Wycliffe Foundation Blog

By Steve Davis, Director of Gift Planning, Wycliffe Foundation

Many people today are struggling. They are struggling with the decline in value of some of their assets, such as certificates of deposit earning 1 to 2% interest, or a decline in the market value of their portfolio and decreasing dividends.

Additionally, many individuals face uncertainty about what their future needs will be. They may hesitate to use some of their assets to make a gift that will impact the work of Bible translation, for fear that additional income may be needed at some future point. So they wait.

Someone once said that “waiting will cost you,” and that is often true. If you wait to buy a car, it may cost you more. However, in exchange for some flexibility and a willingness to wait, a flexible deferred  charitable gift annuity can actually provide you with more income for the future.

The concept

A charitable gift annuity (CGA) is one of the most popular gift-planning tools people use to support Bible translation and serves as an agreement between Wycliffe Foundation and a financial partner.

With a CGA, you can make a gift of cash or marketable securities and receive fixed payments for life at attractive rates by transferring some type of asset to Wycliffe. In return, you receive an income stream for the rest of your life, or two lives in some cases. At the end of those lives, the remainder of the gift will support the work of Bible translation.

A deferred gift annuity defers the income stream until some point in the future. The value in waiting results in a larger payment—one that is fixed and won’t be influenced by market conditions.

The flexible deferred charitable gift annuity simply adds one more component: In exchange for a degree of flexibility, you can select the payment to start at one rate and increase that to higher fixed rate at a later date. In essence, you can defer your payment twice, providing a larger annuity payment and more income over a lifetime than if it was established now.

 The benefits

• Gift and tax deduction
• Tax-free income
• Value grows tax-free till payout
• Flexibility
• Gift to Wycliffe now
• Secure source of future income

 The impact

• Peace of mind
• Impact future of Bible translation
• Replace your giving upon death
• Taxes reduced or eliminated

Here’s an illustration of the concept:

Mr. and Mrs. John Smith, ages 65 and 64, would like to have the option of establishing a future retirement income. They are uncertain about when they will need this. They would like to begin to lock in a fixed rate now, just in case the value of their assets declines.

 The Smiths decide to transfer $100,000 cash to Wycliffe Foundation to establish a flexible deferred charitable gift annuity. They select the target date as John’s 70^th birthday. The deferred rate is 6.4%, and their payment will be $6,400 per year.

 As a result, the Smiths will receive a charitable income tax deduction of $28,972.16. Their annuity contract allows them the flexibility of starting to receive their payments anytime between ages 70 and 80. If they decide to wait until John is 80, their rate will be 11.4% and their annual payment will be $11,400. If they select the latter option, their tax-free income may increase as well.

By Jeff Lydenberg, Guest columnist

Many of you are supporting aging parents, dependent children, or Wycliffe missionaries. There is a tax-efficient way to continue to meet financial obligations to those and others so important to you, and impact the work of Bible translation.

A charitable gift annuity (CGA) is a simple contract; in exchange for a contribution of cash or an appreciated asset, Wycliffe Foundation commits to making fixed payments for life to one or two named beneficiaries. The amount of those fixed payments is based on the age of the annuitants—the older the annuitant is, the higher the payments will be.

You can establish a CGA for the benefit of a relative, friend or Wycliffe missionary. If you establish a gift annuity and name any of these as a beneficiary, their payments will be partially tax-free.

Wycliffe Foundation invests and manages the contribution, and when the last annuitant has died, the remainder of the contribution is used to advance the mission of Bible translation, linguistics training, and literacy efforts. A gift annuity is safe and secure legal contract backed by the full resources of Wycliffe.

As the donor, you are entitled to a charitable deduction for the gift portion of the contribution. Payments to the annuitant are partially tax-free, and if long-term appreciated securities are used to fund the annuity, tax on any capital gain is reduced. You may also be able to avoid any gift tax consequences.

Editor’s note: Jeff Lydenberg serves as vice president of consulting for PG Calc, and works with nonprofit organizations on gift-planning needs. He is a frequent speaker at local, regional and national planned-giving events and is a member of the Greater Cincinnati Planned Giving Council.

Thirty years ago, Robert Bugenhagen set off on an adventure. As a trained linguist, Robert planned to help translate Scripture in Papua New Guinea, a nation where more than 700 languages are spoken.

At the time, Robert’s parents, Roger and Shirley, of Annapolis, Md., were skeptical of their son’s plans. They thought he would probably return to the U.S. in a few years, perhaps disillusioned by the enormous task he had undertaken.

