteria.
Q. What is a qualified endowment?
A. A qualified endowment is a permanent, irrevocable fund that is held by a Montana incorporated or established organization that is a tax-exempt organization or is a bank or trust company that is holding the fund on behalf of a tax-exempt organization. The affordable housing revolving loan account is considered a qualified endowment.
Q. How can my business take advantage of the Montana Endowment Tax Credit?
A. By making a contribution to the qualified endowment of a nonprofit organization or by establishing a planned gift that will create a qualified endowment. To be sure that your contribution is a qualified one made to a qualified endowment and that you are able to take full advantage of this Tax Credit, you should consult a professional financial advisor or a representative of the nonprofit organization to which you are making your gift.
Q. How much do I have to be able to contribute in order to qualify for the Tax Credit?
A. The law governing tax credits to qualified endowments doesn't specify a minimum amount to qualify. Some nonprofit organizations may have their own policies on gift amounts.
Q. I already give an outright gift to a nonprofit organization. What are the advantages of giving to a qualified endowment instead?
A. Consider doing both. The outright gift supports current fund activities and the endowment gift will help ensure the nonprofit organization's sustainability.
Q. What is the maximum tax credit I can claim through the Montana Endowment Tax Credit?
A. A taxpayer is allowed a tax credit in an amount equal to 40% of the present value of the aggregate amount of the charitable gift portion of a planned gift made by the taxpayer during the year to any qualified endowment. The maximum credit that may be claimed by a taxpayer for contributions made from all sources in a year is $10,000 per individual or $20,000 per couple. The credit may not exceed the taxpayer's income tax liability.
Q. What is a planned gift?
A. A "planned gift" is an irrevocable contribution to a permanent endowment held by a tax-exempt organization, or for a tax-exempt organization, when the contribution uses any of the following techniques that are authorized under the Internal Revenue Code:
- charitable remainder unitrusts
- charitable remainder annuity trusts
- pooled income fund trusts
- charitable lead unitrusts qualifying
- charitable lead annuity trusts qualifying
- charitable gift annuities
- deferred charitable gift annuities
- charitable life estate agreements
- paid-in-full life insurance policies