Robert stayed in Papua New Guinea much longer than his parents anticipated. It was where he met his wife, a Finnish nurse named Salme. The couple, based on Umboi Island, has since helped translate the Bible into two minority languages and is now working on a third.

"It was really quite moving to hear how the people really appreciated having the Bible."

His son’s lifelong devotion to Bible translation has shaped Roger’s financial goals.

The senior Bugenhagen wants to support his son’s work—mostly because Robert is his son, but also because Roger has seen the effect that a new Bible translation has in the hearts of those receiving it for the first time.

Roger first realized the impact of his son’s work when his son’s team hosted a ceremony in their village to celebrate the completion of a Scripture translation.

“They had a video tape at the time that I saw, and it was really quite moving to see how the people really appreciated having the Bible,” Roger shared.

Roger, who became a widower when Shirley died in 2000, began to think about how to incorporate Wycliffe into his estate.

During his career at the U.S. Census Bureau, from where he retired as assistant director of economic programs, Roger had learned the importance of sound investments. As he began looking at his assets, he decided to make some changes.

“I was trying to lessen my exposure to the stock market, I was looking for some alternatives, and I had read something about charitable gift annuities, and I decided to explore that directly with Wycliffe,” Roger said.

Roger eventually established two charitable gift annuities through Wycliffe Foundation. With these charitable gift annuities, he made a gift of cash and now receives fixed payments for life.

“It worked out very well for me in several aspects because I donated appreciated stock, which is transferred,” Roger said. “By not selling it, I save myself a lot of capital gains taxes.”

“The income from my annuity was far greater than I was receiving in dividends from the stock,” Roger explained.

Upon Roger’s passing, the remainder of the CGA will benefit his son and daughter-in-law. This decision was an easy one for Robert.

“As they get older, a lot of their support that they’ve gained over the years has dissipated,” Roger said. “People die off, so it’s not an easy situation. So I felt really good that this would probably help them in their later years. I’ve seen the work, I’ve seen the results of the work, and I’m able to support them.”

By Emanuel J. Kallina, II, Guest columnist

 A charitable lead trust (CLT) is a vehicle by which a donor irrevocably transfers assets to a trust; the trust then makes income payments no less than annually from those transferred assets to a charity for a set term.

The trust may be structured two ways: as a charitable lead annuity trust (CLAT), where the charity receives a fixed dollar amount or a percentage each year of the fair market value of the initial trust assets, or a charitable lead unitrust (CLUT), where the charity receives a fixed percentage of the fair market value of the assets, determined annually. In either case, at the end of the trust term, the remaining trust assets pass to beneficiaries, typically the grantor’s children or grandchildren.

 Benefits to partner:

• Provides assets for use by a favorite charity or ministry,
• Estate- or gift-tax deduction equal to the charitable income interest and possibly an immediate income tax deduction, and
• Ability to pass assets to descendants free of estate and possibly gift tax.

Benefits to ministry:

• Commitment by donor of an immediate income stream for a set term,
• Depending on how the CLT is structured, trust income can be taxed to donor and not CLT, thereby preserving principal.

 CLTs are useful tools that not only benefit the ministry but also the supporter, making it an ideal vehicle for the charitably-minded who are also looking for a way to benefit family.

 Emanuel J. Kallina II is an attorney in Townson, Md., specializing in estate planning and tax law.

Steve Davis

 Looking for a way to make a greater Kingdom impact, especially through the work of Bible translation? You may not think you can, because: 

• You have non-cash assets,

• You desire to pass these assets to family and/or

• You would pay capital gains and gift tax.

What if you could use these assets, transfer more to your children tax-free and still impact the Kingdom? A charitable lead trust (CLT) can do this, and it’s the right tool for this time.

Your opportunity to effectively transfer assets to the next generation has never been better. Rates that predict how much assets will grow in the trust are at an all-time low, making this a timely and wise decision. Many assets, such as securities and businesses, are severely depressed, and it’s likely that they’ll appreciate at a rate well beyond this in the coming years. The combination of low rates and depressed asset values provides a rare opportunity to maximize the use of a CLT.

How does a CLT work?

You transfer assets such as cash, real estate, stocks or business interests to a trust for a set number of years. Each year, payments are made as a fixed percentage from the trust to the ministries of your choice. For even more flexibility, you can set up a Wycliffe Donor Advised Fund, and the trust payments can be made to your DAF. From here, you recommend grants to your favorite Kingdom causes, such as Bible translation.

When the trust expires, the remainder passes to your family. Once the assets are contributed to the CLT, they are immediately removed from your taxable estate, and all assets—including future appreciation—pass to your children and bypass the estate tax.

Who can utilize this? CLTs are the perfect tool for stewards who desire to exercise wise Biblical stewardship, produce greater Kingdom impact and give resources tax-free to family and loved ones.

What are the benefits of a CLT ?

• Trust receives annual charitable deduction for amounts paid to charity,

• Appreciation in value is not included in your estate,

• Assets required during lifetime can be committed to ministry at death,

• Additional Kingdom impact, and

• Assets passed to family with reduced or zero tax.

You see, there is a solution to the desire to impact the work of Bible translation and provide for your family. Consider a CLT and lead the way to finishing the task of Bible translation in this generation.  

Neither the author, the publisher, nor this organization is engaged in rendering legal or tax advisory service. For advice or assistance in specific cases, the services of an attorney or other professional adviser should be obtained. The purpose of this publication is to provide general gift planning information. Watch for tax revisions. State laws govern wills, trusts, and charitable gifts made in a contractual agreement. Advice from legal counsel should be sought when considering these types of gifts. © Copyright Wycliffe Foundation

By Steve Davis, Director of Gift Planning, Wycliffe Foundation

We are here to serve each of you in discovering and implementing God’s plan of stewardship for what He has entrusted to you. As a result, we don’t ask people to make current gifts. However, one of the things that we frequently hear from God’s stewards is “I wish I could give more to the work of Bible translation,” or “I wish my gift were larger.” I’d venture to say that most of you would be interested in finding a way that you could do that today and in the future as well.

Additionally, one of the other concerns of the missionaries that you support is “Who will replace the resources provided by my supporters when they go home to be with the Lord?” These two issues are at the heart of the principle of laying up treasure in heaven. Let me show you a way that you can solve both of these problems by funding the future using a gift that keeps on giving. This concept will also enable you to make your largest gift ever to impact the future of Bible translation.

This gift is called a “bequest endowment,” and here’s how it works: As part of your planning, you include a Wycliffe organization or missionaries serving in Bible translation in your will or trust in the form of a bequest. A bequest can be completed several ways. For example, you can name one of the Wycliffe affiliates to receive a certain percentage of your estate. You can also gift a specific property, or you can designate that all or a portion of “what’s left” go to impact the work of Bible translation. Any of these will allow you to use these assets while you’re alive, provide for your family and impact the work of Bible translation in a significant way. In essence, it allows you to make the largest gift you’ve ever made.

In making this decision, the question then becomes “How much should I leave?” This is where the “bequest endowment” comes into the picture. This will enable you to continue supporting your favorite missionary or project after you’ve gone home to be with the Lord. To determine the amount of your “funding the future” gift, simply take the amount of your annual gift and multiply it by 25.

For example, if your monthly gift is $500 then your annual gift would be $6000. Multiplied by 25, this yields a total of $150,000. This would be the amount of your “bequest endowment.” You would designate the appropriate percentage of your estate that would produce this type of gift, or simply designate “what’s left” as the funding of your endowment. This gift of $150,000 with a 4% yearly distribution would then produce an annual gift of $6000, enabling you to continue supporting your favorite missionary or project. In this way, you’ve funded the future by making a gift that keeps on giving to the work that you are so passionate about—the work of Bible translation.

For more information on supporting the work of Bible translation through a will or bequest, contact us by phone at (877) 379-7131 or visit us online at WycliffeFoundation.org/wills.

Creating your Bequest Endowment

• Step-by-step:
  • Calculate your annual gift
  • Multiply this amount by 25
  • Designate a bequest in your will or trust equal to this amount. This designation can be
    • A percentage of your estate
    • Specific property
    • The remainder or residue (what’s left after other wishes are met)
• Here’s an example of how it works:
  • Annual Gift = $6,000 Current impact
  • X 25           = $150,000
  • X 4%          = $6,000 Future impact
• The result:
  • The largest gift you’ve ever made
  • Joy of laying up treasure in heaven
  • Continued impact
  • Encouragement for the missionary or ministry

Steve Davis and Rachel Tidwell discuss Donor Advised Funds, providing explanation, examples and benefits.

Steve Davis and Rachel Tidwell discuss Charitable Gift Annuities.